Wise pleads guilty to fraud
Aspen resident Michael R. Wise entered into a plea agreement Friday in an $8 million fraud case that will likely send him to prison.
Wise is also the former head of the Silverado Banking savings and loan, which failed in 1988. He was acquitted a charge of misappropriating funds from that institution.
He pleaded guilty last week in Denver’s U.S. District Court to two violations of the federal wire-fraud law for his schemes that cost the Aspen-based Cornerstone Private Capital Corp. more than $8.7 million, federal officials said.
Linda A. McMahan, U.S. attorney for Colorado, said Wise will face a maximum fine of $1 million and 30 years imprisonment on each charge when he is sentenced the morning of July 6 by U.S. District Judge Walker Miller.
“This particular type of case is measured by what they call federal sentencing guidelines,” Wise’s attorney, Gary Lozow, told The Aspen Times last month. “So there isn’t a question of whether or not he’s going to jail, but just how long he’s going to jail. The bottom line is that these guidelines dictate sentencing: There isn’t a place for Mr. Wise to go home – he won’t – he will go to jail. The question is how much time.”
In the plea agreement filed with Judge Miller Friday, officials said the total losses triggered by Wise’s activities with Cornerstone totaled more than $8.7 million. That includes nearly $4.3 million in loans to Cornerstone from 12 investors; $1.1 million in overfunding several projects, $1.4 million in loan payoffs not recorded, $680,000 in unfunded investments and $1.2 million in unfunded participations from an investor.
Wise admitted using the money to buy an equity interest in Cornerstone, to make interest payments to investors and to pad his own bank accounts.
Cornerstone chairman Thomas D. McCloskey said he had contacted the Pitkin County Sheriff’s Office and Aspen police on Sept. 25 after he uncovered “serious financial improprieties.”
A few days later, on Sept. 28, Wise confessed to misusing the funds while he was president of Cornerstone, which made high-interest, short-term real estate loans. The company fired him soon thereafter.
In a written statement turned over to the Aspen police and the Pitkin County District Attorney’s Office, Wise said he had “misappropriated money entrusted to me by investors and lenders. I used the money involved to pay business and personal obligations and to make unauthorized investments.
“I am prepared to pay the legal consequences and to that end will continue cooperating fully with the authorities in their investigation,” he wrote at the time.
Wise, 54, is best known for his connection to Silverado, which he built from a suburban savings and loan into a $2 billion thrift, the third largest in Colorado.
Silverado executives went on a lending binge that led to the thrift’s collapse in 1988 during the national savings-and-loan crisis. The Silverado case became well known because one of the institution’s directors was former President Bush’s son, Neil.
The collapse cost taxpayers $1 billion.
In February 1993, after prosecutors spent four years assembling their case, Wise was acquitted of charges that he used nearly $500,000 of a loan from the thrift for personal expenses.
But federal thrift regulators banned Wise and other Silverado executives from the banking industry for life and imposed mild restrictions on Bush.
Bush, Wise and nine other directors and officers agreed to pay the government $49.5 million to settle a $200 million lawsuit. Taxpayers covered most of the $1 billion in losses caused by the failure.
Wise then moved to Aspen, where he set up the investment firm.
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