Back in 2006, Frederick H.K. Baker came to Durango and dangled the promise of safe, easy money.
With his secret formula for trading foreign currency, select investors could make a guaranteed 10 percent profit a month – enough for that trip to Europe or holidays in the tropics.
More than six years later, the retirement dreams of his investors are grounded. But Baker did take their money for the ride of a lifetime.
A few million dollars spent the winter in sunny Los Angeles with a company whose president now is on death row. When the law closed in, Baker moved the money to Portugal, placing it in the trust of a company registered in New Zealand, with an address in Panama and directors in the United Kingdom.
That’s when it disappeared.
Baker is serving a 41-month prison sentence in Missouri, after pleading guilty to operating a Ponzi scheme. But the court case told only one chapter of Baker’s story.
The Durango Herald took a closer look at his case and found that Baker was less of a mastermind and more of a free-rider on other schemes – schemes whose perpetrators remain unpunished. There were more victims and much more money than were ever revealed in court proceedings.
Prosecutors did not charge Baker for his involvement in a second – and larger – scheme, in addition to the so-called currency-trading scam. And the Herald has found evidence that connects Baker to a third scheme, this one in Utah, that began as soon as Baker left Durango.
Ray Fite of Hawaii thought he was investing in a humanitarian project in Africa when he lost money to the same scheme that snagged Baker’s Colorado victims. He did not invest through Baker.
“It’s much bigger than a couple of monkeys in Durango,” Fite said. “It’s a worldwide phenomenon. They’re in Europe. They’re in Australia. And they get away with it.”
No ordinary victim
Kevin Bryden was looking to invest in housing in Durango.
He had just sold a house in California when he approached Cameron Winters, owner of a small construction firm, about investing in one of his projects.
But Fred Baker, who shared an office with Winters, offered Bryden something different – something better. Bryden bought it.
“I would say over $150,000 of my money went to an investment with Fred Baker,” Bryden said. “I lost it all.”
Bryden wasn’t an ordinary victim. He became Baker’s bookkeeper, recording “investments” from about 80 people in Durango, California, Washington, Florida and elsewhere.
His roommate, Durango native Mark Akins, became the scheme’s chief marketer. Akins never invested his own money, but he earned at least $170,000 in commissions for signing up investors, according to court documents. For six months, he and Bryden ran the Durango end of Baker’s scheme.
(Bryden’s comments in this story come from his sworn testimony in U.S. District Court in November 2012. He returned a call from the Herald and left a message after hours, but subsequent attempts to reach him failed.)
Akins confessed to knowing by March 2007 that Baker was running a scam, but he continued to send investors’ money to Baker through that May. For that crime, Akins is serving a 27-month prison sentence. With time served, he’s scheduled to be released this month.
Through prison spokesmen, both Baker and Akins declined to be interviewed for this story.
Bryden was not charged with a crime. Before he testified for several hours last fall, U.S. District Judge Philip Brimmer told him that although the U.S. Attorney’s Office in Colorado was not going to prosecute him, his testimony could be used against him in another state or a foreign country. Bryden testified anyway and never used his Fifth Amendment right to avoid a question.
A mysterious payback
By his own admission, Baker never did any currency trading. But unlike many Ponzi schemes, Baker actually was investing in something – other Ponzi schemes.
The nature of those schemes wasn’t disclosed in court.
Meanwhile, he spent lavishly on himself – $260,000 on debit card withdrawals, $50,000 to sponsor an off-road racing team in Utah, $40,000 for a down payment on a house and $69,500 for work on the Durango house that he had leased with the option to buy, according to his plea agreement.
Through Bryden and Akins, Baker offered two “investments.” The first was currency trading, and the second was “private placement” with a company called Methwold International Finance Corp. Victims were told few details about what “private placement” meant, but they were told it would make even more money than Baker’s so-called currency trades.
In the spring of 2007, Baker pulled all of his victims’ money out of the online bank he was using and put it into a Methwold account in Portugal. That’s the last that investors in the United States saw of their money.
The scam collapsed in May 2007, and Baker fled Durango with his family shortly after.
Bryden and Akins angrily confronted Baker, and, surprisingly, Bryden got four $100,000 checks that fall to repay victims. The checks came from Kristine Kimball of Utah.
Federal investigators learned of the scheme in 2007, but Baker and Akins weren’t indicted until 2011. The indictment covered the period from mid-2006 to May 2007, and the case did not include charges related to Methwold.
It did not delve into what Baker, Akins and several associates were up to in the summer and fall of 2007.
And it did not solve the mystery of those four $100,000 checks.
Monday, the Herald takes on these questions.