Former head of Children’s Community Foundation faces mail fraud charge

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A former Kansas City-area businessman who ran the local Children’s Community Foundation has been charged in federal court with two counts of mail fraud related to his activities with a trust company in New Hampshire.

Colin Lindsey and two associates were the subjects of investigation by the U.S. attorney in New Hampshire, as well as that state’s attorney general and banking department.

Lindsey, along with Lisa Elliott of Epsom, N.H., stand accused of running a fraudulent investment practice with Noble Trust Co., based in Manchester, N.H.

Federal prosecutors allege that Lindsey managed a product called the Noble Alternative Income Fund, which promised investors annual investment payments of at least 12 percent.

Authorities think Lindsey used money held in the fund to extend loans to a Colorado company, Sierra Factoring Inc. But the loans were such that Lindsey no longer could offer payments to his investors, whose money ended up in Sierra Factoring.

In 2007, Lindsey sued Sierra Factoring, claiming that it turned out to be a Ponzi scheme.

Ponzi schemes involve taking money from new investors to pay old investors and constantly having to find new money to pay out an increasing investor roster. They are nonsustainable schemes that collapse when new money can’t be found.

Federal charges accuse Lindsey of running a Ponzi scheme of his own within Noble Trust, as it thought he used more than $780,000 from new customers to make payments to existing customers.

Elliott, Noble Trust’s COO, is charged with knowing about Lindsey’s commingling of funds but never reporting it.

Lindsey also is accused of selling high-priced life insurance policies to customers who were middle- to lower-middle-class individuals.

Authorities think that Lindsey sold the insurance policies through Balcarres Group LLC to earn commissions, which he then would use to replenish the client money he lost on the Sierra Factoring fraud.

A Florida man, Jerry Vito Marino, referred customers to Lindsey, often containing false financial information for the life insurance plan beneficiaries. Prosecutors charged Marino with one count of mail fraud in relation to his activities with Lindsey.

Lindsey allegedly made $5.5 million in commissions from the sales of the life insurance policies, $2.1 million of which he paid to Marino for finding customers.

Lindsey’s trial ties back to the Kansas City area, where he was running the Lenexa-based Children’s Community Foundation, a 501(c)(3) organization that advertised an opportunity for customers to transfer real estate to the foundation in return for lifelong annuities and tax benefits.

Lindsey’s activities with the Children’s Community Foundation roused the attention of banking regulators and the Kansas attorney general, in part because he was acting as a trustee for trusts with the Children’s Community Foundation.

Lindsey never was charged with wrongdoing, but he appeared to wind down his activities with the Children’s Community Foundation and moved to New Hampshire, where he started Noble Trust.

In 2007, banking regulators in New Hampshire took over Noble Trust after a routine examination of the company’s books showed money was missing from client accounts.

No dates have been set for Lindsey, Elliott and Marino to appear in court.