BELLEVUE, Wash. >> When Georg Frey killed himself last December, he left behind $50 million in debts and 150 angry investors who had trusted him with their retirement savings -- only to find themselves victims of a scam. Man’s suicide reveals
massive Ponzi schemeAt least 1 of his many victims
was an investor from HawaiiAssociated Press
State regulators who are still sorting through files say Frey's NuWest Inc. operation was among the largest Ponzi schemes in state history, the Eastside Journal of Bellevue reported Sunday.
But authorities did not know the extent of Frey's deception until after he died.
More than 100 investors are suing his widow, Michelle, his estate and his right-hand man, Renton businessman Donald W. Jones, through a Seattle law firm. Others have filed separate lawsuits.
Boxes of documents are piled up inside the office of attorney Anthony Carter at the state Department of Financial Institutions in Olympia. Since Frey's death, Carter said, he has received more than 100 calls from distraught investors.
Everyone was saving for retirement, Carter said. Many lost their life savings.
Lured by one-line newspaper ads promising high returns, the investors came from throughout Washington, California, Nevada, Missouri, Alaska and Hawaii.
The Hawaii investor, from Lahaina, plunked down $50,000, said Carter, declining to identify the individual.
The biggest losers were an Edmonds couple who sank $12 million into NuWest. A Bellevue investor lost $3.5 million, a Redmond man $3 million, a Seattle man $2.2 million and an Issaquah man $1.7 million.
"He was not a big talker," said a Redmond investor who met with Frey in 1990 and did not want his name revealed. "He let you ask all the questions, and then he told you what you wanted to hear."
Frey talked about fishing and skiing, recommended an eye doctor to him and promised crates of free crabs from Frey's crab-fishing venture. The Redmond man invested -- and lost -- millions.
The pitch: Frey told investors that he was acting as a middleman. Investors could deposit money, which he would lend to property owners needing fast cash. Minimum investment was usually $10,000 to $75,000, with IRA and pension funds welcome.
In addition to 14 percent or 15 percent returns, Frey offered many investors "lender fee" discounts of 2 percent or 3 percent. They would hand over $97,000, for instance, but receive interest on $100,000.
As long as Frey kept drawing in new money, the scheme stayed afloat. Investors kept getting their checks -- right up until Frey's death.
On the evening of Dec. 1, 2000, Frey walked into Wade's Gun Shop in Bellevue and rented a 9 mm handgun. He shot a box of bullets at a target, then walked into the men's bathroom and shot himself in the heart. He was 49. Now investigators are finding the paperwork a mess they may never figure out. The FBI also is investigating.
Originally from New Jersey, Frey was a developer in New Hampshire during the 1980s. In 1989 a civil judgment was entered for more than $1.9 million against him, stemming from fraudulent bank loans in New Hampshire.
Frey's business interests ranged from trying to create a factory boat for crab fishermen to building a golf course community near Roseburg, Ore. He invested around Puget Sound in offices, residential apartments and the Friendly Food Mart business. A few complaints were filed against him, but federal and state regulators who investigated looked at only small pieces of the picture, the Journal reported.
Michelle Frey referred calls to her lawyer, Helen Johansen, who said the widow "has fully cooperated in the ongoing litigation brought by investors."
Michelle Frey had little idea what her husband was really doing throughout their marriage, Johansen said.
"He expected unquestioning loyalty and obedience from his family," Johansen said, "and from his friends the same."
Washington regulators say similar schemes continue to flourish, however. They warn investors to check out deals before handing over their money.
"There is still a sucker being born every minute," said Deb Bortner, director of securities at the State Department of Financial Institutions.
Star-Bulletin reporter Debra Barayuga
contributed to this report.