Colorado Attorney / 1031 Exchange Intermediary Accused Of Ripping Off Clients

In Summit County, Colorado, the Summit Daily News reports:

• "The amount of money Breckenridge lawyer Royal "Scoop" Daniel allegedly defrauded his clients of before disappearing in late April is growing, but police won't have an exact number until a detailed accounting report is complete. In early May, police estimated about $561,000 of clients' money was missing; recent estimates put that number at closer to $800,000, said Breckenridge Sgt. Susan Quesada. Six potential victims have come forward, Quesada said."

The article is not clear as to how many of the victims used attorney Daniel as a 1031 real estate exchange intermediary; however, the report states that he did act as a qualified intermediary for 1031 real estate exchanges and at least one couple reportedly lost $80,303.10 from the proceeds of the sale of an investment condo in Keystone, which Daniel handled as a 1031 qualified intermediary and held the couple's money pending a reinvestment of the funds into another real estate investment. (An opinion article in the Rocky Mountaiin News reports that law enforcement agencies believe that Daniel may have absconded with more than $1 million from the proceeds of 1031 exchanges he had put together for clients; see No cure for rogues).

A 1031 exchange, which is a reference to section 1031 of the Internal Revenue Code, is a process used to legally defer paying capital gains taxes when selling an investment property. For the story, see Scoop investigation waiting on accounting report.

Go here for other posts on the recent reported problems in the 1031 exchange industry.