Dallas -- A Colorado developer has been indicted on 20 counts of misusing public funds from a $31 million bond issue designed to finance an upscale housing development in affluent Greenwood Village.
Zach Davidson created the Marin Metropolitan District that issued the taxable bonds for a European-style development near other high-rise residential properties he had successfully developed. When the economy collapsed in 2008, the European village was scrapped and the developer declared bankruptcy.
The indictment in Arapahoe County in suburban Denver alleges Davidson stole or misdirected more than $3.1 million in public funds from the Marin Metropolitan District between July 2008 and April 2010.
The 2008 bonds with maturities in 2028 paid 7.72%.
Davidson created 13 companies after arriving in Denver in 2005 to develop the $255 million Landmark Project that included the European Village, the Landmark Tower and Meridian Tower.
The Landmark Tower sold out the day it went on the market, and the Meridian Tower also found buyers. Despite signs of economic turbulence, Davidson proceeded with plans in 2008 to build the European Village that was to include 161 manor homes and 60 brownstones.
In June 2010, U.S. Bankruptcy Court Judge Michael Romero authorized Hypo Real Estate Capital Corp. to acquire the project to cover debt. Another lender, FirsTier Bank in Louisville landed in receivership due, in part, to the project’s failure.
An attorney for the metro district told the Denver Post that "a good deal of the bond funds is still held in escrow and has not been spent."
Davidson was accused of misappropriating $3.1 million from the 2008 bonds.
The largest single misappropriation cited was $727,313 in landscaping materials and work at the site that the grand jury found wasn't done.
The indictment also states that Davidson's bank records show he was paying himself more than $90,000 a month even as the project was foundering during the nation's financial crisis.