vanished_fortunesFormer Colorado Springs banker and resident Chad Friese and his firm, The Argent Company, borrowed nearly $12 million from dozens of individuals and their retirement accounts, but did not pay it back, according to court documents.

A civil lawsuit filed in June 2011 in El Paso District Court by more than 60 people, their retirement accounts and businesses seeks a return of the money.

Formed in 1996, The Argent Company made asset-based, short-term loans to third parties, Friese said. For example, if a builder needed a loan to finish a project, he could ask Friese. Friese then appealed to people who had assets to loan.

Via Friese, Argent would borrow their money, promising high returns and payback, and make the loan to the builder.

“I made money by making asset-based loans,” Friese said.

“The company’s underlying collateral was primarily secured by deeds of trust on commercial real estate in Colorado,” Friese said in a prepared statement. “The Argent Company was, for a long period of time, a profitable business which paid its creditors highly favorable interest rates.”

- Advertisement -

He added that he made hundreds of loans to people buying single-family homes out of foreclosure.

It’s not Friese’s first brush with the justice system. Last year, following a related incident, Friese, now 45, was banned for life by the Federal Deposit Insurance Corp., from working at any FDIC-insured institution.

Victims’ comments

“We got high interest on our investment,” around 9 percent, said Donald Cloud, one of the plaintiffs in the lawsuit. “That worked for some years.”

Court papers said in exchange for the advance of funds, Argent would issue certificates of debt, whereby Argent promised to repay the debt over time and with interest.

“Friese personally guaranteed Argent’s performance,” the court complaint said.

Friese made the third-party loans without asking for collateral, said Rob Alexander, owner of Stockmens Bank in Colorado Springs where Friese worked until 2012. It’s a highly unusual practice in banking, Alexander said.

“He personally guaranteed” the loans, Alexander said. “As a banker, you might do some unsecured loans, but for very small amounts. When you get into those numbers ($10 million), you get collateral.

“All they had was a note from him.”

According to court papers, Argent borrowed $11.95 million from 68 individuals and entities up to 2010. The largest single loan was from a Colorado Springs business for $1.58 million; the largest amount Friese borrowed from one family came from a single Colorado Springs family for $2.97 million, court documents said. Most of the loans came in increments of $25,000 to $100,000, court documents show. The documents show Friese and his family members also made loans to Argent.

In addition, court documents allege Friese transferred thousands of dollars from Argent’s account to other companies owned by Friese. According to the court papers and the Colorado Secretary of State’s website, Friese also owns PC Funding, Argent Land Holdings and The Argent Holding Company.


“I’m just glad the guy’s out of my life. I trusted the guy. I’m not used to getting duped.”

– Rob Alexander,

Stockmens Bank

[/pullquote]“Like several other successful companies and individuals in the real estate market, The Argent Company began experiencing financial issues when the real estate and credit markets began to crash in 2007,” Friese’s statement said. The Argent Company had lent on two large projects that could not avoid the recession, including a 37-unit townhouse development in Fountain.

“Unfortunately, these two failed projects alone will cost The Argent Company well over $3 million,” Friese’s statement said.

In March 2010, Argent, through Friese, told certificate holders the company was unable to repay the debts and was “indefinitely suspending all payments to certificate holders and intended to liquidate and distribute its assets,” the complaint read.

After Friese informed the certificate holders that he was unable to pay the debt, they united in an attempt to view the company’s finances, Cloud said.

That proved “tough because Chad Friese didn’t want to turn the books over,” Cloud said.

The group then filed suit against Friese and his company, court papers show.

Receiver brought in

The court eventually appointed a receiver; Colorado Springs homebuilder and accountant Steve Scott has worked to divest available assets and pay the certificate holders.

Scott’s latest report, filed Aug. 1, states Argent has three active bank accounts at Stockmens Bank with a combined balance of $53,889.35. There is also one escrow account at Central Bank & Trust with a balance of $100,376.48 and another account for the Fountain Village Townhome Home Owners Association with a balance of $1,441.41.

Scott declined to be interviewed for this article.

Court documents show some of the $11.95 million has been repaid, but not much.

The family that loaned Argent $2.97 million was paid back $28,374.36 in June 2012, according to court records dated January 2013.

El Paso County Assessor records show Argent, with an address of 724 S. Tejon St., Suite A, owns four lots of land in Falcon and an office building at 3100 N. El Paso St. in Colorado Springs.

Those properties will be divested, Friese acknowledged.

“Everything’s for sale,” he said.

Certified Public Accountant Jay Kloster of Colorado Springs is the accountant for the receiver; he had also served as the accountant for Friese and Argent, he said.

Of the repayment, Kloster said there is “no hope of most of it getting paid back.”

Kloster said that he also loaned money to Argent and Friese.

The creditors in this case, or the receiver, would have to pursue Friese with a court judgment to have a chance at getting their money back.

“Unfortunately, they likely will never receive all that’s due to them,” said a Colorado Springs attorney familiar with the case.

Banned for life

Friese has been in trouble before, this last time for bank fraud. In July 2012, the FDIC banned Friese from ever working at an FDIC-insured institution.

The action resulted from an incident in which Friese, a former employee of Stockmens Bank in Colorado Springs, wrote a check for $1.18 million on an account at the bank that was not his own. The money bought a foreclosed property for Argent. Court papers say he used other Stockmens employees’ access codes to gain access to the money and account.

“That was just one of the transgressions,” Alexander said. “In a period of time, I discovered a number of bank frauds he committed.”

Alexander reported the incidents to the FDIC, which conducted a full investigation of the funds at Stockmens Bank.

“I’m just glad the guy’s out of my life. I trusted the guy,” Alexander said. “I’m not used to getting duped.”

Alexander said the bank recovered most of the $1.18 million, but he still owes “right at $100,000, I think. It could have been worse.”

The FDIC’s ruling said: “The respondent has engaged in misconduct and breached his fiduciary duty … including … unauthorized use of bank funds to pay obligations of his company and his concealment of that conduct from the bank’s board of directors and its regulators.”

“He could petition to work at an FDIC-insured institution if he wanted to come back,” but he hasn’t, said Greg Hernandez, spokesperson for the FDIC. There has been no criminal action to date in the El Paso County courts or U.S. District Court in Denver.

The attorney familiar with the case said he’s not aware of any criminal action against Argent, “though it sure seems one would be appropriate,” he said, adding it’s rare to see white-collar crimes prosecuted in El Paso County.

Friese now lives in tiny Harvey, N.D., population 1,795, 200 miles northwest of Fargo.

He said he moved there to be closer to family.