Investors say they put $175,000 into a fix-and-flip project at this home, 1257 N. Corona St. in Denver, and received nothing in return. (Justin Wingerter/BusinessDen)
Fifteen real estate investors say they have lost $2.5 million — most of their retirement savings, in some cases — to a convicted thief who coaxed them into investing in local fix-and-flip projects with promises of strong returns, then ran off with their money.
Seven other victims of Sean McClay, an Aurora businessman, also lost an undetermined amount of money in his purported fix-and-flip projects, according to a May 9 lawsuit.
The sizable lawsuit — 26,000 words and 72 pages long — accuses McClay, two of his associates and eight of his companies of conspiring together to rob millions of dollars from investors and then fraudulently move their ill-gotten gains to McClay’s mother to hide them.
The investors’ lawsuit is one of seven filed against McClay since December. Its bold allegations arrive just two months before McClay is scheduled to go to trial in a civil case in which he’s accused of taking more than $400,000 from taxpayers in Lake County.
And they arrive less than two years after McClay, now 51, admitted to stealing thousands of dollars from a high school football club. In exchange, prosecutors dropped allegations that McClay stole tens of thousands of dollars from a small company he worked for.
“The loss created great strain on the company,” its owner, Don Balczewski, testified.
“Sean and I were friends and I feel truly betrayed by his actions,” another McClay victim told a judge. “I’ve lost sleep, dealt with anxiety and have been unable to eat.”
‘Betrayed by their coach’
On Jan. 19, 2017, Roxanne McClay of Park Falls, Wisc., noticed something unusual.
On her husband’s phone was a Facebook message from a woman in need of quick cash. Below that were assurances from her husband that he could get the money, perhaps from a football club, in exchange for sex, according to Roxanne McClay’s statements to police.
Later that day, a Park Falls alderman named Chris Hoffman stopped in a police station and accused Roxanne McClay’s husband, his friend Sean McClay, of misappropriating funds from the Screaming Eagle Football Club. The booster club raises money to support a high school football team in the small town. The coach of that team was Sean McClay.
Park Falls, Wisc., is home to about 2,400 people, according to the U.S. Census Bureau. (City of Park Falls)
Hoffman and his wife, treasurer of the club, determined that McClay had withdrawn $3,969 from the club’s bank account without permission, including $350 that was given to the woman in the Facebook messages. Roxanne McClay filed for divorce later that year.
Two months after the Hoffmans realized money was missing from the football club, Balczewski walked into a Park Falls police station and accused Sean McClay of embezzling from IKS Industries, a machine shop he owns. He’d hired McClay as CEO seven months before.
IKS Industries’ credit union — the same credit union the Screaming Eagle Football Club used, coincidentally — had flagged strange activity on the account. Balczewski determined that McClay had written $30,000 in checks to himself over three months, he told police.
McClay was fired and banned from IKS’ premises. In late 2018, he was charged with two felony counts of theft in a business setting. In 2021, those charges were amended to one felony theft for allegedly looting from IKS and one misdemeanor theft for the football club pilfering.
Sean McClay, 51, pleaded guilty in October 2021 to one count of misdemeanor theft. (LinkedIn)
As part of an agreement with prosecutors, McClay pleaded guilty to the misdemeanor in October 2021. He was sentenced to 20 hours of community service and told to pay $5,500 in restitution. He also had to write an apology to the football club and avoid contact with it.
“Our funds were compromised and the community questioned our leadership. We have been working diligently to rebuild trust and funds,” Hoffman, the alderman, wrote in a victim impact statement he filed with the Price County Circuit Court on behalf of the booster club.
“All of the kids involved in the program have felt betrayed by their coach. I have worked hard to ensure proper learning is taking place and that the kids feel they can trust again.”
In his own statement, Balczewski said that IKS was forced to take out loans just to meet payroll because of what McClay had done and “our largest customer became concerned with our stability and held back orders.” He proposed a punishment that the judge in the case opted not to impose: that McClay must tell future business associates about his theft.
A simple pitch
In December 2021, two months after he pleaded guilty to theft, McClay — who had family ties to Colorado — began soliciting investors in the state for fix-and-flip projects, according to those investors. In phone calls, emails and meetings, McClay claimed to have several large lines of credit and a successful career in real estate. Investors say that those assurances were lies.
McClay’s pitch was simple. He would create an LLC, buy a house through that LLC with investor money, improve the house, quickly sell it for a profit, and divide that profit among investors. Investor funds would be kept in their own bank account, he allegedly told investors.
The first house was 475 Aspen Drive in Evergreen. Four investors — including Deborah Dunafon, majority owner of Shotgun Willie’s strip club in Glendale — gave more than $125,000 in February 2022. But no LLC was formed, the funds were commingled with other McClay accounts, the house was never renovated and investors lost everything, they say.
This scenario played out 20 more times between February and December 2022, according to the lawsuit. The number and names of the investors changed, as did the property they were purportedly investing in and the return on investment they were told to expect. But in each case no LLC was formed, investor funds were commingled and investors lost everything.
In all cases, McClay and his associates purchased the homes in question — 15 in the Denver metro area, plus others in Colorado Springs, Utah, Virginia and Texas — but didn’t give investors a stake in the properties or a cut of the profits, investors claim.
Investors in this property at 1640 N. Humboldt St. in Denver were told to expect a 15.5-percent return on investment. Instead, they lost everything, they say. (Justin Wingerter/BusinessDen)
In their most egregious allegation, the 15 plaintiffs accuse McClay of soliciting investments in a fund that would be used to buy properties on the East Coast after it raised $1.5 million. McClay raised $775,000 and then simply ran off with the money, according to investors.
Their lawsuit accuses McClay of a long list of offenses, including securities fraud, wire fraud, theft, fraudulent transfer and fraudulent concealment. Also named as defendants are Joseph Gould, who is the chief operating officer of McClay’s Clear Creek Co., and Marc Simpson, who allegedly co-operated the East Coast fund alongside McClay and Gould.
Gould, of Aurora, did not respond to emails and phone calls requesting comment last week. Contact information for Simpson, who investors say lives in Virginia, could not be found.
McClay’s mother, Beverly McClay, is also accused of unjustly enriching herself through a fraudulent transfer. Investors say that her son gave her assets in order to hide them from investors and “impair their ability to enforce any judgment or to collect any debts.” Beverly McClay did not respond to phone calls and voicemails requesting comment.
Sean McClay similarly did not respond to several phone calls, voicemail messages and emails seeking his side of the story. Neither did his attorney in Denver, David Wollins.
In addition to an undetermined amount of money from the defendants, the investors are also asking Judge Elizabeth Volz in Centennial to let a receiver manage the properties that McClay and other defendants allegedly bought with the investors’ money. The defendants are collecting rent on the properties but not paying taxes or reimbursing investors, they say.
Some of the properties have been foreclosed on. COST Fund, a local short-term lender, has already won two court judgments this year that allowed it to take a house in Denver and another in Centennial after McClay defaulted on half-million-dollar promissory notes.
Elsewhere, subcontractors say they aren’t being paid. Boulder Engineering Co. won a $27,000 judgment against McClay, Gould and Clear Creek Co. in early May after being stiffed on several projects. And a sprinkler installer said it is owed $87,000 by McClay and Clear Creek Co., so it sued the two on May 9, the same day that investors sued them.
Expensing a funeral
Meanwhile, in Leadville, jurors are scheduled to gather July 31 and decide, after a five-day trial, whether McClay and a former company of his defrauded taxpayers out of $431,000.
McClay and Peak 360 Services, a defunct company he allegedly co-owned, are being sued by Lake County, which awarded Peak 360 a $1.4 million contract to build a fire station in 2018. The shoddy work that followed failed to meet building codes, the county says.
After work stopped, an audit determined that taxpayers had been overbilled $430,687, including $197,967 for labor and materials that were never delivered, according to the county. McClay and Peak 360 also fraudulently billed taxpayers for groceries, hotel stays and their company’s ads, as well as the funeral expenses for a friend’s family member, Lake County said.
The county is making eight claims against McClay, Peak 360 and another co-owner of the company, including breach of contract, negligence and fraud. Its lawyers plan to ask Lake County jurors to award it punitive damages “for defendants’ fraudulent conduct.”
McClay and Peak 360 have denied all wrongdoing and are countersuing the county for ending their contract and not fully paying Peak 360 “for its work on behalf of the citizens of Lake County.” McClay also denies that he ever co-owned Peak 360 or controlled its finances.
The fire station was initially supposed to open in 2019 at a cost of $1.4 million. Instead, it will open next month at a cost of $2.1 million, Commissioner Kayla Marcell said.
“Lake County has projected its damages from Peak 360’s defaults under the construction agreement to equal almost $525,000 of the increased cost,” she said.
Investors say they put $175,000 into a fix-and-flip project at this home, 1257 N. Corona St. in Denver, and received nothing in return. (Justin Wingerter/BusinessDen)
Fifteen real estate investors say they have lost $2.5 million — most of their retirement savings, in some cases — to a convicted thief who coaxed them into investing in local fix-and-flip projects with promises of strong returns, then ran off with their money.
Seven other victims of Sean McClay, an Aurora businessman, also lost an undetermined amount of money in his purported fix-and-flip projects, according to a May 9 lawsuit.
The sizable lawsuit — 26,000 words and 72 pages long — accuses McClay, two of his associates and eight of his companies of conspiring together to rob millions of dollars from investors and then fraudulently move their ill-gotten gains to McClay’s mother to hide them.
The investors’ lawsuit is one of seven filed against McClay since December. Its bold allegations arrive just two months before McClay is scheduled to go to trial in a civil case in which he’s accused of taking more than $400,000 from taxpayers in Lake County.
And they arrive less than two years after McClay, now 51, admitted to stealing thousands of dollars from a high school football club. In exchange, prosecutors dropped allegations that McClay stole tens of thousands of dollars from a small company he worked for.
“The loss created great strain on the company,” its owner, Don Balczewski, testified.
“Sean and I were friends and I feel truly betrayed by his actions,” another McClay victim told a judge. “I’ve lost sleep, dealt with anxiety and have been unable to eat.”
‘Betrayed by their coach’
On Jan. 19, 2017, Roxanne McClay of Park Falls, Wisc., noticed something unusual.
On her husband’s phone was a Facebook message from a woman in need of quick cash. Below that were assurances from her husband that he could get the money, perhaps from a football club, in exchange for sex, according to Roxanne McClay’s statements to police.
Later that day, a Park Falls alderman named Chris Hoffman stopped in a police station and accused Roxanne McClay’s husband, his friend Sean McClay, of misappropriating funds from the Screaming Eagle Football Club. The booster club raises money to support a high school football team in the small town. The coach of that team was Sean McClay.
Park Falls, Wisc., is home to about 2,400 people, according to the U.S. Census Bureau. (City of Park Falls)
Hoffman and his wife, treasurer of the club, determined that McClay had withdrawn $3,969 from the club’s bank account without permission, including $350 that was given to the woman in the Facebook messages. Roxanne McClay filed for divorce later that year.
Two months after the Hoffmans realized money was missing from the football club, Balczewski walked into a Park Falls police station and accused Sean McClay of embezzling from IKS Industries, a machine shop he owns. He’d hired McClay as CEO seven months before.
IKS Industries’ credit union — the same credit union the Screaming Eagle Football Club used, coincidentally — had flagged strange activity on the account. Balczewski determined that McClay had written $30,000 in checks to himself over three months, he told police.
McClay was fired and banned from IKS’ premises. In late 2018, he was charged with two felony counts of theft in a business setting. In 2021, those charges were amended to one felony theft for allegedly looting from IKS and one misdemeanor theft for the football club pilfering.
Sean McClay, 51, pleaded guilty in October 2021 to one count of misdemeanor theft. (LinkedIn)
As part of an agreement with prosecutors, McClay pleaded guilty to the misdemeanor in October 2021. He was sentenced to 20 hours of community service and told to pay $5,500 in restitution. He also had to write an apology to the football club and avoid contact with it.
“Our funds were compromised and the community questioned our leadership. We have been working diligently to rebuild trust and funds,” Hoffman, the alderman, wrote in a victim impact statement he filed with the Price County Circuit Court on behalf of the booster club.
“All of the kids involved in the program have felt betrayed by their coach. I have worked hard to ensure proper learning is taking place and that the kids feel they can trust again.”
In his own statement, Balczewski said that IKS was forced to take out loans just to meet payroll because of what McClay had done and “our largest customer became concerned with our stability and held back orders.” He proposed a punishment that the judge in the case opted not to impose: that McClay must tell future business associates about his theft.
A simple pitch
In December 2021, two months after he pleaded guilty to theft, McClay — who had family ties to Colorado — began soliciting investors in the state for fix-and-flip projects, according to those investors. In phone calls, emails and meetings, McClay claimed to have several large lines of credit and a successful career in real estate. Investors say that those assurances were lies.
McClay’s pitch was simple. He would create an LLC, buy a house through that LLC with investor money, improve the house, quickly sell it for a profit, and divide that profit among investors. Investor funds would be kept in their own bank account, he allegedly told investors.
The first house was 475 Aspen Drive in Evergreen. Four investors — including Deborah Dunafon, majority owner of Shotgun Willie’s strip club in Glendale — gave more than $125,000 in February 2022. But no LLC was formed, the funds were commingled with other McClay accounts, the house was never renovated and investors lost everything, they say.
This scenario played out 20 more times between February and December 2022, according to the lawsuit. The number and names of the investors changed, as did the property they were purportedly investing in and the return on investment they were told to expect. But in each case no LLC was formed, investor funds were commingled and investors lost everything.
In all cases, McClay and his associates purchased the homes in question — 15 in the Denver metro area, plus others in Colorado Springs, Utah, Virginia and Texas — but didn’t give investors a stake in the properties or a cut of the profits, investors claim.
Investors in this property at 1640 N. Humboldt St. in Denver were told to expect a 15.5-percent return on investment. Instead, they lost everything, they say. (Justin Wingerter/BusinessDen)
In their most egregious allegation, the 15 plaintiffs accuse McClay of soliciting investments in a fund that would be used to buy properties on the East Coast after it raised $1.5 million. McClay raised $775,000 and then simply ran off with the money, according to investors.
Their lawsuit accuses McClay of a long list of offenses, including securities fraud, wire fraud, theft, fraudulent transfer and fraudulent concealment. Also named as defendants are Joseph Gould, who is the chief operating officer of McClay’s Clear Creek Co., and Marc Simpson, who allegedly co-operated the East Coast fund alongside McClay and Gould.
Gould, of Aurora, did not respond to emails and phone calls requesting comment last week. Contact information for Simpson, who investors say lives in Virginia, could not be found.
McClay’s mother, Beverly McClay, is also accused of unjustly enriching herself through a fraudulent transfer. Investors say that her son gave her assets in order to hide them from investors and “impair their ability to enforce any judgment or to collect any debts.” Beverly McClay did not respond to phone calls and voicemails requesting comment.
Sean McClay similarly did not respond to several phone calls, voicemail messages and emails seeking his side of the story. Neither did his attorney in Denver, David Wollins.
In addition to an undetermined amount of money from the defendants, the investors are also asking Judge Elizabeth Volz in Centennial to let a receiver manage the properties that McClay and other defendants allegedly bought with the investors’ money. The defendants are collecting rent on the properties but not paying taxes or reimbursing investors, they say.
Some of the properties have been foreclosed on. COST Fund, a local short-term lender, has already won two court judgments this year that allowed it to take a house in Denver and another in Centennial after McClay defaulted on half-million-dollar promissory notes.
Elsewhere, subcontractors say they aren’t being paid. Boulder Engineering Co. won a $27,000 judgment against McClay, Gould and Clear Creek Co. in early May after being stiffed on several projects. And a sprinkler installer said it is owed $87,000 by McClay and Clear Creek Co., so it sued the two on May 9, the same day that investors sued them.
Expensing a funeral
Meanwhile, in Leadville, jurors are scheduled to gather July 31 and decide, after a five-day trial, whether McClay and a former company of his defrauded taxpayers out of $431,000.
McClay and Peak 360 Services, a defunct company he allegedly co-owned, are being sued by Lake County, which awarded Peak 360 a $1.4 million contract to build a fire station in 2018. The shoddy work that followed failed to meet building codes, the county says.
After work stopped, an audit determined that taxpayers had been overbilled $430,687, including $197,967 for labor and materials that were never delivered, according to the county. McClay and Peak 360 also fraudulently billed taxpayers for groceries, hotel stays and their company’s ads, as well as the funeral expenses for a friend’s family member, Lake County said.
The county is making eight claims against McClay, Peak 360 and another co-owner of the company, including breach of contract, negligence and fraud. Its lawyers plan to ask Lake County jurors to award it punitive damages “for defendants’ fraudulent conduct.”
McClay and Peak 360 have denied all wrongdoing and are countersuing the county for ending their contract and not fully paying Peak 360 “for its work on behalf of the citizens of Lake County.” McClay also denies that he ever co-owned Peak 360 or controlled its finances.
The fire station was initially supposed to open in 2019 at a cost of $1.4 million. Instead, it will open next month at a cost of $2.1 million, Commissioner Kayla Marcell said.
“Lake County has projected its damages from Peak 360’s defaults under the construction agreement to equal almost $525,000 of the increased cost,” she said.
