This is an archived article that was published on sltrib.com in 2010, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
Dwight Shane Baldwin, who runs a string of Salt Lake City venture-capital, private-equity and real estate companies, has been charged with securities fraud and theft, prosecutors said Monday.
Baldwin, 29, is accused of swindling two investors by promising huge returns and making other bogus statements that persuaded them to pour $200,000 into a California toy company, according to charging documents filed in 3rd District Court.
Instead, more than half was used for unrelated expenses that went to other Baldwin companies and for personal expenses, said Keith Woodwell, director of the Utah Division of Securities.
"I think this case boils down to not being honest with investors," Woodwell said. "If you tell investors that their money is going to be used for one purpose and you use it for something else, you've committed securities fraud."
Baldwin posted a $25,000 bond Friday. He is scheduled to be arraigned today on two counts of fraud and two counts of theft, all second-degree felonies. Each charge is punishable by one to 15 years in jail. He will turn himself into authorities after the arraignment, assistant attorney general Charlene Barlow said.
Baldwin wasn't available for comment Monday. He is represented by Salt Lake City lawyers Ed Brass and Kim Cordova.
"He maintains he's innocent of any criminal wrongdoing. In fact, he expressed some regret as to the timing of the charges because the matter was close to being resolved completely," Brass said Monday.
"He's been advised by a civil law firm and a securities lawyer for some time and thought this would be taken care of without the filing of criminal charges."
Baldwin is a co-founder of Silverleaf Companies, which has operated under various names -- SilverLeaf Ventures, Silver Leaf Capital Partners, Silver Leaf Capital Partners 1, Silver Leaf Development and Silver Leaf Realty, according to a probable cause affidavit filed Thursday by the Utah Office of the Attorney General.
During a three-month period beginning in December 2007, Baldwin allegedly urged Nicole Lindley and Matthew Lee to put money in Silver Leaf Capital Partners 1, or SLCP1, which wanted to invest in toy maker GarageCo, according to court documents.
Baldwin allegedly proposed to invest $1 million into the Woodland Hills, Calif., company. SLCP1 would own 80 percent of GarageCo. If Lindley and Lee each invested $100,000, each would own 10 percent of SLCP1, a shell company, and Silver Leaf would fund the remaining $800,000, according to the documents.
Baldwin allegedly told Lindley her money would be invested for three to five months, at most. Afterward, she would receive her investment, plus about $300,000 in profit, according to the documents.
Lee claims he was told his $100,000 would be repaid in four months and that he and Lindley each would be allowed to own about 17 percent of SLCP1.
Lindley became worried when Baldwin and an employee failed to provide her with weekly updates. She said Lee told her he had been to the company's office to look at its books and found that half of their investments had been used to pay expenses incurred by some of Baldwin's other Silver Leaf companies.
Court documents show money was spent for personal expenses, restaurants, advertising and insurance for Silver Leaf Development. About $37,500 paid for a party in Park City during the 2008 Sundance Film Festival. Another $6,600 was taken out in cash.
Baldwin has long been a subject of investigation by regulators. At the same time he was soliciting Lindley and Lee, Baldwin was also trying to persuade the securities division to approve his company's application for an investment adviser license.
The application was denied. Securities division investigators determined the request contained false and misleading information. Baldwin incorrectly represented himself and the company as being licensed before and during the application process, division officials said.