AG says Dover man ran Ponzi schemeBy DAVE SOLOMON
New Hampshire Union Leader
January 24. 2013 10:02PM
DOVER - A prominent real estate investor and former Dover School Board chairman was arrested Thursday and charged with operating a Ponzi scheme whose victims allegedly include a former Dover school superintendent.
Nickolas Skaltsis, 6 Erik Drive, was taken into custody after being charged by the state Attorney General's Office with 15 felony counts of theft by deception and four felony counts of theft by misapplication in connection with at least 21 unsecured promissory notes to 13 investors that raised $327,500, most of which was never repaid, according to a statement from the state Bureau of Securities.
The bureau alleges that Skaltsis told investors he would use the money to purchase, rehabilitate and then resell distressed homes in Strafford Country, promising rates of return between 12 and 14 percent. State investigators said that Skaltsis did not purchase and rehabilitate property, but instead "used new money to pay old debts, commingled investor funds in a personal account and converted investor funds to cash for personal use."
The bureau learned that on Oct. 12, Skaltsis was found by police in Wells, Maine, inside his vehicle with a generator running, in an apparent suicide attempt. He was reportedly taken to Southern Maine Medical Center in Biddeford and later released.
At the time of his arrest, he was being treated at the New Hampshire Hospital in Concord and was returned there after his arraignment Thursday in Circuit Court, Rochester, on personal recognizance bail.
In 2007, the state Supreme Court affirmed a lower court decision ordering Skaltsis to pay $703,504 on an unpaid promissory note from 1990.
"By the time he solicited investor funds in 2011, Skaltsis was already heavily in debt to prior secured lenders, prior investors and the $703,504 judgment against him," the bureau investigators wrote. "A review of his bank records shows significant credit card debt and very little disposable cash beginning in 2011."
The total owed by Skaltsis for prior investments, secured deals, personal loans and partnership deals was set at $428,250, not including a defaulted mortgage of $125,000 or the Supreme Court judgment, which combined would put his total debts at $1.2 million, according to investigators.
Skaltsis is facing enforcement action filed on Wednesday by the Securities Bureau requiring him or his business operations - Liberty Realty Trust and Phoenix Asset Group - to pay restitution to investors, the cost of investigation and administrative fines, while also barring him from conducting any securities-related business in New Hampshire. The bureau also obtained a court order freezing the assets of Skaltsis and his companies.
In a 15-page petition for relief, the Bureau of Securities staff outlines each investment, most in increments of $10,000, $15,000 and $20,000 from February 2011 to August 2012. The report follows the money in and then out of Skaltsis' accounts.
The petition describes what officials call "other suspicious activity," including solicitation of personal loans over the past three years and a mortgage deal that cost one investor approximately $125,000.
Skaltsis has a long history of community involvement in Dover. He was chairman of the School Board in 2002, on the Board of Directors for Dover Adult Learning from 2009-2011; and a member of the city's McConnell Center Advisory Board, according to Foster's Daily Democrat.
"If this turns out to be true, this is very unfortunate for a trusted person in the community to have taken advantage of people," Ward 6 City Councilor Michael Weeden told Foster's.
John O'Connor, who served as Dover superintendent of schools from 2004 to 2010, invested $15,000 with Skaltsis in February 2010, according to the Dover newspaper, which wrote on Jan. 18 that, "O'Connor even went so far as sitting outside Skaltsis' home this past summer in a lawn chair with a sign demanding Skaltsis return his money."
Eric Forcier, staff attorney for the Bureau of Securities, warned investors to be wary of high-return propositions.
"When someone offers investors an opportunity for a financial return that sounds too good to be true, it probably is," he said.