A man accused of defrauding dozens of investors, including former Denver Broncos quarterback John Elway, in a $71 million Ponzi scheme pleaded guilty Monday to charges of theft, securities fraud and violating Colorado's organized crime law.
In exchange for Sean Michael Mueller's plea, prosecutors agreed to drop one charge of theft and not seek more than 40 years in prison. In court, prosecutor Joseph Morales said the plea agreement also includes restitution, though outside of court, Morales said the dollar amount has not yet been determined.
Authorities say 65 people invested $71 million with the company over 10 years, but in April it had $9.5 million in assets and $45 million in liabilities. Morales said Mueller falsely claimed to have earned between $50 and $70 million on those investments.
Mueller, 42, appeared in an orange prison uniform and handcuffs and answered, "Guilty, your honor," when asked by Denver District Judge Martin F. Egelhoff how he pleaded to each of the counts.
Egelhoff ordered a presentence investigation, which will help determine Mueller's sentence. A sentencing hearing was scheduled for Dec. 6.
Morales said outside of court that Mueller might be eligible for probation, but prosecutors will seek prison time.
"It's a pretty big crime and it's a lot of victims," Morales said.
Prosecutors say Mueller sent fake monthly account statements to investors and provided his accountants with fake brokerage statements showing consistent returns. Instead of investing the money, prosecutors say, Mueller bought three homes, several expensive cars, exclusive country club memberships and spent money on daily expenses.
He controlled Mueller Capital Management LLC, which was seized by regulators in April after Mueller revealed to an employee and in a note to investors that his funds had "lost money from the start." He then threatened to jump off a parking structure before Greenwood Village police intervened.
"The confusion has finally won its battle with me, and I feel like there are no good options left," Mueller wrote in an e-mail April 22. "I always thought I could make it back, but that's not going to happen."
Outside of court, Mueller's attorney Richard Kornfeld said the guilty plea was Mueller's way of communicating remorse to his victims.
"That message started in April when he was on top of the parking lot," Kornfeld said. "And his agreeing to plead guilty continues that message. He's accepting responsibility."
Colorado Securities Commissioner Fred Joseph said investigators found that Mueller recruited investors through a network of car dealers that he knew.
Elway entered the auto business in 1989 while a quarterback for the Denver Broncos. He sold his five dealerships to Fort Lauderdale, Fla.-based AutoNation Inc. in 1997 for $82.5 million in a mostly stock deal and licensed his name to the company. That arrangement ended in 2006.
In court documents, Elway told the court that he and a business partner gave Mueller $15 million in March. Elway last month asked the court handling the civil portion of Mueller's case to put their claims ahead of other investors so they can collect their money first.
They said Mueller agreed to hold the money in trust until they agreed on where it would be invested.