Denver, CO – Charming Con-Artist in String of Scams Fled to Israel

Denver, CO – Arnold Zaler stood before a federal magistrate judge on the morning of March 11, about to pull off one of his best scams yet.

The businessman known to most as “Arnie” was charged with 30 counts of bank and wire fraud for a scheme involving his kosher hot dog company and Denver’s biggest sports venues.

If convicted, he faced more than 30 years in prison.

The judge, with no objection from prosecutors, set Zaler’s bail at $25,000, unsecured. Zaler could go free without posting any money or property, but he had to agree not to leave the state of Colorado.

That same day Zaler turned over his passport and temporary travel documents issued by Israel, where he has told people he has dual citizenship.

Thirteen days later, he boarded a Delta Air Lines flight in Atlanta, bound for Jerusalem, the FBI has since learned.

Authorities Colorado haven’t seen him since.

The slip didn’t surprise some people who know Zaler, nor some of his previous victims.

Since making an unsuccessful run for Denver City Council in the 1970s, Zaler has devised a string of creative and convincing schemes, swindling people out of millions of dollars, according to court records.

In the mid-1990s, for example, he convinced a disabled woman distraught over her daughter’s death. He took her for about $100,000, the woman told a judge in 1997.

He forged a U.S. senator’s signature on paperwork for business loans in Arizona and got his fraud trial there delayed by telling the judge his father had died – although he was very much alive.

And upon his return to Denver after serving time in an Arizona prison, Zaler persuaded some of the city’s brightest business minds – many of them fellow Jews moved by his commitment to the community – to invest in his latest venture.

Then, using a scheme almost identical to the one that landed Zaler behind bars in Arizona, he scammed them to the tune of more than $2 million, prosecutors say.

The U.S. Attorney’s Office has since started the process of trying to have Zaler extradited from Israel to the United States, spokesman Jeff Dorsch ner said this week.

But doing so is complicated. It requires the involvement of the Department of Justice, the U.S. State Department, the American Embassy in Israel and the Israeli government.

“It’s a slow process,” Dorschner said.

Meanwhile, sources in Israel said this week that Zaler is living free in Jerusalem, looking for money to open a new restaurant.

Smooth operator

Much of the 59-year-old Zaler’s success – legitimate or not – can be attributed to his uncanny ability to charm.

Described as an eloquent speaker who is highly personable, Zaler knew how to tell people just what they wanted to hear, several people close to him said.

Among the Jewish community, he spoke fervently of his love for Israel. He sometimes flashed photos of himself with well-known politicians, including former President Jimmy Carter.

Outside the federal courthouse in Denver before his March 11 court appearance, Zaler said he wished he could talk about the allegations but that his attorney wouldn’t let him.

He then said he regretted that the story of his indictment had been in the newspaper and could be hurtful to his two children. A family member later said Zaler has been estranged from his kids for some time.

Zaler grew up in Denver, where his grandfather ran a kosher deli for more than 50 years.

After graduating from North High School in 1967, he went to the University of Colorado, where he became a leader in the left-wing group Students for a Democratic Society.

It was a tumultuous time, and Zaler started making his first headlines – he faced expulsion for holding an unauthorized meeting after SDS had been banned from campus and led a group of students who tried to disrupt ROTC drills.

He later left the SDS, saying he didn’t agree with the violent turn it was taking nationally.

By then Zaler had caught the politics bug. In 1974, he quit his job as a traveling salesman for a company that made Snoopy toys to work as an unpaid volunteer for Gary Hart’s bid for U.S. Senate.

Five years later, at just 29, he challenged a longtime city councilman nearly 40 years his elder for a chance to represent an east Denver district.

During the campaign Zaler touted his role in raising money for Denver’s Babi Yar Park, a memorial to the 100,000 people killed and dumped in a ravine in the Ukraine by Nazis and their collaborators. Several people confirmed that he did indeed raise money for the park but that his role was likely minor.

Zaler lost the election. He soon turned his sights back to making money, this time in Arizona.

‘Something’s wrong’

Zaler and his then-wife moved to the Phoenix area in the early 1980s.

Looking to capitalize on the “computer revolution,” they started a company called Softie and began creating computer games that were educational and nonviolent, Zaler told The Arizona Republic. They included versions of Wheel of Fortune and The New York Times crossword, he said.

As in Colorado, Zaler was active in the community. He started a group that pushed to get the state to recognize the federal Martin Luther King holiday, and he was a member of the Phoenix Jewish Federation.

At one point his name was floated as a possible candidate for Congress.

Among his connections Zaler also found investors. He told them he had more orders for computer games than he could fill, with companies like MTV, Nickelodeon and Merv Griffin Enterprises, court records show.

Zaler told investors their money would finance the production of the games and result in quick profit.

According to the The Arizona Republic, he predicted gross revenues of $5.7 million in 1993 and $11.4 million in 1994. In reality the company was losing money, and sales never exceeded $500,000.

Prosecutors said Zaler faked orders and befriended a manager at a local bank, who would vouch for the company’s financial standing if any investor questioned it.

Investors sued in 1994, and Zaler left the state, spending time in Denver and Israel, according to The Arizona Republic.

Maricopa County prosecutors concluded the business was a pyramid scheme, and in 1996 Zaler was charged with more than 50 counts of fraud and other crimes. Authorities said he bilked at least 15 investors out of more than $15 million.

He also was charged with selling $35,000 in fake Arizona Cardinals and Phoenix Suns tickets.

The following year he was sentenced to 14 1/2 years in prison.

Zaler told the judge he had been afraid to tell friends and family that he couldn’t make the numbers, according to a newspaper account. He said he was a changed man.

But he also implied that his investors should have been more skeptical.

“Somebody should have said ‘Something’s wrong with this picture,’ ” Zaler said.

Back in Denver

With credit for time served and good behavior, Zaler was paroled in 2002. He returned to Denver, where he decided to get back in the old family business.

He also began ingratiating himself back into the Denver area’s Jewish community.

The color scheme inside Zaler’s Kosher Meats in Tamarac Square was blue and white, to show his support for Zionism, and he used the same logo his father and grandfather had used, according to a news story at the time.

He donated gift certificates to Jewish charities, and sponsored events such as a Jewish family picnic and a soup kitchen to raise money to end hunger in Israel.

In a story about the deli posted on a Web site run by the Allied Jewish Federation of Colorado, Zaler said at least five rabbis had announced the opening of his deli from the podium of their synagogues.

In 2005, Zaler got a contract to open a concessions stand at the Pepsi Center. He also had stands at Coors Field and Invesco Field at Mile High.

Zaler’s contact at the Pepsi Center was a salesman named Ryan Smith, who worked for arena operator Kroenke Sports Enterprises.

Zaler recruited Smith to help with his scam, just like he had the Arizona bank manager, and he turned to his friends in the Jewish community for capital.

In a plea agreement filed this year in federal court, Smith admitted he and Zaler falsified purchase orders for hot dogs to be sold at the Pepsi Center then used the fake orders to persuade people to invest.

When investors demanded more documentation, Zaler and Smith faked delivery confirmations and letters from higher-ranking Kroenke Sports employees, Smith admitted.

The paperwork stated that Kroenke Sports would pay for the hot dogs up front, which the company does not do.

When one of the investors, Jay Spivak of Spivak Funding, grew angry that he wasn’t being paid, Zaler said he would set up a meeting with Kroenke Sports owner Stan Kroenke, according to the plea agreement.

Zaler later lied and told Spivak that Kroenke – with whom he never spoke – had canceled the meeting because he needed more time to gather money, which was a lie.

He also said Kroenke was refusing to speak to Spivak by phone.

A few days later, the jig was up.

One of Spivak’s partners called Kroenke Sports’ general counsel, who informed them that the company hadn’t been buying hot dogs from Zaler.

Spivak filed a civil lawsuit against Zaler in 2006.

The following year, well-known Denver developer Jordon Perlmutter also sued, saying Zaler had taken him for more than $300,000.

The federal indictment handed up in March accused Zaler of taking more than $2.2 million from investors based on the fake orders.

It named Donald Slupsky and MEP Group as additional victims, and said Zaler also committed fraud on his own, faking orders for hot dogs at places such as Target and Invesco Field.

Still seeking investors

Smith was fired from Kroenke Sports four days after Spivak’s attorney called the company lawyer.

This year he entered a guilty plea in federal court. He was sentenced to five years of supervised release and ordered to pay $2 million of restitution.

The FBI learned of Zaler’s whereabouts in April after a Denver-area man reported that his daughter met Zaler while eating in a restaurant in a Jerusalem hotel.

Zaler told the young woman he was “making aliya”, according to an affidavit filed in federal court by an FBI agent.

It’s unclear whether Zaler flew to Israel using travel documents other than those he turned in to the court or if he used a different name.

This week, two people who have met Zaler in Jerusalem said he is planning to open a restaurant there next month.

One person said Zaler has befriended several wealthy businessmen and is trying to get them and others to invest in his latest project. Among his main selling point, the person said, are tales of his success in Denver.