In the months before Don Richard Iley’s accounting firm unraveled in bankruptcy, the Parker resident now charged with stealing millions of dollars from his small business clients allegedly paid off payroll clients and a colleague hip to his scheme.
That’s according to a lawsuit filed last week by Tom Connolly, the court-appointed trustee tasked with recovering money from Iley since his alleged victims – mostly local small businesses – forced the accountant and his firm into bankruptcy in December 2015.
Now Connolly is trying to claw back $688,000 from Iley & Associates consultant Fred Anzman, who sold his practice to Iley in 2014. The lawsuit, filed Feb. 24, also claims Iley paid $2.7 million to former clients that knew about his scheme.
Those funds, if successfully recaptured, will be a drop in the bucket compared to what Iley allegedly pilfered. By Connolly’s count, Iley & Associates collected $14 million from payroll clients from April 2012 through 2015, funneling $1.2 million to the IRS and using the rest on business and personal expenses like his mortgage. In August, a federal grand jury in Denver indicted Iley on 32 criminal counts of fraud.
Connolly argues that Anzman should have known about Iley’s alleged fraud when he sold his CPA client list to Iley & Associates and became a consultant to Iley’s firm in August 2014. By that time, consumer complaints had twice prompted state regulators to fine and sanction Iley publicly.
According to the complaint, in the months after the deal closed, Anzman demanded that Iley double his salary and advance him more than $100,000 to pay for his book of business, even though the pair had agreed to smaller monthly payments.
After a client presented Anzman with evidence of Iley’s wrongdoing, Connolly says, Anzman went through with a November 2015 deal to get an additional $150,000 from Iley & Associates.
“Anzman had actual knowledge of Iley’s fraud no later than September or October 2015 and should have known of Iley’s fraud long before September 2015,” Connolly writes in the complaint, filed in Denver bankruptcy court.
Neither Anzman nor Iley returned calls seeking comment.
Anzman is the former owner of Deli Tech, a now-defunct sandwich and knish spot in the Denver Tech Center. In 2004, then-Denver District Attorney Bill Ritter charged Anzman with cocaine possession and unlawful sexual contact with a patron dining in his restaurant.
Those charges were dismissed three years later. Anzman filed for personal bankruptcy in 2009, reporting that he owed $1.4 million.
According to court documents, Anzman picked up his old book of business following the collapse of Iley & Associates. Records from Colorado’s State Board of Accountancy show that Anzman’s state CPA license is expired. Both Anzman and his CPA firm, Business Accounting & Tax Services, were disciplined and fined by the state accounting board in 2011 for operating without a license.
Many of the local small businesses that trusted Iley to pay their employees and remit payroll taxes to the state and federal government are still waiting for their dues.
The bankruptcy claims against Iley & Associates have mushroomed to over $22 million, according to court documents. The majority of those claims were filed by former Iley & Associates payroll clients, like Under the Umbrella Cafe and Bakery in Congress Park and liquor store Grape Expectations in Park Hill.
Connolly has said that Iley & Associates’ alleged fraud likely exceeds the business’s legitimate revenue.
Gary Lozow of Foster Graham Milstein & Calisher is representing Iley in his criminal case. In the bankruptcy, Shaun A. Christensen and Peter J. Lucas of Appel, Lucas & Christensen represent Iley, and Kenneth J. Buechler of Buechler & Garber represents Iley & Associates.