Disappearing act latest in Denver man's schemes
By Sara Burnett, Rocky Mountain News (Contact)
Published December 26, 2008 at 3:05 p.m.
Photo by Darin McGregor © The Rocky
Arnie Zaler, left, owner of Zaler's Kosher Korner, checks in on one of his hotdog stands just before kickoff at Invesco Field at Mile High in Denver on Sunday night, Dec. 3, 2006.
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 bond 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 airlines flight in Atlanta, bound for Jerusalem, the FBI has since learned.
Authorities here 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, according to court records, news accounts and interviews.
In the mid-1990s, for example, he persuaded a disabled woman distraught over her daughter's death that he wanted to marry her, then 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 — though 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 Dorschner 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 about his love for Israel. He sometimes flashed photos of himself with well known politicians, including former President Jimmy Carter.
Married and divorced three times, one news story from the 1970s city council race noted he liked to wear his shirt unbuttoned and had no trouble picking up women.
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 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 200,000 people killed and dumped in a ravine in the Ukraine by Nazis and their collaborators.
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 non-violent, Zaler told The Arizona Republic. They included versions of Wheel of Fortune and the New York Times crossword, he said.
Just 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 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 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 concession 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 earlier 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 convince 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 Jordan Perlmutter also sued, saying Zaler had taken him for more than $300,000.
Both Spivak and Perlmutter declined to comment for this story.
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.
Earlier 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 in restitution.
The FBI learned of Zaler's whereabouts in April after a Denver area man reported that his daughter, who is studying at Hebrew University in Israel, met Zaler while eating in a restaurant in a Jerusalem hotel.
Zaler told the young woman he was "making aliya" — Hebrew for moving to Israel, according to an affidavit filed in federal court by an FBI agent.
It's unclear if Zaler flew to Israel using travel documents other than those he turned in to the court, or if he used a different name to board the flight.
This week, two people who have met Zaler in Jerusalem told the Rocky Mountain News 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.
Arnie Zaler timeline
1967: Zaler graduates from North High School in Denver and enrolls at the University of Colorado, where he is an active member of the Students for a Democratic Society.
1974: Having developed an interest in politics, Zaler quits a job as a salesman and goes to work on Gary Hart's U.S. Senate campaign.
1979: Zaler runs for Denver City Council, but loses to incumbent Kenneth MacIntosh.
Early 1980s: After relocating to Arizona, Zaler starts a software company. He also begins a well publicized push for the state to recognize the federal Martin Luther King holiday.
1994: Investors in the software company begin filing civil lawsuits against Zaler, saying they are not seeing promised returns.
1995: Zaler is charged in Grand County, Colorado, with fraud by check after writing a bad $11,000 check to a ranch where he stayed with his girlfriend for two weeks. He is later arrested by the New York Port Authority.
1996: Arizona prosecutors charge Zaler with more than 50 counts of fraud and other crimes, saying his software business was a pyramid scheme.
1997: Zaler is sentenced to 14 1/2 years in prison.
2002: With credit for time served and good behavior, Zaler is released. He returns to Denver, where he later opens Zaler's Kosher Meats.
2005: Zaler gets a contract to sell kosher hot dogs at the Pepsi Center.
February: Zaler is indicted on 30 counts of bank, wire and mail fraud. The indictment alleges he lied to investors about contracts to sell hot dogs at Denver sports venues.
April: A federal judge issues an arrest warrant for Zaler after an FBI agent says he has fled the country for Israel, in violation of his bond.
Source: Court documents, Rocky Mountain News reporting.
Featured
-
DNC in Denver
Complete coverage of the 2008 Democratic National Convention.
-
The Crevasse
A five-part series that examines one tragic day on Mount Rainier.
-
Deadly denial
Sick nuclear workers applied for government compensation but most haven't seen a dime.
-
Final Salute
The Rocky followed Maj. Steve Beck as he took on the most difficult duty of his career.
-
'Colorado's burning'
Coverage of the state's worst wildfires.
-
Columbine shootings
Coverage of the April 20, 1999, shootings at Littleton's Columbine High School.
-
The Crossing
Colorado's deadliest traffic accident killed 20 children on Dec. 14, 1961.
-
Osveli's journey
Osveli Sales left Guatemala for a better life. Two months later, he came home in a box.
-
Wake for an Indian warrior
Oglala Sioux bestow a tribute to the first tribal fatality in Iraq.
December 26, 2008
4:03 p.m.
Suggest removal
Burt writes:
That's just how business is done in America. Bernard Zaler or Arnold Madoff, Zionist or Evangelical, money trumps ethics and morality. Capitalism is our true religion and foundation.
December 26, 2008
4:40 p.m.
Suggest removal
forty5ford writes:
These days in America, integrity and ethics don't mean a hill of beans to many ordinary people, business executives and corporations.
Rather, it's about people and corporations hoodwinking others and unjustly reaping financial in order to "get ahead in life" or become "king of the hill". Then their greed turns into more desperate acts and egregious demands. The mentality has become so pervasive that many it seems have chosen to scribe to the new business anthem of "if I can't beat them then I'll join them". Making an honest living these days is seldom heard of.
This country is in heap of trouble, and the bailouts have only further served to promulgate the fleecing the America. I'm afraid we haven't seen anything yet, which gives ample reasoning for the increase in gun sales.
December 26, 2008
4:50 p.m.
Suggest removal
HankReardon writes:
Seems like a perfectly ordinary slippery sneaky scumbag to me.
December 26, 2008
4:53 p.m.
Suggest removal
milehighman writes:
Burt, I couldn't have said it better myself.
December 26, 2008
5:11 p.m.
Suggest removal
HopiMedicineMan writes:
I knew Arnie at CU. He built a cult around himself as so many did at that time. I recall in these cell meetings he’d host on campus, he’d put a cigar in his mouth, hold up a book of matches and some blonde would light it. It was theater of the absurd. Everyone walked around with Che Gueverra T-shirts and berets. That childhood ego structure is now the power structure. As most people of the era, the first thing that came to mind when confronted with a pueblo Indian was peyote buttons. You get used to it.
December 26, 2008
5:14 p.m.
The_Punnisher writes:
(This comment was removed by the site staff.)
December 26, 2008
5:15 p.m.
Suggest removal
44roger writes:
I hope the next one they nail is kenneth Copeland...
December 26, 2008
6 p.m.
Suggest removal
Hope writes:
and YET...with this time-line of events and idictments...the court STILL thought he was worthy enough to be let out on his own?? Gee....who would have thought he would skip the country??? WHAT a SHOCKER!!
December 26, 2008
6:09 p.m.
DallasKing94 writes:
(This comment was removed by the site staff.)
December 26, 2008
6:36 p.m.
Suggest removal
infidel91 writes:
Burt, Zaler is no more a capitalist than you are.
December 26, 2008
6:51 p.m.
Suggest removal
tiburon49 writes:
I met "Arnie" when he was at CU and I was shopping for mischief. Did anyone ever think of asking him if he had knowledge of what happened to "Old Main" at CSU? Hmmmm......
Anyway, I agree with the HopiMedicineMan. Except I'm not real sure what he said......
December 26, 2008
7:02 p.m.
The_Punnisher writes:
(This comment was removed by the site staff.)
December 26, 2008
7:09 p.m.
Suggest removal
John_Galt writes:
Belonged to SDS in college. Not a surprise that he is just another liberal scam artist.
The biggest liberal scammer of all just got elected as president.
December 26, 2008
9:13 p.m.
Suggest removal
HopiMedicineMan writes:
Is it possible Israel is funneling money from American and European Jews for some paranoid defense fund? Arnie and Madoff are agents of this effort? (Who needs Ian Flemming when you've got me?)
December 27, 2008
2:32 a.m.
Suggest removal
BenchBoss writes:
Local scam artist attributed to international geopolitical maneuvers by highly imaginative Rocky bloggers.
Holy cow. I can't sleep but some of this definitely made me laugh.
December 27, 2008
10:12 a.m.
Suggest removal
knowitall writes:
A TRUE SHEISTER.....
December 27, 2008
11:16 a.m.
Suggest removal
hinona writes:
Zaler's mother died this past week. I don't think he made it back for the burial..
This guy goes free on a 25K personal bond, (no surety), with his past record.. Something is fishy..
How did he travel without a passport ?? smells funny...
I knew his family.. good people..a real slime bag of a son..
December 27, 2008
12:55 p.m.
Suggest removal
Ming writes:
Hey Burt & others; Zaler was with the SDS, a Marxist group and he worked for Gary Hart, a left of center senator. Could it be that this guy is a left leaning crook and not a capitalist crook? Wake up and smell the facts.
December 27, 2008
8:41 p.m.
Suggest removal
incognitoboy writes:
left-leaning, right-leaning, capitalist, marxist, blah blah blah.
none of that crap matters here, does it? either you live ethically, or you don't.
this guy was a massive thief, regardless of what his politics were, and as such he deserves to spend many, many moons behind bars. as do the ceo's of countrywide, bear stearns, et al.