First castle seized, and now race cars | PostIndependent.com
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First castle seized, and now race cars

The Internal Revenue Service has added a stable of eight NASCAR race cars to the assets seized in an ongoing fraud investigation of former Redstone Castle owner Leon Harte and his partners, according to a complaint filed in U.S. District Court in Denver on April 25.

In March, the IRS seized the 42-room Redstone Castle under allegations that Harte and his principal partners, Norman Schmidt and Peter Moss, through their Reserve Foundation Trust LLC, defrauded investors out of $20 million since 1999.

The IRA alleges they used $6 million of that money to buy the Redstone Castle in 2000, court documents say.



In April, the IRS seized the NASCAR race cars and related assets from Smitty’s Motor Sports Shop in Commerce City, court documents said.

Schmidt operates his investment business, Smitty’s Investments, from the same address, court documents said.



Internal Revenue Service spokesperson John Harrison would not comment on whether Harte was involved with Smitty’s Investments.

Schmidt and Harte could not be reached for comment.

The assets the IRS seized from Smitty’s Motor Sports Shop include 43 tires and four wheels, four transmissions, three radiators and oil cooler assemblies, nine rear-end gears, 34 jacks, two welders, four trucks and a tractor-trailer rig.

“The tractor-trailer has an extended cab, and a tile shower,” Harrison said. “They got it from another racing team.”

Court documents said the disbursements from proceeds of the alleged fraud allowed the principals of Reserve Foundation Trust, Smitty’s Investments, and a third firm, Capital Holdings, to purchase the NASCAR race cars and all the equipment necessary to support a NASCAR race team.

The NASCAR race circuit, best known for the Daytona 500, attracts millions of spectators a year.

The three investment firms under investigation allegedly offered high-yield financial instruments called prime bank notes, with a promised return of up to 100 percent per month.

“Typically, the operators of the fraud scheme will indicate that they are operating outside of the normal banking channels, wherein they may obtain … financial instruments not normally available in the usual investment circles,” court documents said.

The FBI continues to investigate the case, Harrison said, and no charges have been filed.

Harte’s former wife, Debbie Harte, closed the Redstone Castle’s bed and breakfast operation last fall. Due to the IRS seizure, the castle has not reopened.

Harrison said he is meeting with Redstone residents to discuss keeping the historic structure open for tours this summer. Harrison said a federal judge will ultimately decide what happens to the 100-year-old castle.

In March the IRS also seized the Redstone Castle’s Carriage House parcel, and a structure at 410 Redstone Blvd.

Contact Lynn Burton: 945-8515, ext. 534

lburton@postindependent.com


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