Two indicted for investments fraud

MISSOULA - Two former Kalispell men have been indicted by a grand jury on charges of fraud related to securities sales.

David Tacke, 46, and Curtis Barton, 48, appeared in federal court in Missoula on Thursday before U.S. District Magistrate Bart Erickson. They pleaded innocent to 12 felonies each. If convicted, they face up to 130 years in prison.

They are charged with mail fraud, wire fraud and money laundering in a high-stakes, high-tech business.

According to the indictment, the men collected about $4 million through the sale of unregistered securities as investments in a business called VenueTech System and its subsidiaries.

The indictment sets out this chronology:

. In 1981, Tacke incorporated Sports Eye Systems Corp. in Montana. The company was to develop and sell a binocular vending unit to be installed beneath seats at major metropolitan sports stadiums and arenas.

. In 1984, two investors complained to the Montana State Auditor that they never received stock certificates for their investments.

. In 1985, the auditor's office ordered Tacke and his corporation to stop selling securities. It found that Tacke is not registered as a broker/dealer or salesperson as required by law; the securities are not registered as required; Tacke failed to provide investors with disclosures on the financial status of the company, its officers and the use of investors' funds, as required; Tacke failed to provide stock certificates to investors; and Tacke offered stock in lieu of paying debts to creditors and employees.

The cease-and-desist order also alleged that investors were not told about numerous lawsuits against Tacke - including three in Canada, seven in Seattle and King County, Wash., five in Lake County, three in Flathead County, one in Illinois, one in Colorado and one in Pennsylvania. There were also nine state and federal tax liens and nine other liens.

. In 1989, Tacke incorporated Binoptic International Corp. in Montana, with the same business plan as Sports Eye's. He listed a business address in Polson and had the corporate stock traded on the Canadian stock exchange. Those securities were also not registered.

. In 1994, Tacke incorporated Binoptic International Operations, Binoptic International Corp. and Binoptic European Operating System in Montana.

. In 1995, the Alberta Securities Exchange Commission ordered Tacke to stop trading, citing violations of Canadian securities laws.

. In 1998, Tacke began selling securities for a business called Binocs System Corp., a Delaware entity that was incorporated in 1999 with its principal place of business in Kalispell. It was qualified to do business in Montana.

. In 1999, Tacke established Quelle Development Corp. in Montana. It was never registered to do business in Montana.

. In 1999, Tacke incorporated VenueTech Systems and Techware Solutions Inc. in Delaware and they were qualified to do business in Montana in 2000.

Tacke was listed as president and CEO of all the entities - all with the same business purpose.

From mid-1998 to at least December 2002, Tacke and Barton sold securities to about 266 investors in 13 states, including Montana, Idaho, Washington, California and Utah. Like Tacke, Barton is not registered as a salesperson as required by law.

The men never disclosed the cease-and-desist orders issued in Canada and by the Montana State Auditor, the financial condition of VenueTech and its subsidiaries, that the stocks were not registered as required, and that a portion of the securities would be spent on speculative stock trading and for Tacke's personal benefit.

In February 2002, the chief financial officer of VenueTech and its subsidiaries revealed a balance sheet that listed more than $2.152 million in total liabilities and virtually no assets.

The men are charged with mail fraud for reportedly communicating about the scheme through mail. The wire-fraud charge is for alleged interstate wire communication about the scheme.

The 10 money-laundering counts stem from transactions involving "criminally derived property" of a value greater than $10,000 with two bank accounts.

There is no trial date set.

Assistant U.S. Attorney Kris McLean is prosecuting the case for the government.