Trial begins in fraud case

MISSOULA - A federal jury will decide whether a Kalispell entrepreneur defrauded investors.

David Tacke was indicted by a grand jury on charges of mail fraud, wire fraud and money laundering.By CHERY SABOL

The Daily Inter Lake

MISSOULA - A federal jury will decide whether a Kalispell entrepreneur defrauded investors.

David Tacke was indicted by a grand jury on charges of mail fraud, wire fraud and money laundering.

Assistant U.S. Attorney Kris McLean and defense attorney Greg Jackson presented their synopses of the case as Tacke's trial opened Monday afternoon.

Tacke had the idea for a business that would manufacture binoculars for fans to rent at sports stadiums. They would be stored beneath the seats and secured by a cable.

As McLean tells it, Tacke fraudulently obtained investors' money.

But Jackson countered that there was no fraud by Tacke.

According to McLean, "We're not saying he didn't have a good investment idea," or that Tacke didn't have employees, a manufacturing plant or a product.

The way he lured in investors is what was illegal, McLean said.

Operating under a variety of corporations beneath the holding company, VenueTech System, Tacke did not register securities with the state auditor's office as required and was not registered himself to sell securities, McLean said.

He said Tacke also failed to provide investors with necessary disclosures (such as who the corporate officers were), detailed financial statements, how investment money was used, and any tax liens, prior judgments against the company, or government orders to stop selling the securities.

According to the indictment, that information includes 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 also were nine state and federal tax liens and nine other liens.

"This is the type of information an investor should be told about before they fork over

their hard-earned money," McLean said.

Tacke sometimes had investors write one check to VenueTech and another to a separate entity, called Quelle, which was not incorporated in Montana and was, according to McLean, Tacke's personal account. With money invested in the Quelle account, Tacke bought speculative stocks, clothing, a car, and a house, McLean said. About $1 million passed through that account, McLean said.

"That is in essence the nature of the scheme," McLean said. It was a plan to keep information from investors, get money, and "do whatever he wanted with it."

In fall 2000, an employee and investor in the company, along with others, made a report to the state auditor's office. A search warrant was executed on the company, with involvement by the auditor's office, local law-enforcement, the FBI and the IRS.

McLean said investors had spent about $3.6 million on the company.

"By Dec. 31, 2001, it was all gone," he said.

A bookkeeper at that time tallied VenueTech's holdings at negative $3 million, McLean said, and Tacke was still mailing newsletters and soliciting further investments.

Jackson, however, said he would show the jury "a very different version" of the story.

He said investors were excited about the new company and its potential. Tacke was working with Microsoft on developing hand-held ordering devices for food and beverages in stadiums, and the binocular vending business had been installed at Coors Field in Denver and Wachovia Center in Philadelphia.

There is no fraud, he said.

"Every penny of investors' money is accounted for," he said.

Tacke did have a separate account in an entity named Quelle, Jackson said. In that account, Tacke held a large block of shares in VenueTech. Because he was drawing no salary from his work in VenueTech, when he needed money, Tacke sold shares from the Quelle account, something he owned and had every right to sell, Jackson said.

Tacke undertook no fraud in terms of disclosure, he said. He believed registration was not required, Jackson said.

"Mr. Tacke provided in good faith a product that is in use today," Jackson said.

Chief U.S. District Judge Donald Molloy ruled Monday that the jury could not hear that in 1985, the state auditor's office ordered Tacke and his corporation to stop selling securities and that in 1995, the Alberta Securities Exchange Commission ordered Tacke to stop trading.

McLean cannot include that evidence in his case unless it comes up during the defense case.

Tacke is 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. Unless those charges are proven, the jury can't convict Tacke of money laundering.

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

The trial is expected to last two weeks.

Reporter Chery Sabol may be reached at 758-4441 or by e-mail at csabol@dailyinterlake.com