Investigator says millions missing in Mark Dente alleged Ponzi ... - Akron Beacon Journal

A court-appointed investigator is starting to unravel the mystery of what alleged Ponzi scheme operator Mark Dente did with more than $100 million.

Investors from across the country expected Dente, who was then the boys and girls basketball coach at Copley High School, to use their money to buy and flip property. They were happy, at first, to make 8-12% (or 30% per year if they let it ride) for loaning Dente their money for 60 or 90 days.

Then, they say, Dente stopped paying them in late 2021.

In the next few months, investors filed nearly 100 lawsuits against Dente and his businesses, including AEM Services. The cases were consolidated into one. In June, a visiting Summit County judge appointed Mark Dottore, a Cleveland mediator, to find and recover the lost money.

In a recent interview ahead of the anniversary of his appointment, Dottore said his insight as the receiver has increasingly convinced him that Dente's real estate investment business was nothing more than a front for what's alleged to be one of the largest Ponzi schemes in Ohio history.

So far, $3 million to $4 million in assets have been identified — further evidence, Dottore said, that Dente was flipping cash, not homes.

After suing for control of financial records and winning an early judgement that's blocked Dente and his family from accessing AEM's bank accounts, Dottore and his team have found just 28 homes, mostly in Ohio but also in Arizona, Nevada, New York and Texas. Their sale has raised nothing close to the $109 million investors say they're owed.

With his fees coming out of the funds he recovers, Dottore must now decide whether to use limited resources to go further down the money trail.

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"I don't want to go out and blow a bunch of these people's money if there's nothing there," Dottore said of spending money to find more money.

But "it's got to be someplace," said the attorney who's worked seven Ponzi cases in his career.

With few assets to sell, receiver examines Mark Dente's deals

Ponzi schemes are investment scams that pay existing investors with funds from new investors.

In most Ponzi schemes, Dottore said it's easy to spot the money.

About the Mark Dente case: State accuses former Copley coach of Ponzi scheme that bilked investors out of millions

"It all went to, you know, cars, planes, women and everything else," he said.

Not this case.

Dente's vacation house in Portage Lakes was among the 28 homes sold. His remaining assets — a family home in Copley, four SUVs, a pontoon boat and jet ski, a Camaro and a Corvette — might fetch another $1 million. Dente allegedly used some of the $109 million to pay himself, his son and his employees at AEM, which had offices in Arizona and across the street from the Summit Mall. He also, according to Dottore's research, paid a college tuition bill and two mortgage payments when his personal home in Copley was facing foreclosure.

Some of these expenses, like the payroll, may be unrecoverable, particularly if Dente's business associates continue to file for bankruptcy protection as Jason Ramus, who ran business development and national wholesale at AEM, did last month. (A message was left with counsel for Ramus.)

But Dottore still believes he can retrieve a "decent chunk" of the missing $105 million as he focuses on the people and companies that made money through Dente's alleged Ponzi scheme.

California loan company, Arizona wholesaler and large investment 'finders' under scrutiny

Dottore's forensic accountants and investigators are looking into a California company called Key Trading. Dente told investors to take out loans from this company so they, too, could invest in his business, Dottore said.

Dottore said Dente paid the interest Key Trading charged on the loans, which raises concerns about his relationship with the California company. The Beacon Journal's attempts to reach Key Trading were unsuccessful. California companies with that name are now out of business or have non-working phone numbers.

Dottore is also looking into Dente's extensive business with KeyGlee, an Arizona company that sells regional franchises to property flippers. While few people owned more than two franchises, Dente bought 18 of the 110 available franchises, giving investors a "significant" impression that AEM was a legitimate business, Dottore said.

KeyGlee, which has not returned phone calls, charges $100,000 per franchise and a 15% fee for every transaction. In exchange, franchisees get a list of homes for sale in a specific region, plus people who will flip them, end buyers and technical support.

Franchise owners say they make bank deposits to KeyGlee and communicate all transactions using the company's software. Dottore said he's requested this information for the franchises Dente ran, which could serve as a ledger of AEM's business activity and how investor money was used.

Additionally, there are the "finders" who allegedly profited from lining up big-time investors. Dottore, on behalf of the investors, joined a lawsuit last month against attorneys Darrell L. Seibert II and Stephen Pruneski. Their attorney did not immediately return a call for comment.

Dottore alleges in court that Seibert and Pruneski, through SP Investment and a joint venture with Dente, raised $11 million from investors who are now suing. According to a contract between SP Investments and AEM, the two attorneys received 60% of the revenue generated on monthly investments of $2 million or more.

'It's all about greed'

Dottore is not ruling out the possibility of clawing back money from fortunate investors. These "net winners" cashed out before Dente stopped payments, before his business failed and investors started filing lawsuits.

The "age-old question," Dottore said, is "when did everybody know? You can kind of figure that out over time, and you watch somebody who starts getting a bunch of money at once, and they either are trying to exit or they figured it out and they just want to get out."

"I'm at the point now where there's some people I want to file lawsuits against," said Dottore.  "You'll probably see them shortly."

Operating on the premise that Dente's business was never truly about house-flipping, Dottore is uncovering layers of what he calls "ponzies within the ponzi."

Anyone who made anything on the $109 million in investments could get a legal notice from Dottore's office saying their earnings must be redistributed to the victims. This includes investors who cashed out while others rolled over their investments.

While Dottore assesses the number of net winners, he's already heard from nearly 700 alleged victims, from deep-pocketed investors and funds managed by financial consultants to working-class investors who borrowed or drained their life savings for a chance to make a profit.

"Every one of these, it's the same story. It's all about greed," Dottore said of Ponzi schemes.

He said he feels "so bad" for investors who "kind of got themselves into it."

How the alleged scheme ran on confidence

Dottore, attorneys for the Ohio Department of Commerce and investors who have filed lawsuits allege that Dente's business was not about real estate but to acquire new loans to pay off old ones. The insolvent and unsustainable cycle grew and grew like a textbook Ponzi scheme, they say, pressuring Dente to pursue bigger and bigger investments to keep up the charade.

And, according to Dottore's review of the tens of millions of dollars that ebbed and flowed from AEM's bank accounts each month, Dente was always building up confidence in his business.

If an investor needed $10,000, Dente would get them the cash almost instantaneously and without question, Dottore said. The quick, no-hassle checks Dente cut were used to calm other nervous investors.

Dente's "investor plan" touted home sales of 550 in 2018, 1,675 in 2019 and a projected 2,200 in 2020. When securing loans, he personally signed the promissory notes, which signaled to investors that the loans had such little risk that the man making them was willing to bet his personal finances on their success.

This kept on until the end of 2021. In emails obtained by the Beacon Journal, AEM executives told investors to stop bothering Dente and that payments would be late. In reality, they stopped altogether.

To this day, no one involved has admitted any wrongdoing. And neither Dente nor his company has been charged criminally.

Second Dente family business to fail

In court, Dottore has alleged that AEM is the second iteration of a failed Dente family company.

When that first company, Landmark Property Development LTD, crashed in 2008, Dente and his wife, Sharon, faced dozens of lawsuits from creditors and investors, including the IRS. And the bank filed to foreclose on their home in Copley, which was moved into a Dente family trust.

From these dire financial circumstances, AEM was born.

"Like Landmark did, [AEM] told investors that it would borrow money from them, then use that money to buy residential real estate, improve that real estate and sell it for a profit, thereby allowing it to provide a healthy (if not stellar) return on the investment in a short period of time," Dottore said in court. "The new twist for [AEM] was the representation that it engaged in real estate wholesaling — allowing it to conduct deals without ever actually purchasing a property."

Dente crossed the line, according to court records, when he used investor money for personal gain, paying his mortgage, buying a boat in his son's name and purchasing a vacation home — all just three months after a second bank defaulted on his family home.

'How big of a red flag is that?'

Dottore traced some of the money invested in Dente to a loan service company called Key Trading.

Investors who didn't have the cash to invest told the receiver that Dente steered them to this California company for a loan.

Key Trading would provide a loan at 6% interest, Dottore said. The investor would give the loan to Dente, who was promising a 30% return. On top of that, Dente would sometimes make the interest payments to Key Trading, meaning the investor could expect eventual profits with no expenses.

Dottore had to know more. So, he had his brother Tom — who also leads Dottore Companies with Mark and another brother — dig a little deeper.

"Now, this is crazy," Tom said after talking to investors in the case. "They gave [Key Trading] access to their computers so they could fill out their loan applications."

Tom couldn't find much online about the company, so he picked up the phone and used a number an investor gave him.

"I figured I'd call and I'll see if I can get a loan," he said. On the phone, he could "hear somebody knocking on an old screen door.

It sounded like "a sweatshop working from home," he recalled.

The woman wouldn't say much. But she did tell Tom that "we don't have a website."

"I'm like, Jesus God, how big of a red flag is that?" Tom said.

Some investors took out 10 or 15 loans and handed the cash to Dente, Tom said.

Reach reporter Doug Livingston at dlivingston@thebeaconjournal.com or 330-996-3792.