Published Jan. 23, 2005
Copyright by The Colorado Springs Gazette
By Bill Vogrin
ROATAN ISLAND, Honduras – A decade after Colorado Springs developer David Sellon stuffed dozens of suitcases with cash and disappeared — leaving family, friends and millions in debts — he has rebuilt his fortune on this tropical island and insists he was never a fugitive, only a victim.
The man, who sculpted neighborhoods from Rockrimmon to Cheyenne Mountain and who acquired millions in cash and a string of wives and powerful friends, tells a much different story about his dramatic fall and departure from Colorado Springs than government attorneys did in 1994 when they sued him for millions and accused him of fraud.
A tanned Sellon, 65, gazed out his office window this month at the Caribbean’s azure waters and pondered how dramatically his life changed after he left Colorado in 1994.
At the time, he had declared bankruptcy, given up his homes, art, antiques, furs, diamonds and vintage cars, and stopped fighting a federal civil fraud lawsuit related to $8 million in unpaid loans from failed savings and loans.
As white-capped waves broke across some of the world’s most spectacular coral reefs, Sellon talked for the first time to The Gazette about why he moved to Belize and, ultimately, to this tiny island that has been a haven for Americans in financial or criminal trouble.
“There are so many rumors about me that are not true,” Sellon said. Today, he is one of the richest, most powerful developers on this swath of rain forest poking from the Caribbean.
“I wasn’t running from anything,” Sellon said. “This was the best business option I had, and it turned out great.”
Roatan is about 40 miles long and three miles wide with a ridge of 900-foot-high mountains running its length. One paved road crosses it.
For decades, the island was known primarily by scuba divers, who treasured Roatan for its stunning coral reef. In recent years, its popularity has grown — driven by a cruise industry that brings ships several times a week — because of its beaches, resorts and climate.
Sellon was among the first to recognize its potential and today he presides over its transformation from his mansion atop a peninsula with 360-degree sea views.
The home replaced his 46-foot yacht, Shenanigans, which he lived on when he moved to Roatan. He has a new wife — his fifth — a successful business developing luxury seaside homes and condos, and has become a Honduran citizen.
Among island executives, Sellon is known and respected for his work and creating nearly 100 jobs. Unemployment here hovers around 27 percent, and many of Roatan’s estimated 40,000 residents live in poverty, especially in its largest city, Coxen Hole.
Sellon does not socialize much and is not close friends with many native Hondurans or other expatriates who congregate at places such as the Dive and Yacht Club in French Harbour.
In fact, he is something of a mysterious figure. Most islanders seem to know only what came from a news clipping fished off the Internet a couple of years ago.
The clipping prompted him to finally reveal pieces of his past to some associates, stressing he was not a fugitive and was never accused of a crime despite government allegations that he conspired with savings and loan managers to commit fraud, deceive regulators and violate banking laws.
Indeed, he is free to come and go from the United States and often does, living much of the year near Orlando, Fla., in a house bought by his wife in 2002. He even visits Colorado Springs, where he has been known to drop in for lunch with old colleagues.
A MODEST START
To appreciate Sellon’s comeback, it is necessary to look at his life during the 30 years before his financial flameout and disappearance from Colorado Springs.
In 1966, he was a University of Michigan architecture school graduate looking for a job. He and his first wife, Patricia, volunteered for the Peace Corps hoping to go to South America but were turned down because they had a baby.
So they left Michigan to seek work in San Diego and came through Colorado Springs, where Sellon saw an ad for a city planner. He interviewed and was offered the $6,000-a-year job.
After 14 months with the city, Sellon jumped to the private sector. By 1971, he was on his own, first as a consultant and then as a developer and custom home builder after he realized that “I was doing plans for other people, advising them on how to do their subdivisions, and they were making a lot more money than I was. I thought, ‘Why don’t I do this for myself?’”
Sellon developed his first project, Discovery, above a former coal mine south of Woodmen Road and west of Interstate 25, now known as Discovery in Rockrimmon. He laid out streets, parks, commercial and residential zones and home sites.
Sellon pushed his master plan through City Hall, earning respect from city staff for his skillful use of raw land. Many credit him with pioneering the concept of preserving distinctive rocks and mature, native scrub oak and pine trees, and designing streets and homes to complement terrain.
His neighborhoods featured underground utilities and community-owned open spaces, trails and parks, as well as homeowners associations and strict covenants to preserve property values.
His business, wealth and power expanded quickly. His land purchases became more ambitious. He took over Crystal Hills near Manitou Springs, bought 180 acres and created Top of Skyway, acquired 900 prime acres around The Broadmoor resort and the 560-acre Neal Ranch at the base of Cheyenne Mountain, which would become the Broadmoor Bluffs, Hills, Oaks and Spires neighborhoods.
“He was very good at what he did,” said Steve Tuck, a city planner who was a city land-use reviewer in the 1980s when he met Sellon. Tuck worked for Sellon from 1986 to 1989, before returning to the city.
“He knew how to work the system,” Tuck said. “He was extremely politically savvy. If he had a disagreement with city staff and took it to the political process, you could guarantee he was going to win.”
After 10 years of building his company, Sellon owned 1,500 acres and had debts totaling $18 million. His personal wealth peaked at $8.5 million in 1988, according to court documents.
He wielded great influence at City Hall, was a force behind the Housing and Building Association and had a high profile in elite social circles. He’d even branched out and was developing condos in Belize with a partner, William “Tex” Province, a Colorado Springs developer and former Planning Commission member.
Sellon, like other developers, amassed vast acreage, speculating that the boom would continue, fueled by generous savings and loans that invested wildly in real estate. In 1981, it began to crash when inflation hit double digits and the prime lending rate soared to 21.5 percent.
Recession followed. Property sales plunged. Suddenly, large inventories of land and buildings sat empty across Colorado Springs and the nation. But the bills kept coming. A meltdown was inevitable.
By the mid-1980s, the nation’s savings and loan industry collapsed. Colorado Springs was known nationally as the epicenter of the crisis, with four local failed S&Ls among dozens nationally that chalked up more than $1 billion in losses in Pikes Peak-area real estate loans.
Congress created the Resolution Trust Corp. in 1989 to take control of failing S&Ls, stop the economic bleeding and liquidate their loans. In El Paso County, RTC took possession of more than 850 homes, 21 percent of the area’s apartments and 12 percent of its office, industrial and retail space.
Many developers and builders went out of business. Among the biggest failures was developer Frank Aries, who bought the 20,000-acre Banning-Lewis Ranch east of the city and ultimately lost it, defaulting on a $240 million loan in 1989.
Others struggled, including Sellon, who scrambled to reduce his inventory and $18 million debt to five S&Ls. He started missing payments on land, and one S&L sued him for foreclosure. He negotiated loan extensions and settled others loans by returning land, including $2 million in property to The Broadmoor.
Meanwhile, from 1990 to 1992, Sellon said, he repaid half of his $18 million debt by giving the RTC 60 percent to 90 percent of his business’ profits. He tried to extend his RTC loans.
“For two years, I worked to repay them,” Sellon said. “I paid them down to less than half the total. If they had just left me alone, I’d have repaid the entire $18 million.” Instead, RTC demanded payment in full, which Sellon found impossible. His inventory was seized and liquidated.
“They sold many of my lots for 17 cents on the dollar,” Sellon said. “It wasn’t just me, they were doing it to everybody. They were forcing everybody into bankruptcy.”
Something they didn’t do to every developer was sue them for civil fraud, but the RTC went after Sellon, accusing him of conspiring with managers of the defunct Otero Savings and Loan to commit fraud, deceive regulators and violate banking laws.
The RTC alleged that Sellon bought 648 acres in Pueblo from Otero in 1986 for $3.2 million, twice the market value, so the S&L could report a $1.5 million profit and hide its deteriorating financial position.
“I had no idea, and still don’t have any idea, what was wrong with the documents,” Sellon said. “My attorney always believed that because the RTC had given a lot of developers immunity, they needed somebody’s hide to tack to the wall. I was that hide.”
In April 1994, the RTC asked a judge to freeze Sellon’s assets and filed another lawsuit alleging that he transferred property to his sons, David II and Jon, and carried large amounts of cash in briefcases to Belize and Honduras.
In August 1994, Sellon filed for bankruptcy — from Belize. His fortune was gone. In his filing, he counted $11.1 million in debts and $1 million in assets, including a $46,000 monthly salary, two office buildings and stock in a Belize resort. Finally, in May 1995, he gave up. By then, Sellon said, he knew he was going to live and work in Central America.
Why should he return, Sellon said. Money earned in the United States beyond his living expenses would have to be turned over to the RTC to satisfy the $10 million judgment the government won against him.
“They beat me, right?” Sellon said in a recent phone conversation — a follow-up to the interview on Roatan — as he sipped wine in his Florida home. “They won the lawsuit because I ran out of money to defend myself.
“Under the circumstances, I decided to continue and focus on my efforts in Central America.”
It was a coincidence, he said, that he had started building condos in Belize, which does not have a law enforcement treaty with the United States, so collecting the judgment would be almost impossible.
In 1998, the government sold its judgment to National Loan Investors, an Oklahoma City bill-collection agency, for $1.4 million and closed its books on Sellon. NLI sold what assets were left and wrote off the loss.
“This is a classic case of the big bureaucracy wasting taxpayer money,” Sellon said. “I could have paid that $18 million. “What a waste.”
One reason Sellon agreed to talk to The Gazette in his office on Roatan is that he wants people to know he’s not a crook.
“I was never charged criminally,” he said. “It was strictly 100 percent civil. I was never accused of a crime.”
What about the transfer of assets? The flight to Belize and applying for citizenship there? The suitcases of cash?
Sellon says RTC attorneys misrepresented his actions. Although he acknowledged he carried cash to Belize — the government said eight times a year beginning in 1990 — Sellon insists it was legal.
Every suitcase, he said, held less than $10,000 — the threshold at which the cash must be declared.
“You can say the suitcases were half-full,” Sellon said, stressing that he never mixed cash intended for Colorado projects with cash for Belize projects.
“There were no suitcases full of personal cash,” he said repeatedly, leaning toward his desk and pointing his finger for emphasis. “It was money clients gave me to build condos for them in Belize. It was never cash from projects in Colorado. I (carried cash) to get a better exchange rate from the banks in Belize.”
He said he obtained Belize citizenship in 1989 to lower his tax bill in Belize, not because the country did not have treaties with the United States to enforce court judgments.
“That was a business decision,” Sellon said. “I did it to save money.”
Sellon admitted that he decided not to return from Belize when his attorneys filed for bankruptcy. Nor did he contest or appeal the $10 million government judgment against him. But he insists he didn’t disappear overnight to escape his debts, as RTC attorneys charged.
“I didn’t just leave one day,” he said. “It was a transition. It was more gradual than that. “I wasn’t running from anything. I made a personal and business choice to try a new adventure. A new life. Obviously, the one had run dry in Colorado Springs.”
The $10 million judgment?
“That’s news to me,” Sellon said. “I never knew there was a judgment against me. My attorney said they just dropped the lawsuit. I thought they gave up.”
CHANGES KEEP COMING
Sellon was busy rebuilding while the U.S. government wrapped up its case against him. He lived in a friend’s guesthouse in Belize. After a year or so, an acquaintance, Canadian developer John Edwards, lured him about 90 miles across the Caribbean to Roatan.
Edwards was developing an oceanfront hotel and wanted Sellon to see the island, convinced it would be a great place for luxury homes, condos and hotels. Sellon visited, agreed and joined Edwards there.
In 1996, they created Parrot Tree Plantation, a gated community of luxury homes, including Sellon’s 5,000-squarefoot ridgetop mansion with a detached guest house and pool.
In Roatan, Sellon met a secretary and single mother of two, Honduran Diana L. Hunt, now 41. In 1999, she became his fifth wife.
A short time later, Sellon and an old Colorado Springs colleague, Jon Campbell of Campbell Homes, bought 133 acres for $2.5 million on the island’s northwest side known as Lawson Rock. Campbell’s son, Scott, also is a partner in the project, Sellon said.
In some ways, the property — with 3,000 feet of palm-lined beaches and coral reef — was far superior to Parrot Tree. Still, Lawson Rock’s value wasn’t obvious to most.
“It was nothing but thick bush you could hardly get through,” said Mary Mason Monterroso, an agent who had been trying to sell the parcel for three years. “David saw it and fell in love with it.”
Sellon wasted no time developing it, building a 400-foot pier and marina and clearing the forest to reveal gently sloping land with stunning views. His initial 40 home sites sold quickly. The development includes a 6,000-square-foot mansion being built by Scott Campbell.
In March 2003, Sellon announced construction of the Lawson Beach Club, a condominium complex on 1,000-feet of beach that will have a lagoon, restaurant and water sports facility. Construction is under way on the initial 22 units and lagoon dredging.
“He’s a bright guy and a good planner,” said Edwards, his former partner. “David’s doing well now. He has made a speedy recovery in Honduras.”
LIFE IS GOOD
Sellon has recovered so well he now splits time between Roatan and the United States. In 2002, his wife bought a three-bedroom house in Montverde, Fla., northwest of Orlando, paying $164,000, according to property records. She receives a $25,000 tax break on the house, which requires her to live there at least six months a year.
The couple also own a 2000 Oldsmobile and a small, 10-foot boat. Her teenage children live with her and attend school in Florida. Sellon said he spends most of his time in Roatan, returning to Florida for weeks at a time and visiting his sons in Dallas and Colorado Springs.
“I get back to Colorado Springs about a half-dozen times a year,” he said. “I’ve gone back and driven through the old neighborhoods. I like to see happy families in nice houses, kids playing in the yards, stuff like that. It’s a very satisfying thing.”
In fact, life is full of contentment for Sellon. He said he remains a U.S. citizen, as well as a citizen of Belize and Honduras. He files an income tax report each year with the IRS, even though he has few U.S. assets.
“Of course, I declare my foreign income,” he said. “But everything is exempt up to about $85,000, and I don’t exceed that. But I still file the report.”
How can anyone say he’s a fugitive, Sellon argued, when the government knew where he was and what he was doing?
As for leaving a $10 million debt, Sellon doesn’t look back. He thinks it’s unfair to compare his situation to other developers, like Steve Schuck, who stayed and suffered and rebuilt their businesses. In fact, Sellon said he couldn’t work in the United States again after enjoying the freedom of developing in Honduras. “
I wouldn’t be able to handle the bureaucracy,” he said. “Today, I can have a subdivision surveyed, take it to a judge who puts it in the registry and that’s it. There’s no planning commission, no park board, no city council and no neighborhood groups. It’s delightful.
“It’s what we call developer heaven.”
That’s the view he takes of his life — from leaving Michigan and his many marriages to his business partnerships and leaving Colorado Springs.
“I have no regrets. Never,” Sellon said. “I think it’s really important in anybody’s life to move on from one phase to the next phase. It’s important to make those transitions.
“I worked hard, and I think I deserve this. In retrospect, I don’t feel good about what happened. But I feel good about the results. If the government hadn’t done that to me, I never would have had this kind of life. Life is good.”