A 40-year-old former Gardnerville businessman who spent the last several years as a fugitive in Chile is set for a hearing Wednesday on three felony charges in connection with an investment scheme that allegedly bilked the victim out of more than $67,000.
Stephen J. Hadaway told East Fork Justice Jim EnEarl on Friday he may need a court-appointed lawyer if his family can't help him financially.
He was returned Wednesday to Douglas County Jail where he is being held on $100,000 cash bail.
EnEarl denied Hadaway's request that he be released on an electronic monitoring system.
"I don't know if you fled the United States trying to avoid prosecution, but your request for no bail is denied," EnEarl said.
Hadaway is charged with securities fraud, transacting business as an unlicensed broker/dealer or sales representative and obtaining money under false pretenses.
John P. Kelleher, assistant chief of the Nevada Attorney General's criminal division, said Hadaway faces up to 20 years on two of the charges if convicted.
Hadaway told EnEarl he went to Chile two years ago.
"I hear they threw you out of the country," EnEarl said.
Hadaway claims he contacted an investigator for the Nevada Secretary of State's office from Chile because he wanted to resolve his legal issues.
"Three weeks later the Chile police were at my door and told me I had 72 hours to leave the country," he said.
Charges were filed against Hadaway in 1999 by the Nevada attorney general's office.
According to court documents, the crimes allegedly were committed in 1996-97.
Hadaway is accused of setting up a business called OPM Asset Management. He reportedly talked the victim, whom he met while giving the man's son ski lessons, into making a $2,500 investment. A month later, he paid the victim $5,000 as a return.
A few weeks later, the victim asked Hadaway to invest $41,650. At that point, the victim's fortunes began to turn, but he still gave Hadaway money, according to documents, ultimately losing $67,150.
Hadaway was operating from a business at 1382 Highway 395, Suite 3, in Gardnerville and an office in South Lake Tahoe.
Kelleher described the transactions as a "Ponzi scheme."
"Basically, we believe he was telling the victim he was investing money in companies, but took some and put it in his own pocket and would use the new victims' investments to pay dividends to older investors," Kelleher said.
Even if the victims' had doubts about the investments, Kelleher said it's not unusual they would continue to give a suspect money.
"These people are fast talkers," he said. "What I see a lot is a suspect saying they've changed bank accounts, etc. The victims put so much money into the investments, they want to believe it's legitimate. It's kind of a denial."
According to the court documents, Hadaway is accused of using some of the victim's money to pay off an account at Harrah's. There is no proof he bought any stock.
Records indicate Hadaway's securities sales representative license issued by the state expired in December 1995. He also was the subject of disciplinary procedures by the National Association of Securities Dealers, according to court documents.
"The fact that we've been able to finally get him after almost a decade is encouraging to me," Kelleher said. "The ones, particularly, who steal a lot of money and flee the country without a concern for the victim, it lets them know that we take these charges seriously and will not give up pursuing them."
Bob Walsh, spokesman for the Secretary of State's office, said Hadaway was returned to California, where he also faces charges, by Chilean officials, then returned to Douglas County.
"I was a young guy. I made a mistake," Hadaway told EnEarl on Friday. "I have a wife and daughter in Chile and it's time I resolved my problems."
