Colorado Sen. Ben Nighthorse Campbell has asked a U.S. District Attorney to investigate Tom Chapman for fraud, following a tip from one of the developer's former business associates.
Chapman is notorious for starting to
build a massive, $1 million log cabin on a private inholding in the
West Elk Wilderness near Paonia, Colo. After much publicity and
long negotiations, Chapman agreed last fall to drop the project and
trade his West Elk Development Corp." s 240 acres to the Forest
Service. In return he would receive 105 acres of federal land near
the Telluride ski area in western Colorado.
Forest Service said it approved the land exchange because the
luxury cabin threatened the integrity of the West Elk Wilderness.
The agency appraised Chapman's property at
But former business associate David
Forrest of Laguna Beach, Calif., alleges that Chapman and another
partner, Carl Woerner, artificially inflated the value of the
wilderness inholding, and then began construction to force the
Forest Service to trade for much more valuable real estate near
Telluride or Aspen.
"Neither Mr. Woerner nor Mr.
Chapman had any intention of ever completing a structure on the
West Elks property," asserts Forrest, in a March 17 letter to
Forest Service Chief Jack Ward Thomas. "They believed that just a
few helicopter flights to bring in building materials would be
enough to convince the Forest Service that they would build if (the
agency) did not agree to a trade."
his employer were wooed as potential investors in the scheme. After
initial contacts with Woerner, Forrest says he met personally with
Chapman in Aspen in May 1992.
"He showed me a
map of the parcels he had identified as the most valuable
alternatives for the land trade. We reviewed his portfolio
describing how he had used a similar plan to sell a Black Canyon of
the Gunnison parcel for a client (Richard Mott). In the Black
Canyon deal he said he actually had to run the bulldozers for a few
days until the Park Service gave in and agreed to purchase the
Chapman told Forrest that he
originally chose the West Elk property because of its priority on
the Forest Service trade list. In 1989, Robert Minerich bought the
wilderness land from the Elliott Oil Company, with Chapman serving
as real estate agent and minor partner. However, Chapman explained,
Minerich owned a microwave company which leased land from the
Forest Service, and he was unwilling to take aggressive action
against the Forest Service.
According to Forrest,
Chapman and Minerich were seeking new investors. They asked him to
come in on a deal to buy the West Elk property for $240,000 in
cash, and $480,000 to be financed by
"It was my opinion that the price was
high, based on the county records indicating a 1989 purchase price
of the West Elk property by Mr. Minerich for $240,000," adds
Forrest. "Mr. Chapman explained that the price had to be high to
justify a higher value for a trade ... and contended that the Alta
Lakes property (which is currently proposed for the land exchange)
would be worth two to four times the West Elk Wilderness' purchase
price of $720,000."
Forrest says he terminated
negotiations with Chapman and Minerich because of the high risk and
disagreement over tactics. But Chapman found other investors and
formed the West Elk Development Corp. In August 1992, Chapman's new
corporation bought the West Elk land from Minerich for $300,000 in
cash, and a $660,000 note financed by
It is that transaction that Sen.
Campbell, D, wants investigated for fraud. "In effect, (Minerich)
sold the property to himself," said Campbell in a letter to U.S.
District Attorney Henry Solano.
ultimate goal was not the development of the property, but its sale
or exchange to the federal government, it was necessary to find a
way to inflate the appraisal," Campbell wrote. "In calculating the
fair market value the Forest Service appraiser will naturally look
at the last sale price - the artificially high price."
Opponents of the land exchange, who earlier
appealed the proposal to the Forest Service chief, have asked the
Internal Revenue Service to investigate as well. Both agencies are
currently evaluating the requests.
meantime, Forest Service officials say they stand behind the land
"We have a valid existing
contract with Mr. Chapman," says Jim Dunn, lands officer for the
Grand Mesa, Uncompahgre and Gunnison National Forests in western
Colorado. "We aren't interested in what happened in the past."
Dunn says the Forest Service appraisal did not
consider the $960,000 price claimed by Chapman or the $240,000 paid
by Minerich. "Our appraisal is strictly based on the 240 acres in
the West Elks and the 105 acres in Telluride. They are equal value
for equal value," says Dunn.
Chapman, who has
said that he sought a land exchange for the good of the wilderness,
failed to return calls.
* Steve Hinchman,