‘A sad story of betrayal’: How a Colorado family real estate firm was gutted by a godfather [PAYWALL - ARTICLE IN COMMENTS]

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At 4:27 p.m. on Oct. 1, 2002, air traffic controllers lost radar contact with a single-engine Cessna as it made a circling descent through thick clouds northeast of Laramie, Wyo.

Search-and-rescue crews, working through the night, found its wreckage at 11 a.m. the next day, along with the body of its pilot and only occupant: 59-year-old Neal Smith II, president of the Denver real estate holding company that his grandfather had founded 75 years before.

The tragic crash set in motion a series of events that are still playing out 21 years later. They include the arrest and bankruptcy of his best friend, the plundering of his family’s century-old company and a financial scare for his widow, who is in a memory care facility.

“This case presents a sad story of betrayal,” said U.S. Bankruptcy Judge Elizabeth Brown.

Smith left behind four sons — Neal Smith III, Greg, Brad and Justin — who have, alongside their lawyers, spent the past several years piecing together how a $7 million company was all but wiped out by an embezzler who they have known and loved their whole lives.

“It just saddens me to no end,” said Neal Smith III, who goes by Tres. “Just heartbreaking.”

Living large

From first grade until the day that he died, Neal Smith II’s best friend was Harold Gorden — “two peas in a pod,” Greg Smith calls them. Gorden, who does not have children of his own, is the godfather to all of Neal Smith’s sons. They spent holidays and vacations together.

“I loved him,” Justin Smith, 46, said. “I looked up to him so much as a kid. I think my dad did too.”

Gorden, who the boys called Uncle Butch or Butchy, was a stockbroker and proudly flaunted his money. He was partial to beaver-pelt Stetson hats, ostrich-skin boots, Rolexes and country clubs. A chauffeur named Phil drove him around in one of his two limousines.

“Anything that a wealthy person would possess, Harold Gorden had it,” Brad Smith, 54, explained.

So, when the sons learned after their father’s death that his will named Gorden as trustee for the family company and family estate, they were unanimous in their support.

“I couldn’t think of a better pick,” Greg Smith, 57, recalls thinking.

Gorden had been the head of trading at Blinder Robinson & Co., a former Denver-based brokerage that specialized in ultra-risky penny stocks. Its flamboyant founder, Meyer Blinder, spent 40 months in a federal prison in the 1990s for racketeering, money laundering and fraud. Blinder Robinson was given the pejorative nickname “Blind ’em and Rob ’em.”

After Neal Smith’s death, Gorden moved from vice president to president of the Shirley Co., a real estate holding business that was founded in Denver in 1927. In exchange for handling minor paperwork, like filing taxes, Gorden was paid $12,500 per month by the company, which was worth $7.2 million in 2002. The company’s shares were held in trust for the Smiths; Julie Smith, Neal’s widow, drew a modest $5,000 per month for living expenses.

If it had been managed in a hands-off way by Harold Gorden, the Shirley Co. would be worth somewhere between $8 million and $12 million today, according to the Smiths. It was not, so it is not.

While the Smith brothers went about their lives and gave little thought to the family company, which was in the capable hands of their clearly successful godfather, he was raiding it for his own gain. In addition to the $2 million in wages he was paid between 2003 and 2020, another $2.26 million is missing and presumed stolen, according to a June 15 court ruling.

“It never would have occurred to them that he was living large off their inheritances,” Judge Brown wrote of the Smiths two weeks ago. “But that is exactly what he was doing.”

Gorden loaned $233,500 in Shirley Co. funds to his friends and then never collected. He sold an $843,000 ranch that the company owned in Montana but couldn’t explain under oath where the money went. He sold a $1.1 million Shirley Co. ranch for $645,000 in 2017 and then pocketed $175,000 from the sale. He inexplicably sold the company’s house in Lakewood, valued at $1.6 million in 2002, for a mere $100,000 in 2003. Gorden denies it went to a friend.

At times, he streamlined his embezzlement by writing five-figure company checks to himself and his wife, Brown said. He also used $166,000 in company funds to buy himself an interest in an energy company and reportedly gambled away another $1.24 million on what Brown calls “foolhardy investments,” though she questions if he actually made the investments.

Through his attorneys, Gorden declined several requests in recent weeks to discuss the Smiths and the judge’s findings. A listed phone number for Gorden has been disconnected.

‘A great shock’

Because Gorden shared very few details about the Shirley Co. with his godsons, the first inkling that something was wrong arrived in 2012, when Brad Smith asked for an accounting. The vague paperwork he received showed that much of the company’s real estate was gone and the value of its assets had dropped from $7.2 million to $5 million since 2002.

The company’s fiscal woes came into full view in 2020, when Gorden informed Justin Smith that there was no longer enough money to pay for Julie Smith’s assisted living care.

“I didn’t know what to do. None of us could believe it,” Justin Smith recalls.

“To find out that the company was broke,” Brad Smith said, “was a great shock.”

The four brothers demanded to look at the Shirley Co.’s books and were rebuffed by Gorden. Faced with few options, they sued their godfather and mentor that August. Gorden was removed as head of the Shirley Co. and Smith family trusts in November 2020.

“The hardest part of this case is that we had no records. It was pieced together using scattered documents from the last 20 years,” said Ben Hudgens, an attorney at the Richards Carrington firm in Denver, which represents the Smiths. “It took a lot of digging.”

Before jurors in Castle Rock could hear the case last summer, Gorden filed for personal bankruptcy, bringing the lawsuit to a halt. So, the Smiths sued him in bankruptcy court. Litigation gave the brothers something they’d never had: an accounting of the Shirley Co.

“We were absolutely appalled once that discovery started rolling in,” Greg Smith said, “and we realized that it was actually criminal, what was going on.”

Last August, Gorden was charged in Douglas County with two counts of felony theft and one count of securities fraud. The charges allege that Gorden, 80, stole more than $100,000 from the Smiths on two occasions between 2017 and 2019. He will be arraigned Aug. 7.

Meanwhile, in bankruptcy court, Brown oversaw a three-day trial this April at which Gorden and some of the Smiths testified. On June 15, she ordered Gorden to pay $2.53 million to Julie Smith and the Smith sons. That debt cannot be excused by Gorden’s bankruptcy.

“The defendant transferred at least $733,817 of Shirley Company funds to enrich himself, his company, his wife and his friends. He had no intention or plan to return them,” she wrote, adding that the “misdeeds occurred over a long period of time — from at least 2003 to 2019.”

The judge went on to say that “the defendant’s conduct was so brazen, his remorse is nonexistent and the court strongly suspects that he stole more than three times the amount (that) plaintiffs were able to trace.” She wrote repeatedly that Gorden lacks credibility.

“In a case like this, when you get to the end and you have that vindication, after being told for years that you’re making stuff up, it is really a testament to their perseverance,” Hudgens said of the Smith brothers. “The system eventually worked the way that it is supposed to.”

‘We were his children’

When Neal Smith’s plane crashed nearly 21 years ago, the Shirley Co. had 21 properties spread across several states. Today it has one: a ranch in Silverthorne.

In the vacuum of information left behind by Gorden’s tenure as company president lies an absence of answers for why he did what he did to the Smiths.

“I think it was to maintain his lifestyle, to maintain that persona,” Greg Smith theorizes. “He always had to be the center of attention, the life of the party. He had to maintain that perception because in his world, that was the only one that any of his peers ever knew.”

Tres believes that Gorden had an unspoken business vendetta against his father. Brad thinks that Gorden was chasing the distant dream of a penny stock fortune and struck out.

“Since the day that our father died,” he said, “Butch Gorden has looked every one of us in the face probably a dozen-plus times and said, ‘I got you boys’ back, I’m doing this for you.’”

When they talk about all they have lost since 2002 — their father, their inheritance, nearly all of the family company — the Smiths often come back to what Tres calls the “betrayal.”

“I still don’t understand how somebody can say that they’ve loved us his whole life and act like he did and then show zero remorse, show zero accountability,” Justin Smith said.

“He always told us that we were the closest thing that he ever had to kids. That’s how we grew up. That was said on a constant basis, that we were his children,” Greg Smith said.

“And I don’t know anybody who could steal millions of dollars from their children.”