Colorado men sentenced in fraud case costing Blue Ocean Enterprise millions | #phishing | #scams


Two men have been sentenced to jail and probation in connection to incidents that cost a Larimer County business millions of dollars.

Benjamin Davenport and Kirk Smith were both sentenced to 100 total days in jail and 10 years of supervised probation last week in connection with two fraud cases from 2018 and 2019. The two pleaded no contest to two counts each — one in each case — of submitting a misleading filing, a Class 3 felony and financial crime. 

A plea of no contest means the defendant does not admit guilt but does receive a sentence for the charge they pleaded no contest to.

The bulk of the jail time Davenport and Smith were sentenced to — 90 days — is in connection to a case involving Fort Collins business Blue Ocean Enterprises.

Davenport and Smith were arrested in 2018 alongside four others on allegations of running a theft and money-laundering scheme that cost Blue Ocean more than $2.9 million, court documents from the time of their arrests show. 

Davenport was the business owner and manager, and Smith was the co-owner and chief financial officer, according to court documents. Investigators alleged the two men led the scheme between 2012 and 2016. 

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Fort Collins police said Davenport and Smith went into business with Blue Ocean Enterprises — the sister company of OtterBox — and investigators say the two sold Blue Ocean materials through another company they owned without disclosing they were the owners, overcharging Blue Ocean and using the profit to benefit themselves.

“It doesn’t seem like there is any remorse (from Davenport and Smith) at all,” Blue Ocean Enterprises President Brent Keele said during the sentencing hearing July 14.

Davenport said they created the other company and hid it from Blue Ocean to protect themselves after Davenport said he feared he and Smith were being pushed out of their work with Blue Ocean.

“My clients were trying to protect themselves from a more sophisticated business,” attorney Andrew Green said. 

Davenport said he didn’t intend to break the law when they hid their business from Blue Ocean, and he was trying to protect them from being defrauded themselves.

“I understand the lines we crossed. I do,” he told the judge. “I would not do it again. … Our intent was self-defense.”

Smith told the judge he “would never have engaged in actions (he) knew to be illegal.”

“No amount of money is worth putting your integrity into question,” he said.

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Jeremy Pond, Davenport’s assistant and one of the codefendants in the case, told the judge during sentencing he never saw Davenport or Smith do anything illegal and that Davenport is one of the most “faithful and trustworthy” businessmen he knows. 

Pond accused the district attorney’s office of arresting him in an attempt to get him to help them convict Davenport and Smith of crimes he says they didn’t commit. He said the situation has been difficult on his family.

Pond said the district attorney’s office dismissed the charges against him.

No record of charges against Pond could be found in online court records, and the district attorney’s office could not provide information on how Pond’s case was resolved, office spokesperson Jodi Lacey told the Coloradoan. 

The other three codefendants in the case have also been sentenced:

  • Jason Lewis pleaded guilty to tax evasion, a Class 5 felony, and failure to file return/pay tax, an unclassified misdemeanor, on Dec. 23, 2019. He was sentenced to a two-year deferred sentence.
  • Christopher Reppert pleaded guilty to tax evasion, a Class 5 felony, on June 14 and received a one-year deferred sentence.
  • Stephanie Johnson pleaded guilty to tax evasion, an unclassified misdemeanor, on Nov. 13 and received a one-year deferred sentence.

A deferred sentence requires people to complete terms ordered by a judge in a specified amount of time, similar to how probation conditions work. If they successfully complete the deferred sentence, they are allowed to withdraw their guilty plea, can sometimes seal their record from the public, and avoid a conviction on their record. If they fail to complete any of the terms, the conviction enters their record.

Davenport and Smith were also arrested in 2019 after being accused of conning a Florida business man out of more than $1 million when he asked to invest in their Fort Collins-based virtual reality company, VRsenal Inc.

The businessman, Juan Jose Rendon, told investigators Davenport, Smith and another codefendant, Gabriel Halsmer, used his investment intended for VRsenal on personal expenditures, including attorney’s fees for Davenport and Smith’s other case. 

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But Davenport told the judge they were being paid a salary and used that money on their personal expenses. He said they weren’t legally obligated to tell Rendon how they were spending that money. 

Halsmer has pleaded not guilty and has a trial scheduled to begin at the end of August. 

Eighth Judicial District Judge Juan Villaseñor agreed with Davenport that the case involving Rendon was weak, but he said “failing to disclose they were the principals” of the other business working with Blue Ocean is theft.

Villaseñor was critical of the plea agreement offered by the district attorney for Davenport and Smith, especially after two grand jury indictments in both cases ruled there was enough evidence for the district attorney’s office to pursue more than 30 criminal charges against each of them.

Deputy District Attorney Joshua Ritter said he believed that with the defendants’ lack of criminal histories, probation was a fair sentence. 

“I believe it’s a significant concession but not an unreasonable one to give the defendants a crack at probation with 24 years (of prison) hanging over their heads” if they violate probation, Ritter said.

Villaseñor sentenced both men to jail, but their sentences will stagger so just one will be in jail at a time while the other continues to operate their virtual reality business. The two must also remain employed and pay restitution, as well as notify probation and the collections department of any new business ventures or investments they make while on probation. 

All suspects are innocent until proven guilty in court. Arrests and charges are merely accusations by law enforcement until, and unless, a suspect is convicted of a crime.

Sady Swanson covers public safety, criminal justice, Larimer County government and more throughout Northern Colorado. You can send your story ideas to her at sswanson@coloradoan.com or on Twitter at @sadyswan. Support her work and that of other Coloradoan journalists by purchasing a digital subscription today.



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