FORT COLLINS — Three leaders of VRsenal Inc., a Fort Collins-based company that claimed to be developing a virtual reality arcade platform, have been indicted by a Larimer County grand jury on charges related to allegations that the trio bilked an investor out of more than $1.1 million.

The five-count indictment handed down Friday accuses VRsenal CEO Benjamin Davenport, chief financial officer Kirk Smith and chief technology officer Gabriel Halsmer of theft and securities fraud. The three were taken into custody and released on bond in advance of a court hearing set for Tuesday. 

Davenport and Smith had been on local law enforcement’s radar for years, according to the indictment. 

In 2017, investigators with Larimer County Sheriff’s Office and the District Attorney’s Office for the 8th Judicial District began looking into the pair’s roles in a company called Blue Point Pellets LLC, an affiliate of a Denmark-based wood pellet manufacturer where the two worked as managers.  That investigation eventually led to an indictment on charges —  including money laundering and theft — related to the misappropriation of about $2.5 million, court documents show. 

While police were investigating the Blue Point Pellets case, Smith, Davenport and Halsmer were contacted by Juan Jose Rendon, a Florida-based investor who’d heard about the virtual reality company the trio had formed.

Davenport and Rendon allegedly discussed investment possibilities. Those discussions included misrepresentations by Davenport about the company’s viability and his past business success.  Rendon was unaware that Davenport and Smith had been interviewed by investigators about Blue Point Pellets during this negotiation period. 

Eventually, Rendon agreed to invest $3 million in exchange for a 20 percent stake in VRsenal with the understanding that the funding would be used for equipment, operating expenses and payroll. Instead, the indictment alleges that the executives paid themselves with Rendon’s money.

Rendon ultimately sent VRsenal a series of payments that totaled more than $1.15 million. He has not seen any return on that investment, according to court documents.