Banking & Finance  December 1, 2019

Editorial: Blue Bear factoring scandal leaves scars, few answers

Few scandals in Northern Colorado history have left deeper scars than that of Blue Bear Financial, what was a Windsor-based factoring company. The company’s collapse in 2005 lost more than $20 million from more than 400 investors, with many losing their life savings. Most were Northern Colorado residents, including school teachers, real estate professionals, dentists — people from all walks of life.

Initial returns for investors were strong, but the company and its affiliates quickly collapsed amidst what was described in bankruptcy filings as “a Ponzi-type scheme,” with elements of the scandal stretching to Kansas and New Hampshire.

But as the 15th anniversary of the Blue Bear bankruptcy approaches — and as the 10-year life of a trust company formed to dispose of remaining assets ends — those who lost money in Blue Bear’s collapse are left with questions and frustration. Their questions are many: How were the people behind Blue Bear able to commence the fraud to begin with? Why were none of the architects of the scheme charged with a crime? Where did all the money go?

Answers to those questions have proved elusive. As BizWest’s investigation reveals, many of the law-enforcement officials involved in the Blue Bear investigation have retired, with most unable to remember details of the case. Others refused to comment or did not respond to BizWest’s inquiries.

Federal authorities passed on the investigation to local agencies, but those local agencies seemed to lack the expertise or resources to pursue the case far enough to make indictments. Today, most of the statutes of limitations on any potential crimes in the Blue Bear scandal are long expired.

What’s clear is that little has changed. Factoring companies — where accounts receivable for a company are purchased at a discount for immediate cash,and the factoring company then trying to collect those receivables — are difficult to regulate. By the time anyone realizes that a problem exists, it’s usually too late to prevent enormous damage and losses.

So, Blue Bear investors — and those of related companies — likely will never get the justice they seek. The funds they lost in 2005 will never be recovered, except for fractions of their investments that eventually were paid by a trust company established to pay out any funds that were collected. What investors are left with is a painful sense of betrayal.

Some are too embarrassed to discuss the scandal.

The stress and regret remain overwhelming.

That’s the ultimate legacy of Blue Bear.

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