Blue Bear: Pain and questions linger for investors

They just want closure. They want it to be over.

About 420 investors lost a little more than $20 million to a Windsor-based factoring company that went bankrupt. Fifteen years later, most of them still don’t want to talk about it. Some did initially but then asked that their comments be withheld.

Their words were similar.

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“I just want to move on.”

“It was all my fault. I made a bad decision.”

“Putting it behind and forgetting it is the best thing we could do.”

“It’s over.”

Mary Sue Brighi is one for whom the pain lingers. She and her husband, longtime Greeley chiropractor Dr. Richard Brighi, had invested life savings of $407,000 with Blue Bear Funding — and lost it. Brighi led a committee that helped devise a reorganization plan for the bankrupt company, but he and his wife had to put their home up for sale.

“Personally, there’s not much I can do. I’ve accepted it,” he told the Greeley Tribune in 2006. “My wife and I didn’t have anything when we started. We talked things over and decided we’re just going to go on with life. We still have our kids and grandkids, so that means a lot to us. Our retirement is gone. Just hope for the best. That’s all I can do.”

Brighi passed away in September 2018, and the pain his widow feels still is evident.

“It was just horrible at the time,” she said.

But for school teacher Sharon Prior Moore, who lost $80,000, recounting the tale allowed her to vent her continued frustration with attempts to recoup some of the money that Mary Sue Brighi described as “a dead-end street.”

Some — like Beverly Sue Ambrose, Thomas Dannatt and Donald Derr — just figured it was a good investment. Ambrose and her family eventually claimed losses of more than $252,000, and Dannatt and his wife lost more than $30,000. Donald and Jacquelyn Derr invested an inheritance they’d received plus his entire retirement fund after working as a street supervisor for the city of Greeley; they lost more than $216,000.

But for Moore, just emerging from a divorce in 2004, investing with Blue Bear was a way to help keep a roof over her head. She was waiting on a property settlement to figure out how much money she could put down on a place of her own.

“In the meantime, I was talking to Don Donahoo, who I knew through school and church,” she said. “His mother, Nancy, lived across from the house I was looking into purchasing in Eaton, and I was just asking her financially what the homeowners’ association fees were going to be like in those patio homes — there’s 21 patio homes where I live. She said, ‘Well, I need to have you connect with Don and maybe he can get you involved in this factoring he’s involved with in Blue Bear, and maybe that can help generate some income in that investment that will help you with your house payments.’ ”

Donahoo explained the concept of factoring and said her investment would return 10 percent to 12 percent interest.

“My divorce settlement came in around $175,000 to $180,000. I determined that if I put X amount on my down payment and invested $80,000 with Blue Bear — Sunflower at the time — that that would provide me a minimum of $800 a month to help with my house payment. That was going to take a lot of pressure off.”

She described Blue Bear as an umbrella, with 13 smaller factoring companies dangling under it — Sunflower was one — that had hired Blue Bear to manage their accounts. But those independent directors had to raise certain amounts within six months and $1 million within a year — and if they couldn’t, they’d be shut down and had to transfer their investors’ money into other factoring companies that could meet the quotas.

Moore didn’t go into the deal without questions, but “I was given the foundational idea of factoring dating clear back to colonial times. It was a quick turnaround for somebody who needed to borrow a lump sum for a short time,” she said. “They would put up some collateral and we would lend them the money, but it would just be for a short amount of time. It wouldn’t be like long term. That’s how they got the higher rates. From what I understood after the fact, being single, I had a hard time grasping this, but I saw the people involved in this and I trusted them. I relied on my faith. I prayed a lot. I just felt like this was God’s way of saying, ‘I’m going to take care of you. You’ll have a little extra and it’s going to be OK.’”

Ambrose had known Donahoo’s father, Bill, from working with him at US West. “I just decided that Bill and Nancy were heading me the right way,” she said. “After I invested and my Mom felt like it was a good deal, she invested a little bit too, as a trust-type thing for her eight great-grandchildren.”

Those big initial returns were exhilarating.

“I’d get notification of how much my money was increasing in value,” Jacquelyn Derr said. “I started out investing $150,000” and within a year was told their pot had grown to more than a quarter million.

“When somebody promises you 14, 15 percent on your money, that’s greed,” Dannatt said, “and it turned around and bit us in the butt. So everybody learns.”

He had even pulled $16,000 out to buy a Buick.

“I really considered mortgaging my home and taking everything out that I could in equity and investing it like Donnie and his mother did,” Dannatt said. “Luckily, I had enough sense not to do it. But my wife and I quickly doubled our money. When you’re making 14 percent, doubling your money is fantastic — if you can get it back.”

In December 2004 or January 2005, he said, he got a letter from the Blue Bear plan’s administrator, “asking if I wanted to pull out all my funds or leave them in there. My decision was, we were making about 13 or 14 percent on our money, so I’ll leave it in there.

“I’m like anybody else. I was greedy,” Dannatt said. “And then, lo and behold, he declares bankruptcy.”

Moore was so happy with the more than $800 a month she was receiving that she not only encouraged friends and neighbors to invest as well but also decided that the inheritance she had invested in funds managed by Paine Webber wasn’t returning enough.

“So I saw Don over at his mother’s house” — Nancy Donahoo worked in Brighi’s office — “and we met right in the middle of the street. I asked him if I could invest the money from Paine Webber in Blue Bear,” Moore said. “At that time, he told me there was a problem and I needed to not do any more. He said, ‘The money’s gone.’”

Emotions flooded in for Moore.

“I just went through all kinds of things,” she said, and listed them:

“Fear. Am I going to be able to make my house payment now? Am I going to lose my home?

“Regret: Well, I should have listened to my broker at Paine Webber when he said it sounds too good to be true.

“Thankfulness that Don hadn’t let me invest more.

“Worry that I was going to lose some friends that I’d corralled into listening to the presentation.

“I was also feeling stupid,” she said, “but after the collapse we started meeting in large groups, and I’d go to those meetings and look around at all these other people in the community who I viewed as being very smart, solid people — and they were taken by it too.”

A grocer lost $110,000. A woman put her inheritance in and lost $200,000; “she’s very, very angry,” Moore said. Another resident of the patio homes lost $126,000. Yet another lost more than $1.295 million and her home.

“It wasn’t just dumb bunnies who got into it,” Jacquelyn Derr said.

That word “stupid” kept coming up in interviews with the jilted investors.

“I felt stupid because I had lost basically my entire retirement,” Ambrose said. “I was so hurt, I had boxes of documentation, all the stuff that was mailed to me over the years. But you’ve lost everything. What’s the use of keeping it? I just got rid of it. I think I was so hurt, so upset with myself that I had been stupid enough to get into something like this and hadn’t gotten out when I had the chance. I had lost money on a previous investment, and I just felt like a stupid person who keeps making stupid decisions.”

The Derrs discovered Blue Bear’s collapse when their 50th wedding anniversary was approaching and they wanted to withdraw some money to buy a car.

“They said we couldn’t because the account was ‘impaired.’ I’ve never heard of an impaired account,” Jacquelyn Derr said. “It was impaired, all right. It must have gotten run over.

“I was sick to my stomach,” she said. “They took us to the cleaners really good. It was like a Bernie Madoff scheme. It’s a sickening feeling, like the world had almost stopped, to find out that everything you’ve invested was gone.”

“I’ve been in shock for a very long time over it,” added Moore. “I tried to put it out of my mind. I would watch my neighbors being devastated, being angry. Growing up in that small town of Eaton, everybody knew everybody.”

Moore said Donahoo tried to explain to her that “the guy at the helm overrated the collateral. It might have only been worth $12,000 and they said it was worth $200,000. The inflation of the collateral was what did us in.”

The investors tried to work through attorneys to recoup funds from a trust that was formed from the bankruptcy liquidation, but Moore was left with little more than questions:

“How about the team of Denver lawyers that took all that money from us? We paid all that money from the trust or whatever the heck it was. Where are they and what happened there? It seems like they swooped in — they all looked fabulous like on a TV show, and then they were gone, and then we were like, ‘Did you do anything or did you just take the money?’ We would have been better off not having those lawyers and just divvying it up among all of us.”

And what of the criminal investigations?

“How are things not on the record? When I made all those calls — the DAs from everywhere, the attorneys, FBI — they looked on their little computers and —oh, there’s just not anything. How is there not stuff recorded?”

Ambrose remembers receiving “stuff from the FBI that I had to fill out and send back, but as far as I know, nothing was done.”

In May 2009, investors received small distribution checks — Ambrose called it “pennies on the dollar” — and a letter that said $5,000 from the bankruptcy liquidation was in a trust that would cover administrative costs but also receive whatever funds that could be gleaned from litigation against the scheme’s instigators. At the end of 10 years, the letter said, those funds would be distributed.

It’s been 10 years.

One of the investors, Moore’s friend Rose Francella, who claimed a loss of more than $50,000, wrote to the lawyers administering the trust on Oct. 9. She requested a copy of the trust document, an update on the money that was to be distributed in May when the trust was dissolved, and a prompt response.

At press time, the investors have gotten none of that.

Moore said she is somewhat fearful of the response that will finally come: “What if we owe money?”

“They’re not going to get anything from me,” Dannatt said. “I’m so broke I can’t even pay attention.”

Moore still lives in her Eaton patio home and just retired after 32 years of teaching elementary-school classes in Kersey — but ripples from her financial loss remain.

“I had to find a little part-time job” at the front desk of Eaton’s recreation center, Moore said. “I’m working part time just to fund my health insurance. I wouldn’t have had to do that if I hadn’t lost all that money. I wouldn’t owe as much on my house and my payments wouldn’t have to be so big. I refinanced eight years ago.”

Derr and his wife had to keep working as well; they both do lawn maintenance and she teaches piano.

“We’ve worked awful hard to get money back in the till. We’re up in years now where we really need that,” she said. “We were both ranch raised, so we knew how to kick in and work.”

Dannatt, who started at the telephone company as a janitor and retired in 1990 as an engineer, has returned to his custodial roots at a local church and also does work for neighbors.

Between Blue Bear and another investment, “I lost my entire savings, $130,000,” said Dannatt, who will celebrate his 77th birthday in January. “I was kind of down, but what the hell? They weren’t taking food out of my month. I try to stick a little in savings every month, and last December I invested in some utility stocks through my credit union. I’ve still got a roof over my head and food to eat. We’ve lived in the same house for 44 years.

“I’m not a person who wants to take a trip around the world. As long as I can live comfortably, I’m happy.”

Moore wonders whether she has worked through all the emotions she needs to. “Maybe there’s still some there,” she said, “but I’ve still never been through the denial, the anger. I’m still like, ‘Oh, well.’”

Most of the investors contacted by BizWest have no animus toward Donahoo, especially since he and his family sustained substantial losses as well.

“I don’t want to blame Don, although I know a lot of people in Eaton have turned their back on him,” Moore said. “I’ve never tried to blame Don. He was very involved with our Evangelical Free Church in Eaton. There were missionaries from our church who were involved in Blue Bear. Lots of families were hit by this. When I see him I’m friendly toward him. He lost his home, his vehicles. His mother lost her home. Maybe it would be different if he were still out there in his beautiful home, but he lost quite a bit.”

Other investors echoed Moore’s kind words about Donahoo.

“I don’t think Donnie did anything wrong,” Ambrose said. “I trust Donnie as far as I can throw him, and that’s a long ways. I know Donnie and his family, and I know Donnie didn’t do this to us. When I see Donnie, I give him a hug and a kiss, because I trust him. If I had $150,000 to give him to invest, I’d do it again.”

“Not me,” countered Dannatt. “I have no blame on Donnie. He was hoodwinked and sold a bill of goods just like the rest of us, thinking it was a good thing. He and his mother lost a lot like the rest of us. But I found that the best way to double my money was to fold it in half and put it under my mattress.”

The Derrs haven’t reinvested either — not even in the stock market, Jacquelyn Derr said.

“We’ve got some cattle on the place,” she said. “As long as they’ve got four legs under ‘em, that’s all the stock we need.”