By Sara Burnett The Denver Post
Robert McAllister sat at his lucky table in the back of the Punch Bowl bar, near Denver’s federal courthouse. He was surrounded by fellow lawyers, friends and a floor covered with confetti. The former federal prosecutor had just successfully defended a prominent metro-Denver developer in an election-fraud case, cementing his place as one of Colorado’s most celebrated defense attorneys. As he raised a beer to toast the victory, the mood was jubilant.
“I’m under the influence of exaltation,” McAllister told a reporter before picking up the tab for the entire party. It was June 1992, and McAllister was the picture of a high-powered attorney in the midst of a model career.
Last year, it all came crashing down.
Amid federal and state investigations, McAllister agreed in June to give up his law license. In November, a federal grand jury handed up a 29-count indictment accusing him of conspiracy, wire fraud, money laundering and bankruptcy fraud. The stunning reversal of roles – from respected prosecutor and defense attorney to a defendant facing federal prison – has stunned many who knew and worked with the 62-year-old lawyer.
Former U.S. Attorney Bob Miller, McAllister’s one-time boss, said McAllister was universally respected for not only his trial skills and legal competency but also his ethics, honesty and character.
“I therefore am now absolutely puzzled and confounded by these recent charges,” Miller said. “They are totally inconsistent with the character of the man I knew and worked with all of those years.”
McAllister told the Denver Post there was much he would like to say – but, on the advice of his attorney, he could not comment on the charges.
Court records, including some of McAllister’s own filings, indicate the troubles started around 2006 and grew over the next several years, compounded by failed real estate investments and a poor economy. As the situation worsened, McAllister appears to have made increasingly desperate attempts to keep afloat, none of which succeeded, according to court filings.
Trail of deceit
McAllister started his career as a federal prosecutor in Chicago in the late 1970s before moving to the U.S. attorney’s office in Denver, where he headed the office’s criminal division until the early 1980s.
Prosecutors with the U.S. attorney’s office in Kansas – which is handling the case because of McAllister’s previous employment in Denver – allege his criminal acts started in 2006, with McAllister’s representation of a Las Vegas man whose company had long been a thorn in the government’s side. Nine years earlier, a court had ordered Richard Neiswonger and his Asset Protection Group Inc. to cease operations and to pay $3.2 million from its ill-gotten gains. Neiswonger, whose company purported to help customers hide assets, also was ordered to turn over his Las Vegas home. When the court-ordered action still hadn’t occurred by 2006 the Federal Trade Commission filed contempt proceedings. A court then froze Neiswonger’s assets. McAllister signed and entered a stipulation agreeing to the order on Neiswonger’s behalf in July 2006. The indictment alleges that within 10 days of the assets being frozen, Neiswonger and his wife, Shannon, began secretly transferring money – $1.08 million over three payments – to McAllister’s accounts.
Unbeknownst to the Neiswongers, McAllister gave more than half of the money to Elizabeth Whitney, 58, who is described in court filings as both his business partner and “live-in friend.” Whitney used the money to buy a home in Clark, near Steamboat Springs, from McAllister, the indictment states.
Within three months, the account that was supposed to hold the Neiswonger’s money was empty. To hide that fact from the Neiswongers, McAllister and Whitney created fake bank statements showing between $900,000 and $1 million in the account and earning interest, prosecutors allege. Sometime in 2007, the Neiswongers asked for their money back.
“Because McAllister had embezzled these moneys to invest in projects and properties that he and Elizabeth Whitney were involved with, McAllister had to resort to various contrivances to make payments back to the Neiswongers,” the indictment alleges.
In one case, he allegedly embezzled about $80,000 from a law client in October 2010 – money McAllister paid to Shannon Neiswonger. In another, he allegedly filed a bankruptcy petition that falsely included Shannon Neiswonger’s maiden name, misspelled, in what was apparently an attempt to keep federal authorities from uncovering his actions, according to the indictment.
Bad real estate deals
Much of McAllister’s problems appear, from court filings and other public records, to have been the result of bad real estate deals. He was among the investors in High Country Club, a high-end vacation club that later filed for bankruptcy liquidation. Afterward, he and a longtime friend bought four of the properties, convinced they could turn the company around.
Between 2007 and 2010, he was the subject of more than a half-dozen lawsuits filed in Denver District Court by people and companies claiming McAllister owed them money. His March bankruptcy petition lists $400,000 in assets and about $1.9 million in liabilities, including more than $100,000 in credit-card debt and an approximately $350,000 judgment entered in favor of an investment firm. An attorney for that company, Mayflower Capital, filed an objection to the bankruptcy, alleging McAllister was using his professional corporation to conceal ownership of a medical-marijuana business, the high-end vacation business and payments for at least seven vehicles – including a $60,000 Cadillac Escalade – and homes in Steamboat Springs and Hawaii. In a court filing, McAllister denied the allegations. He said he represents the two businesses but does not have a financial interest in them. A federal judge dismissed the bankruptcy case in April.
In June, McAllister agreed to be disbarred for eight years for twice using client funds for personal use. Two months later, McAllister told a judge in Idaho that he had provided ineffective counsel to a client convicted earlier in the year of murder-for-hire. The trial occurred while McAllister was dealing with his possible disbarment.
“At the time. . . I did not recognize the extent to which my mental state had deteriorated” as a result of his remorse, McAllister wrote.
According to court records, McAllister is currently working as a paralegal and investigator. He is free on $20,000 unsecured bond and was required to turn in his passport and undergo a psychiatric evaluation and any recommended treatment.
He is scheduled for arraignment Jan. 25 in Denver’s Alfred A. Arraj U.S. Courthouse. It is just across the street from the Byron G. Rogers U.S. Courthouse, where he achieved some of his greatest legal victories, including the headline-grabbing 1992 not-guilty verdict that, for a time, had McAllister on top of the world.
Sara Burnett: 303-954-1661 or email@example.com