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Two top executives of Englewood real estate investment firm Mile High Capital Group Ltd. have resigned, and one was named in a civil lawsuit by the firm demanding the return of confidential information that he allegedly took with him.

Meanwhile, an investigator from the Colorado Division of Securities has questioned former employees and at least one current employee of Mile High or its associated companies. The exact nature of the state's inquiry isn't known.

A division official would neither confirm nor deny whether the state was conducting an investigation.

Mile High Capital Group Ltd. and Investment Property Funding (IPF), a mortgage brokerage firm associated with Mile High, filed a civil complaint Sept. 12 against CEO Andrew McFaul, claiming McFaul had resigned and taken sensitive corporate records of IPF.

The lawsuit states that Mile High owns the IPF stock or, at the very least, controls the IPF stock through a voting trust in favor of Mile High. It also states that McFaul has "claimed ownership of the (IPF) stock."

A Douglas County magistrate ordered the county sheriff to retrieve the documents from McFaul. A hearing is set for Sept. 21.

Calls to McFaul's residence and his voice mail at Mile High weren't returned.

The company also declined to comment on the lawsuit or answer other questions.

However, a press release issued Sept. 14 by Mile High confirmed McFaul and Mile High President Jeff Dietz had left the company. It said McFaul will focus his energy on being CEO of Aspen Home Builders, a sister company of Mile High that he owns. It also said McFaul may take independent ownership of IPF. It said Dietz left "due to a pressing family situation."

Calls to Dietz' home and office weren't returned.

Mile High's lawsuit against McFaul asks for a return of IPF corporate records as well as unspecified damages.

Mile High, founded by Fredric "Rick" Dryer and incorporated in 2000, promotes investment in rental real estate -- mostly duplexes -- at seminars it conducts around the country. On July 12, the company said it had more than $120 million in 2004 sales and more than $175 million so far in 2005.

The numbers come from a press release from Mile High announcing the sale of the company from Dryer to a group led by McFaul, who was then the Mile High chief operating officer, and Dietz, who was then listed as executive vice president.

The July 12 release said Dryer had resigned his positions as CEO, president and board member of Mile High and was no longer a stockholder. It also said McFaul replaced Dryer as chairman and CEO, and Dietz replaced him as president.

The company said this week, however, that a group led by McFaul had been expected to take actual ownership of Mile High "under an agreement, which triggered for tax purposes, at the beginning of next year."

Dietz's departure has made that agreement moot, and ownership will continue as before, said the release.

The lawsuit filed against McFaul Sept. 12 alleges breach of an employment agreement McFaul signed in December 2004, when he became chief operating officer at a base salary of $36,000 a year.

As of Sept. 13, McFaul's Mile High voice mail was being answered by a recording that refers to him as "chief operating officer."

In the Sept. 12 lawsuit, Dryer refers to himself as the "sole shareholder" of Mile High.

State Securities Division Inquiries
Samuel Noel, a senior loan officer with IPF, said he was questioned by state securities division investigator Rick Lucas about a promissory note for $360,000 Mile High issued to him.

Noel said he spoke with Lucas about three weeks ago and Lucas "asked me about the loan I have [to Mile High]."

The note came due this year, was renegotiated, and Noel said he's happy with the arrangement. "They've been paying me interest very regularly," he said.

He has received $75,000 in interest in the last 18 months, received $10,000 per week the last two weeks, is being paid 13 percent interest and has security in the form of a $500,000 piece of property, he said.

"From what I can tell, everything's on the up and up," Noel said.

But one holder of a Mile High promissory note has not been so happy. In February, the estate of Alfred M. Bernhardt sued Mile High, Dryer and related company Great Divide Vista LLC in Fremont County, alleging fraud, breach of contract and other charges in connection with a $95,000 promissory note.

That case, transferred to Douglas County, has a trial scheduled for August 2006.

Noel said Lucas told him the division has to investigate when it gets a complaint. "He said it [inquiry] was going to take a long time," Noel said. "I'm assuming probably a year or so."

Another person confirmed the security division's inquiries about Mile High. The person said Lucas asked about how the various companies, such as IPF, worked with Mile High, who was in charge of which company and each step of the real estate-buying process.

A Denver Business Journal call to Lucas was returned by Jerry Rome, Colorado deputy securities commissioner.

"Ricky [Lucas] is one of our investigators, but unfortunately all of our investigations are confidential," Rome said. Under state securities laws, he said, he "can't confirm or deny any of the investigations that we're doing."

Mile High didn't respond to questions about Noel's conversation with Lucas or the promissory note held by Noel.

Dryer pleaded no contest to 10 counts of securities fraud in Boulder County in 1987 for selling promissory notes. He has said that matter is irrelevant to his current activities.

Other Lawsuits
Mile High has been a party to more than 30 lawsuits in Colorado, involving investors, contractors, employees and others. Many have been settled out of court under confidential terms.

Petra Marketing Group LLC filed one of the more recent ones on Sept. 2 in Douglas County.

It claims Mile High and Petra entered into a marketing agreement on March 15, and that Petra has lived up to it, but Mile High has refused to pay. Mile High didn't respond to questioning about the lawsuit.

At real estate seminars around the country, Mile High Capital signs up investors who typically put 5 percent down on duplexes that may cost about $320,000. IPF helps purchasers of the duplexes find financing.

The seminars are scheduled by Franklin Masters Institute, which has offices in the same building as Mile High. Franklin has substantially changed the schedule shown on its Web site. An Aug. 17 look at the Web site showed seminars scheduled in the last half of September and in October for San Franciso, Minneapolis and Washington, D.C. Those seminars were no longer listed as of Sept. 14. The company did not respond to an inquiry about the change.

The company has sold more than 10 times the number of duplexes that have actually been built. In Colorado, the company has construction completed or under way in areas that include Milliken, Pueblo West, Caņon City, and areas in or around Colorado Springs.

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