DENVER -- Seven people -- three from Colorado --- are suspected of being involved in an international high-yield investment scheme that defrauded more than 1,000 people of approximately $56 million, the U.S. Attorney's Office said Tuesday.

The Redstone Castle in Pitkin County (pictured, left), numerous NASCAR race vehicles in Denver and $17 million in cash were seized during the course of the 2-and-a-half-year criminal investigation, the U.S. Attorney General said.

According to the indictment, the suspects allegedly told their victims that they would invest their money safely, promising rates of return from 2 percent to 400 percent. They sent investors fraudulent monthly statements which falsely reflected the earnings and growth of their invested funds and then allegedly encouraged investors to make additional investments, defer disbursements, and refer new investors to the program, the indictment said.

The group created corporate alter egos to carry out the alleged scheme and did business as the Reserve Foundation, Smitty's Investments, Capital Holdings, Monarch Capital Holdings and Fast Track, operating from April 1999 to April 2003.

The suspects then used that money for personal expenses, to buy assets, pay off other investors and to pay monthly commissions to other people who recruited more investors to the fraudulent program, authorities said.

"This was a gigantic and complex fraud," said Colorado Securities Commissioner Fred Joseph. "Its only purpose was to separate investors from their money."

Investigators said there are 200 Colorado victims who invested between $5,000 and $500,000 each. Some of these Colorado residents took second mortgages and cashed in their IRAs to contribute, 7NEWS reported.

Some of the investors money was used to buy the Redstone Castle for $6.5 million, which was seized by the Internal Revenue Service last March. During the course of the investigation, agents seized assets worth $24 million, including 60 bank accounts, eight NASCAR race cars, one race truck and several other race-related vehicles.

Facing 57 counts are Norman Eugene Schmidt, 68, of Denver; Jannice McLain Schmidt, 66, of Denver; Charles Franklin Lewis, 68, of Littleton; George Beros, 36, of Shaker Heights, Ohio; George Alan Weed, 68, of Benton, Ill.; Michael Duane Smith, 40, of Colbert, Wash.; and Peter Moss, 62, of London. Moss was indicted but was the only suspect not arrested on Tuesday. He awaits extradition to Colorado.

The suspects face 20 years in federal prison and several million dollars in fines.

"Fraudulent high yield investment or prime bank schemes continue to ensare thousands of victims each year," said U.S. Attorney John Suthers. "Potential investors should remember the fundamental rule of investing, 'If it sounds too good to be true, it is.'"

The Redstone Castle, built in 1903, is a 42-room Tudor-style mansion listed on the National and State Registers of Historic Places and is part of the Redstone National Historic District. The interior of the castle and its furnishings, 75 percent of which are original, were crafted exclusively for John C. Osgood, who formed the Colorado Fuel and Iron Company and was one of the richest men in America at the turn of the 20th century. It is located 45 minutes from Aspen.

Additional Resource:

Read Indictment from U.S. Attorney's Office