IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO

Civil Action No. ________

SECURITIES AND EXCHANGE COMMISSION,

Relief Defendants.

COMPLAINT FOR INJUNCTIVE AND OTHER RELIEF

Plaintiff, the Securities and Exchange Commission ("Commission"), alleges the following for its complaint:

SUMMARY

1. From at least September 2000 through March 2003, defendants Glen W. Hilker and Larry M. Baker, through defendant HB Investors LLC ("HBI"), collectively raised over $4.7 million on behalf of defendant Project Dacono LLC ("PDL") for the purchase and development of real estate located in Dacono, Colorado. Mr. Hilker and Mr. Baker raised these funds by offering and selling PDL and HBI securities to at least thirty-five investors located throughout several states.

2. In raising these funds, PDL, HBI, Mr. Hilker and Mr. Baker made numerous false and misleading statements to investors, primarily concerning the use of investor proceeds. In fact, only approximately $1.7 million of the funds raised were actually used for the purchase and development of the Dacono property. The remaining $3 million of investor proceeds was used by Mr. Hilker and Mr. Baker for their own personal use, was diverted to alter ego entities they controlled - relief defendants HSB Development Co. LLC ("HSB"), Westco Investment & Finance, Inc. ("Westco"), TriCord LLC ("TriCord") and Brookshire Development Co. LLC ("Brookshire") - was invested in risky business ventures unrelated to the Dacono property and was used for payment of Ponzi-type interest payments to other investors.

3. Mr. Hilker, Mr. Baker, PDL and HBI, made other false and misleading statements to Project Dacono investors concerning, among other things, expected rates of return, the risks associated with the investments, and the status of the Dacono property.

4. As recently as March through July 2003, Mr. Hilker and Mr. Baker have continued to: (1) solicit monies in connection with the Dacono property; (2) issue fraudulent promissory notes; (3) make Ponzi-type interest payments (4) divert Dacono property investor proceeds to unrelated uses or (5) solicit funds for personal loans and/or bridge loans on behalf of risky-start up companies. Some of these start-ups had previously received Dacono property investor proceeds.

5. Mr. Hilker, Mr. Baker, PDL and HBI, directly or indirectly, have engaged, are engaged and are about to engage in transactions, acts, practices and courses of business which constitute violations of Section 17(a) of the Securities Act of 1933 (Securities Act) [15 U.S.C. § 77q(a)], and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) [15 U.S.C. § 78j(b)] and Rule 10b-5 [17 C.F.R. § 240.10b-5].

6. Mr. Hilker, Mr. Baker, PDL and HBI, will, unless restrained and enjoined, continue to engage in the acts, practices, and courses of business alleged herein, and in acts, practices and courses of business of similar object and purpose.

7. The Commission brings this action pursuant to the authority conferred upon it by Section 20(a) of the Securities Act [15 U.S.C. § 77t] and Section 21(d) of the Exchange Act [15 U.S.C. § 78u(d)] to restrain and enjoin the defendants, and each of them, from violating Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)], Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 [17 C.F.R. § 240.10b-5], and granting other equitable relief.

8. The defendants, and each of them, committed the violations described above by means of conduct which involved fraud and deceit and which created a significant risk of substantial losses to other persons.

JURISDICTION AND VENUE

9. This Court has jurisdiction over this action pursuant to Section 22(a) of the Securities Act [15 U.S.C. § 77v(a)] and Sections 21(e) and 27 of the Exchange Act [15 U.S.C. §§ 78u(e) and 78aa].

10. Venue properly lies in this Court pursuant to Section 22(a) of the Securities Act, and Section 27 of the Exchange Act.

11. The defendants and relief defendants, and each of them, directly and indirectly, have made use of the means and instrumentalities of interstate commerce, or of the mails in connection with the acts, practices and courses of business alleged in this complaint, which primarily occurred in Colorado.

THE DEFENDANTS

12. Glen W. Hilker, a resident of Englewood, Colorado, is a 50% member of HBI, and was a manager of PDL through April 2003. Mr. Hilker was a registered representative for at least four registered broker-dealers from 1981 to 1995. In July 1999, Mr. Hilker consented to an order by the National Association of Securities Dealers censuring him, suspending him from association with any NASD member for seven months, and fining him $17,500.

13. Larry M. Baker, a resident of Denver, Colorado, is a 50% member of HBI, and was a manager of PDL through April 2003. Mr. Baker has been an attorney since 1957 and is a real estate developer.

14. Project Dacono LLC ("PDL") is a Colorado limited liability company with its principal place of business in Englewood, Colorado. PDL was formed in October 2000 to purchase and develop the Dacono property. The two 50% equity members of PDL are HBI and FS Land Company LLC ("FSL").

15. HB Investors LLC is a Colorado limited liability company with its principal place of business in Denver, Colorado. HBI has a 50% membership interest in PDL. HBI is owned and controlled by its managing members, defendants Hilker and Baker.

RELIEF DEFENDANTS

16. HSB Development Company LLC ("HSB") is a Colorado limited liability company with its principal place of business in Denver, Colorado. HSB, which is owned by Mr. Hilker and Mr. Baker, improperly received investor proceeds diverted from the Dacono property.

17. Westco Investment & Finance, Inc. ("Westco") is a Colorado corporation with its principal place of business in Denver, Colorado. Westco, which is owned by Mr. Hilker and Mr. Baker, improperly received investor proceeds diverted from the Dacono property.

18. TriCord LLC ("TriCord") is a Colorado limited liability company with its principal place of business in Englewood, Colorado. TriCord, which is owned by Mr. Hilker, improperly received investor proceeds diverted from the Dacono property.

19. Brookshire Development Company LLC ("Brookshire") is a Colorado limited liability company with its principal place of business in Denver, Colorado. Brookshire, which is owned by Mr. Baker, improperly received investor proceeds diverted from the Dacono property.

FACTS

20. In the fall of 2000, HBI and FS Land Company ("FSL") formed Project Dacono LLC for the purpose of acquiring and developing the Dacono property. The parties agreed that Mr. Hilker and Mr. Baker (through HBI) would be responsible for the capital raising activities of PDL while FSL would be responsible for developing the Dacono property. FSL is owned by its Stephen J. Foley and Robert C. Swenson, two former football players with the Denver Broncos.¹

21. At the time of PDL's formation, the PDL members anticipated that they would need a total of $2.5 million, consisting of $2 million to purchase the land and approximately $500,000 to develop it. After PDL obtained an institutional loan for $1 million towards the purchase of the Dacono property, HBI needed to raise only an additional $1.5 million from investors.

22. However, between approximately September 2000 and March 2003, Mr. Hilker and Mr. Baker, through HBI, raised over $4.7 million from more than thirty-five investors by offering and selling PDL and HBI securities.

23. Most investors were given a PDL private placement memorandum which promised investors a 35% rate of return per annum on their investments and stated that PDL was seeking to raise between $1 million and $1.5 million from investors to purchase and develop the Dacono property.

24. Other investors received and executed an HBI investor agreement. These investor agreements offered differing rates of return (between 10% and 24% per annum) and varying payout schedules, and indicated that HBI was seeking to raise between $750,000 and $1.75 million for the Dacono property.

25. In both the PDL private placement memoranda and the HBI investor agreements, Mr. Hilker and Mr. Baker used the names of Mr. Foley and Mr. Swenson, as former Denver Broncos, in order to induce people to invest in the Dacono property.

26. At least 35 individuals residing in various states, but, primarily in Colorado, invested approximately $4.7 million in the equity interests and/or notes that were offered by HBI and PDL. At least $1.7 million of the raised funds was deposited directly into Mr. Baker's Colorado lawyer trust account ("COLTAF"), and at least $1.6 million was deposited directly into two bank accounts controlled by Mr. Hilker.

27. In raising the $4.7 million, Mr. Hilker, Mr. Baker, PDL and HBI, made numerous false and misleading statements to investors.

28. The defendants told investors that investor proceeds would be used solely to purchase and develop the Dacono property. This statement was false because Mr. Hilker, Mr. Baker and HBI used investor proceeds for purposes that were unrelated to the purchase and development of the Dacono property. These diversions of investors' funds included, but not limited to, the misappropriation of investor proceeds for Mr. Hilker's and Mr. Baker's own personal use, the diversion of investor proceeds to relief defendants HSB, Westco, TriCord and Brookshire, re-investment of investor proceeds in business ventures unrelated to the Dacono property, and the issuance of Ponzi-type interest payments to prior investors.

29. The relief defendants improperly received Dacono property investor proceeds from one or more of the defendants without having a legitimate claim to, or providing any consideration for, those proceeds.

30. The defendants also misrepresented the rates of return that some investors in the Dacono property would receive. At least ten Dacono property investors received and signed HBI investor agreements and/or received corresponding HBI promissory notes, which indicated that HBI would pay the investors amounts equal to their original investment plus "interest" ranging from 10% to 24%.

31. In some instances, these rates of return were baseless or misleading because the interest payments were due before the expiration of one year, when development of the Dacono property could reasonably be expected to occur. In other instances, the interest payments were due before the Dacono property had even been purchased. In both instances, the defendants failed to disclose that they lacked sufficient funds to make interest payments absent their use of monies from later investors as part of a Ponzi scheme.

32. The defendants also made statements to investors in the offering materials indicating that, due to changing economic conditions, there was a risk that sale of the Dacono property might result in insufficient proceeds to pay investors. However, the offering materials further stated that this adverse scenario was "unlikely" to occur.

33. This statement was misleading because such investments involved a high risk of loss due to, among other things, their inability to pay interest without raising additional investor proceeds, the misappropriation of funds by the defendants, and their diversion of such funds to high-risk investments and to their alter ego companies.

34. The defendants also made statements to investors concerning the status and anticipated completion date for development of the Dacono property. Some of the offering materials stated that the property was expected to be fully entitled prior to August 1, 2001. This statement was misleading because the property was not even purchased until August 27, 2001, and entitlement was expected to take approximately one year from the date of purchase. The entitlement process is still incomplete to this date.

35. Further, Mr. Hilker misrepresented the development status of the Dacono property in a "status report" that he mailed to investors during the first quarter of 2003. In that report, Mr. Hilker stated that 243 single-family lots located on the Dacono property were under contract to be sold. That statement was also false because no portion of the Dacono property was under contract at that time. The contract to sell lots had been rescinded or cancelled by approximately October 2002.

36. From at least March through July 2003, the defendants have continued to engage in fraudulent conduct in violation of the securities laws.

37. As recently as March 2003, Mr. Hilker caused PDL to issue fraudulent securities.

38. In July 2003, Mr. Hilker made an interest payment to at least one Dacono property investor.

39. In April 2003, Mr. Baker diverted Dacono property investor proceeds from his bank accounts to other uses unrelated to the Dacono property.

40. Furthermore, in May 2003, Mr. Hilker attempted to raise additional monies from at least one individual in connection with the Dacono property.

41. Finally, in June 2003, Mr. Hilker solicited short-term bridge loans from at least three different Dacono property investors for Mr. Hilker's purported personal use or for HBI. Mr. Hilker also attempted to induce these Dacono property investors to invest in various unrelated companies, some of which had already received Dacono property investor proceeds.

FIRST CLAIM FOR RELIEF

Violations of Section 17(a) of the Securities Act

42. Paragraphs 1 through 41 are realleged and incorporated herein by reference.

43. Defendants Hilker, Baker, PDL, and HBI, directly or indirectly, with scienter, in the offer or sale of securities, by the use of the means or instruments of transportation or communication in interstate commerce or by the use of the mails, have employed, are employing, or are about to employ devices, schemes or artifices to defraud.

44. By reason of the foregoing, defendants Hilker, Baker, PDL and HBI, and each of them, have violated and, unless enjoined, will continue to violate Section 17(a)(1) of the Securities Act.

SECOND CLAIM FOR RELIEF

Violations of Sections 17 (a)(2) and (3) of the Securities Act

45. Paragraphs 1 through 41 are hereby realleged and incorporated by reference.

46. Defendants Hilker, Baker, PDL and HBI, directly or indirectly, in the offer or sale of securities, by the use of the means or instruments of transportation or communication in interstate commerce or by the use of the mails:

(a) have obtained, are obtaining or are about to obtain money or property by means of untrue statements of material fact and omissions to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; and

(b) have engaged, are engaged, or are about to engage in transactions, acts, practices and courses of business that operated or would operate as a fraud upon purchasers of securities.

47. By reason of the foregoing, defendants Hilker, Baker, PDL and HBI, and each of them, have violated and are violating Sections 17(a)(2) and (3) of the Securities Act.

THIRD CLAIM FOR RELIEF

Violations of Section 10(b) of the Exchange Act of 1934
and Rule 10b-5 Thereunder

48. Paragraphs 1 through 41 are realleged and incorporated herein by reference.

49. Defendants Hilker, Baker, PDL and HBI, directly and indirectly, by the use of the means and instrumentalities of interstate commerce, or of the mails, in connection with the purchase and sale of securities described herein:

(a) have employed, are employing, and are about to employ devices, schemes, or artifices to defraud;

(b) have made, are making and are about to make untrue statements of material fact, or have omitted, are omitting and are about to omit to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; and

(c) have engaged in acts, practices or courses of business which have operated, are operating and will operate as a fraud or deceit upon other persons, including purchasers and sellers of such securities.

(d) Defendants Hilker, Baker, PDL, and HBI, with scienter, engaged in the aforementioned devices, schemes and artifices to defraud, made untrue statements of material facts and omitted to state material facts, and engaged in fraudulent acts, practices and courses of business.

50. By reason of the foregoing, defendants Hilker, Baker, PDL and HBI, and each of them, directly and indirectly, have violated and, unless enjoined, will continue to violate Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.

RELIEF REQUESTED

WHEREFORE, Plaintiff Commission respectfully requests that the Court:

I.

Find that the Defendants, and each of them, committed the violations alleged.

II.

Enter a Temporary Restraining Order as to Defendants HBI, Hilker and Baker restraining and enjoining them, and their officers, agents, servants, employees, and attorneys, and those persons in active concert or participation with them who receive actual notice of the order of injunction, by personal service or otherwise, from violating Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.

III.

Enter preliminary and permanent injunctions enjoining defendants Hilker, Baker, PDL and HBI, their officers, agents, servants, employees, and attorneys, and those persons in active concert or participation with them who receive actual notice of the order of injunction, by personal service or otherwise, from violating Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.

IV.

Enter an order freezing the assets of defendants Hilker, Baker, PDL and HBI and of relief defendants HSB, Westco, TriCord and Brookshire in order to preserve the status quo.

V.

Enter an order against defendants Hilker, Baker, PDL and HBI and relief defendants HSB, Westco, TriCord and Brookshire requiring an accounting, permitting expedited discovery and preventing the destruction of documents.

VI.

Order Defendants Hilker, Baker, PDL and HBI, and each of them, to pay third-tier civil money penalties pursuant to Section 20(d) of the Securities Act and Section of the Exchange Act.

VII.

Enter an order requiring defendants Hilker, Baker, PDL and HBI and relief defendants HSB, Westco, TriCord and Brookshire to disgorge and pay over, as the Court may direct, all ill-gotten gains received or benefits in any form derived from the illegal conduct alleged in this complaint, together with pre-judgment and post-judgment interest as provided by law.

VIII.

Grant such other and further relief as this Court may deem just, equitable, and appropriate in connection with the enforcement of the federal securities laws and for the protection of investors.

Dated this 24^th day of July, 2003

¹ Mr. Foley and Mr. Swenson are not charged with any violation of federal securities laws.

http://www.sec.gov/litigation/complaints/comp18253.htm