By Amy Silverman
By Olivia LaVecchia
By Monica Alonzo and Stephen Lemons
By Chris Parker
By Michael Lacey
By Weston Phippen
"It's the worst thing that's ever happened to us," says Bill Buell, who retired a few years ago after working most of his career in the cattle business. "The money we lost was bad enough. But the worst thing was knowing you were getting robbed and feeling helpless to do anything. ... The guy has a handshake like a wet fish. That should have been our first warning."
Buell's dream for years had been to design and build a big, beautiful boat. He saved his money wisely and decided to make that dream come true.
The couple moved to La Conner, Washington, where Bill Buell hooked up with a veteran boat architect. Together, the men designed a fantasy yacht, a 63-foot aluminum-hulled beauty.
The Buells say they named their yacht The Capriccio for several reasons. One of Geri's favorite places is an upscale Scottsdale store of the same name. The couple also looked up the definition of the Italian word: It means light and airy, and a fanciful whim--which also fit their yacht.
For tax purposes, the Buells created a corporation, Argonaut Motor Yachts, that owned 100 percent of the stock in The Capriccio. The Buell Trust--Geri and Bill Buell--owned Argonaut.
In April 1989, Argonaut obtained a certificate of documentation--the seagoing equivalent of title--from the Coast Guard. That year, however, the couple decided to sell the yacht.
Geri Buell says she was homesick for Arizona, and the cost and stress of keeping the boat seaworthy were considerable.
Bill Buell hired a production company that year to make a videotape of The Capriccio as a marketing tool. The ten-minute tape, called "In a Class of Its Own," shows off the yacht at its best.
Down in Arizona, Stephen Peterson watched the videotape and liked what he saw. He contacted the Buells through a middleman. During negotiations, Peterson assured the yacht owners that the Keebee Corporation and its cache of precious metals would be listed on NASDAQ any minute.
Bill Buell says the contract he signed with Peterson on December 17, 1990, was designed to protect his lucrative asset: Buell agreed to deliver Argonaut's shares to an escrow agent. Peterson said he'd pay $1.3million in cash from expected proceeds of Keebee stock to the escrow agent by March 1, 1991.
But on the day the contract was signed, Peterson also filed a remarkable document with Washington's secretary of state. The amended annual report claimed that Stephen and Mary Peterson were the new president and treasurer, respectively, of Argonaut Motor Yachts.
The office put its official seal of approval on the document--even though there was no evidence that Argonaut Motor Yachts sanctioned the transaction.
"That's the standard way we do things," explains a representative for the secretary of state. "We just can't physically check up on everyone who brings in paperwork for us to process."
This would have dire results for the Buells. Peterson could wave around an official document that showed he owned The Capriccio.
Within weeks, Peterson took advantage of "his" lucrative new asset. A new middleman introduced Peterson to a retired Albuquerque orthodontist, J.B. Veale. Peterson told Veale he needed a $110,000 loan to fund start-up costs for one of his distressed Phoenix motels. In return, he'd repay the doctor $130,000 within four months.
Peterson first said he'd secure the loan with stock in the Keebee Corporation, but Veale didn't bite. Peterson then said he'd secure it with The Capriccio.
He flew to Albuquerque and showed Veale several documents, including American Security Corporation's financial statement, his personal financial statement, a copy of the Coast Guard certificate to The Capriccio and an Argonaut board of directors resolution signed by the Petersons and authorizing the use of the yacht as collateral.
Veale was impressed. He gave Peterson a certified check for $110,000--the last he would see of that money. Records show Peterson paid the middleman a finder's fee of $10,000 and pocketed the rest.
Back in Arizona, however, the middleman in the Veale loan--Neil Cooper of Scottsdale--had done some homework. Cooper says Peterson had admitted to him that he couldn't even afford to turn on the utilities at one of "his" motels, the Airporter Inn.
He saw Peterson wasn't putting anything into the motel. He perused a recent TRW credit report of Peterson's, which came up fairly clean.
"The only thing that bothered me was that [the report] was only a year-and-a-half old," Cooper says. "His answer to that was that he was in the federal witness protection program. It took about 45 days of total hard diligence before I really found out where he was coming from. But it was very, very difficult for us to determine that he didn't own the boat."
As the March 1 escrow-closing deadline neared, the Buells began to piece together what was going on--partly by luck.
First, a realtor friend in Arizona congratulated them for having sold their yacht. The friend happened to have seen Peterson's financial statement--he already was negotiating another deal--which listed The Capriccio as an asset.
Then, one of Peterson's ex-associates snitched on him, telling Buell that Peterson had filed the critical documents with the Washington secretary of state.
Buell immediately called that office. He says a clerk told him that, as far as its records were concerned, Peterson was the president of Argonaut. Buell then alerted the Coast Guard.