Michael Columbia, DJ From Gilbert, Jailed in Arkansas for Allegedly Defrauding Company

A 27-year-old Gilbert DJ who runs a capital investment company out of Scottsdale has been jailed in Arkansas after being indicted in a fraud scheme.

Michael Brace Columbia, when not entertaining local nightclub goers, is the CEO of an investment company called StoneRock Capital Group LLC. His wife, Joanna Columbia, is also listed as a CEO, court records state.

Columbia managed to secure a six-digit payment to his company as part of a deal, but kept a chunk of the money that was supposed to be used as collateral, federal authorities allege.

Last week, U.S. Magistrate Judge Erin L. Setser in the District of Arkansas refused to release Columbia from jail after prosecutors said he was a potential flight risk.

The trouble began, according to the August 22 indictment, when Dan Masters of Texas sought a loan for his financial consulting business. He dealt with Larry Nelson of Arkansas' LAN Holdings, who -- for reasons that aren't completely clear in the indictment -- decided to bring Columbia into the deal.

Nelson purchased a $1 million JP Morgan Chase Collateralized Mortgage Obligation (CMO) bond for $858,000, then had the money wired to a StoneRock bank account in Beverly Hills, California that had been opened by Columbia's wife.

"In order for Columbia to use Nelson's JP Morgan Chase CMO as collateral for a loan, Nelson assigned the CMO to Columbia on or about August 12, 2010," the indictment says.

Instead of using the bond money as collateral for the loan Nelson intended to give to Masters through Columbia, Columbia sold the bond for $417,000 to another company, records state.

Columbia didn't tell Nelson he sold the bond, though. He shipped Nelson $250,000, sending Nelson an e-mail implying the money had come from StoneRock's business funds. On December 2, 2010, Columbia and Masters signed an agreement to do the loan. Columbia promised he would send an additional $1 million to Masters and Nelson, stating that he still had the bond.

On March 21, 2011, Columbia sent Masters an e-mail to let him know the money was on the way.

Two days later, Masters sent Columbia an urgent response: "Nothing is showing up on my end yet." He asked if Masters could send him some proof that the wire transfer had been completed. Columbia strung him along, the indictment states, telling Masters the money was being sent "shortly" and that he'd keep Masters posted.

The money never came, prompting Nelson to send Columbia an e-mail demanding the bond back. But of course, it had been long sold since then, with Columbia and StoneRock pocketing about $167,000, records state.

Nelson's loss was much worse than $167,000 -- he lost more than $440,000 when Columbia sold the bond.

No criminal charges have been filed against Joanna Columbia. Facebook pictures show the couple has at least one child.

Michael Columbia faces up to 30 years in prison and $1 million in fines if convicted.