Real Estate Fraud: The Story of the Ponzi Scheme Widow


The ultimate victim of a real estate Ponzi scheme mastermind, who allegedly defrauded millions of dollars from his clients, could turn out to be his own wife of 38 years. The lesson for homeowners is clear: Be careful who you're dealing with, even if it's your spouse.

David Colwell, a 57-year-old insurance salesman from Hamilton, Ohio, died in 2008 from what police believe was a self-inflicted gunshot wound. He killed himself right before federal prosecutors were about to charge him with a $9 million real estate fraud scheme that left some victims penniless.

Now the feds are going after his 59-year-old widow, Pam Colwell. Although she is not being charged with any crime, prosecutors want to seize her property and life insurance policies, valued at $2.5 million. Colwell is challenging the attempted seizure; and her lawyer denies that she had any knowledge of her husband's misdeeds.

Now prosecutors want to make at least partial restitution to the scheme's 90 victims. The government is legally entitled to the property under federal forfeiture laws, if they can link Pam Colwell's property and insurance to criminal activity.

"She didn't have anything to do with this," said her lawyer, Jack Grove. "Her life has unraveled."