BUSINESS

Gordon Hall trades millions, mansion for prison cell

Robert Anglen
The Republic | azcentral.com
In this 1986 file photo, former Arizona millionaire Gordon Hall sits in his office. Hall, who once boasted he would become a trillionaire in real-estate and other dealings, was sentenced to 96 months in federal prison over a tax scam.
  • Gordon Hall%2C who spent the 1980s playing the part of a larger-than life Arizona millionaire%2C will spend the next 23 years in prison
  • Hall was sentenced last week for a bizarre tax scam in which he told clients he could make their debts disappear by sending bogus checks to the IRS
  • Hall%2C who once owned a 52%2C000-square-foot Paradise Valley mansion%2C has several fraud convictions

Gordon Hall spent the 1980s playing the part of a larger-than-life Arizona millionaire. The person he most regularly tried to outdo was himself.

The real-estate developer and Nautilus health-club entrepreneur lived on the edge of hyperbole, forever promising the biggest and the best.

He was going to plant a 62-story office tower on the Phoenix skyline, the biggest. He bragged about someday becoming a trillionaire, the wealthiest. He lived in a 52,000-square-foot mansion, the best.

But Hall, now 61, will likely spend most, if not all, of his golden years in substantially smaller and far less comfortable accommodations: a federal prison cell.

Hall was sentenced last week to 96 months in prison for orchestrating a $93 million tax scam with roots in the sovereign-citizen movement. That's on top of 180 months he's already serving for his involvement in a South Carolina Ponzi scheme.

MONTINI: The would-be 'god' becomes a convict

According to court records, Hall held seminars at his Mesa home promising people he could make their tax debts disappear by submitting phony money orders to the Internal Revenue Service.

"Participants in a scheme like this typically range from clueless victims who get bad advice to willing participants who could be charged criminally," said Brian Watson, spokesman for the IRS' criminal-investigation division in Phoenix.

Watson said anyone who paid Hall hoping to get out of a tax debt still owes the IRS.

"These bogus filings don't relieve someone's tax debt and the taxpayer could be penalized for sending the document to the IRS," he said.

U.S. District Court Judge Neil Wake described Hall as a financial predator during his sentencing, indicating Hall has operated on the losing end of the legal system for decades.

Hall's downfall is as spectacular as his rise, with multiple fraud convictions involving mobsters, a Wall Street scandal, a bogus gold- and bullion-investment caper and stashing money from federal investigators.

But three decades ago, Hall was a Phoenix celebrity and rode around in a stretch limousine chauffeured by a woman wearing hot pants.

Hall's hilltop Paradise Valley house was something else, indeed. Built by the heir to the Pennzoil fortune, it boasted a 150-seat theater, an ice-skating rink, swimming pool, tennis court and 14-car garage.

In 1986, People Magazine wrote that Hall's house was "dwarfed by his ambition" and noted the 44-foot-wide sign he put on the roof proclaiming it the "Gordon Hall Mansion" because he wanted people to know who was at home.

Hall has come a long way from that People Magazine interview, where he invoked God's name to explain his drive for business success: "God said multiply your talents, don't bury them under a rock or I'll take them away."

About a decade after appearing on the television show "Lifestyles of the Rich and Famous," Hall was in trouble.

By the mid-1990s, his real-estate empire was struggling. He lost the mansion and was staring down an indictment on fraud and racketeering charges, accused of helping organized crime families manipulate the stock market.

Rags to riches to rags

Hall, who had a penchant for quoting self-help books, eschewing vices and promoting a rigorous exercise regimen, made his first fortune in health clubs.

Born and raised in San Diego, he joined the Army after graduating from high school in 1971. After his discharge, he moved to Colorado and served three years as a mail clerk in Fort Carson before buying a small fitness center.

With no formal business experience, Hall turned his fitness-center investment into a health-club empire, launching the 24-hour Nautilus chain and making tens of millions of dollars.

People Magazine estimated Hall's net worth at $60 million before his business model of selling cheap lifetime gym memberships imploded with more members than his facilities could handle.

Hall sold the company and went from pitching health plans to real-estate portfolios. He reduced his business philosophy to sound bites: Buy it, sell it and buy it bigger. Start with houses, move up to commercial real estate. If he could do it, anybody could do it.

But he couldn't. Hall's plans were impressive: the tallest office tower in Arizona; a massive downtown Phoenix hotel; the biggest mall in the world. Enthusiasm, however, could not overcome the 1980s real-estate crash. Projects were grounded, properties sold to creditors.

Hall was nearly broke. Nearly. He moved his family to a rented house in Mesa, and in 1992 parlayed what he had left into a publicly traded used-car business called Eagle Holdings, which targeted high-risk borrowers with high-interest loans.

Hall left the company in 1994. But not before federal securities regulators said he made $2 million on a pump-and-dump stock scheme.

Fraud convictions

The Securities and Exchange Commission filed a civil lawsuit against Hall in 1996 for securities fraud, saying he grossly inflated Eagle's value and then sold stock on the exaggerated share prices.

By that time, Hall was making a serious comeback in the health clubs as chairman and CEO of HealthTech. The publicly traded Mesa company showed signs of success with aggressive marketing statements and earnings reports hyping growth and revenue.

Federal regulators saw similarities between HealthTech and Eagle. In 1997, Hall was indicted on criminal racketeering charges. He was accused of working with the members of the Genovese and Bonanno crime families to manipulate his company's stock price.

Authorities said Hall paid off stock promoters who bribed stockbrokers to run up the value of HealthTech by promoting it to customers. The SEC suspended trading in HealthTech stock, which Nasdaq later delisted.

Hall maintained his innocence, saying he was duped by the promoters who hid their Mafia ties when they signed on as consultants.

A Manhattan jury convicted him in 1999 after four mobsters pleaded guilty in the case. It was the largest prosecution at the time to involve members of organized crime manipulating the stock market.

Hall was sentenced to 87 months in prison and three years of probation. But court records show his criminal career was just getting started.

Hall's probation in the securities case was scheduled to end in 2010. Less than two years later, authorities said he and his 22-year-old son, Benton Hall, became embroiled in a Ponzi scheme involving bogus silver investments.

Authorities said the Halls agreed to help a key figure in the South Carolina scheme hide $1.5 million from federal investigators, including the U.S. Secret Service.

According to federal prosecutors, Wallace Howell received commissions for steering two investors to Atlantic Bullion & Coin. The company purported to make money on silver trades but was a sham that paid dividends to earlier investors using the cash from new ones, prosecutors said.

When the scheme unraveled, Howell panicked and sought the Halls' help to ensure the money he stole couldn't be seized, prosecutors said.

"Howell transferred to the Halls approximately $1.5 million in property, gold and silver coins, equipment, and cash," federal authorities said in a news statement last year. "The Halls then worked to hide this money from the federal receiver and law enforcement."

Gordon Hall was convicted of conspiracy to obstruct justice and wire fraud in April 2014. He was sentenced to 180 months in prison and ordered to pay $172,000 in restitution.

Benton Hall was sentenced to 24 months and was also ordered to repay $172,000.

$93 million tax scam

Conviction in the South Carolina case didn't stop federal authorities in Arizona from coming after Hall and his son for running a tax scam.

By 2013, prosecutors said Hall had become a frequent attendee at sovereign-citizen seminars.

Sovereign citizens are a loose-knit group of tax protesters who use interpretations of archaic laws, including admiralty and common law, to assert their freedom from government authority. Many like to suggest the IRS is an unlawful enterprise.

At one of these seminars, Hall partnered with Brandon Adams, 40, of New Mexico and together they devised the scheme to send fake money orders to the IRS, according to court records.

As part of a plea deal with federal prosecutors, Adams admitted that he and Hall conducted how-to seminars on using fake money orders to nullify a tax debt.

Among the debts Hall tried to erase were his own, Adams said.

"In January 2013, I created two money orders in order for Gordon Hall to pay off his United States tax liability from 1996 and 1997," Adams said in his plea agreement. "I knew that these money orders were means to defraud the IRS."

Authorities said Hall and Adams submitted 149 fictitious money orders totaling about $93 million to the IRS.

Hall and Adams sold clients on the idea that sending a money order to the Secretary of the Treasury creates an accounting entry and reduces any tax liability to zero.

In his own plea agreement, Benton Hall admitted knowing "these fictitious money orders were intended to defraud the IRS."

Adams was sentenced last week to 40 months in prison. Benton Hall was sentenced to 27 months.

Gordon Hall pleaded not guilty and went to trial. He was sentenced last week to 96 months and the judge ordered that he serve his time consecutively — or back to back — with the 180-month sentence in South Carolina.

That totals 23 years, meaning Hall will be about 84 years old when he gets out of prison.