Zaler’s cover blown; he surrenders

After nearly a year on the run in Israel, the hot dog king is coming home.

Arnold Zaler, 59, who was indicted in March of last year by a federal grand jury in Denver on multiple fraud charges, was arrested by FBI agents early on Feb. 20, 2009, at Atlanta’s airport after having reportedly spent the last 10 months in Israel.

A federal warrant was issued in Denver last April after Zaler jumped the $25,000 unsecured bond the federal court had imposed on him.

Zaler, the former proprietor of a Denver-based kosher meat market-deli and sports venue hot dog vending business, fled the US shortly after he had been indicted on complex fraud charges, stemming from allegedly fraudulent purchase orders he had used to attract investors.

Jeff Dorschner, a spokesman for the US Attorney’s office in Denver, told the Intermountain Jewish News this week that Zaler’s arrest followed negotiations between Zaler, the FBI and the State Department.

Dorschner described Zaler’s return to the US — and his surrender to federal authorities — as “voluntary.” He would not comment on whether new charges, related to the violation of his bond, would be filed against Zaler.

The fugitive could be returned to Denver as soon as next week, Dorschner added.

Mitchell Baker, who represented Zaler in his federal case before his flight to Israel, told the IJN this week that he no longer considers himself Zaler’s attorney, although that could change once Zaler is brought back to Denver.

If convicted of the charges against him, Zaler could face potential sentences of 20-30 years, fines totaling millions of dollars and restitution to the businesspeople whom he allegedly defrauded.

Sources speculated that Zaler’s surrender may have been triggered by the knowledge that the Jerusalem Post was planning to publish an investigative article focusing on his recent activities in Israel.

That article was published on Feb. 22, two days after Zaler’s surrender in Atlanta. Written by Steve Linde, the article called Zaler “the Bernie Madoff of Denver,” based on his preference for Jewish victims and the fact that an earlier scam of his — for which he was imprisoned for six years in Arizona  in the late 1990s — resembled Madoff’s Ponzi scheme.

The article also reported that Zaler’s months in Israel were hardly idle time.

According to several unnamed sources who spoke to the Post, Zaler was involved with a dizzying array of illegal activities while in Israel, including leaving “a trail of bad checks” in his wake.

One source told the Post that Zaler had been trying to get back into his old Denver trade, negotiating a deal with Israel’s Supersol grocery chain to import kosher hot dogs to Israel. Reportedly, he had also been seeking investors to open a Jerusalem restaurant.

Another source indicated that Zaler had been using an English-language Israeli website known as “Janglo” to scalp VIP tickets for the hugely successful Paul McCartney concert in Jerusalem last autumn.

The Post article said that Zaler regularly attended synagogue in Jerusalem’s Rehavia neighborhood and befriended a network of mostly Orthodox immigrants.

“He was bright and politically very articulate,” one of those acquaintances told the Post. “He was indeed charming and talked a good rah-rah Israel game. He whined a lot and seemed not to be in the best of health. We also got contradictory details about his family from him, but it was only when some of us decided to Google him that we understood we needed to be careful. There have been numerous online warnings about him trying to scam people here. If he succeeded or not, I do not know.”

“He was a real charmer,” another friend told the newspaper. “He really knew how to talk you through anything. And he tried to hit on every female guest we entertained in our house.”

---

Zaler, the descendant of a venerable Denver Jewish family, was a North High School graduate and Colorado Zionist Federation leader in his youth. In the late 1970s, he ran unsuccessfully for Denver’s City Council.

He headed for Arizona some years later, where in 1996 he was convicted of 50 counts of fraud related to a software company, Softie, Inc., which ostensibly developed popular games but which was alleged to have actually worked as a pyramid scheme.

Sentenced to 14 years, Zaler was able to secure parole after having served only six years — reportedly with the help of several prominent Denver businessmen who testified to his character — and soon thereafter was back in Colorado.

Here, Zaler opted to follow his family’s footsteps in the kosher food business, opening Zaler’s Kosher Meats in southeast Denver in early 2004.

His original plan was to open a shop on West Colfax Ave., where his grandfather had operated a kosher meat shop in the early 20th century. Those plans were changed after a Denver-based kashrus supervisory agency, Scroll K-Va’ad Hakashrus of Denver, raised objections about there already being another kosher meat vendor on the West Side.

Zaler’s business seemed to thrive in its first year, gradually evolving into a restaurant and adding kosher Asian food as well as a bakery in 2005.

Late that year, Zaler expanded his business into Kosher Korner, a concession stand selling kosher hot dogs at the Pepsi Center. That part of the business soon expanded, eventually placing vendors in Invesco Field, Coors Field and some Super Target locations.

During the fall of 2006, however, Zaler had further disputes with the Va’ad, this time over various issues of compliance with Jewish law at the Kosher Korner concessions and the meat market-restaurant location.

After the Va’ad’s hechsher, or seal of approval, was removed from Kosher Korner, Zaler and the Va’ad engaged — along with readers on both sides of the argument — in a vigorous debate in the letters page of the IJN.

When Zaler closed Zaler’s Kosher Meats during this period, he said his main reason for shutting down the business was that it was losing money. For a period thereafter, he continued to operate the Kosher Korner locations, although no longer claiming that the concessions were certified as kosher.

In February of last year, after an FBI investigation, Zaler was indicted on 30 counts of wire, bank and mail fraud.

The indictment listed more than $3 million allegedly lost by a list of victims — individuals and businesses — who were lured into investing in Zaler’s businesses under what the US Attorney alleges were false pretenses.

Alleged victims included MEP Group, a New Jersey-based partnership; Spivak Funding, a firm which invests in food companies; and two Denver businessmen.

According to the 2008 indictment, these investors forwarded varying amounts of money to Zaler — by means of wire and mail transfers and a series of transfers from several banks — after being shown falsified purchase orders and invoices indicating debts owed to Zaler.

According to last year’s grand jury indictment, Zaler used such falsified invoices and orders — or otherwise “misrepresented” facts — to indicate that large quantities of hot dogs, frequently in amounts of hundreds of thousands of dollars, had been purchased by such vendors as Kroenke Sports Enterprises, which runs concessions at the Pepsi Center; Centerplate, which operates food and beverage concessions at Invesco Field; Aramark Sports and Entertainment Group, which operates concessions at Coors Field; and Super Target stores.

Shortly after pleading not guilty to those charges in US District Court, Zaler fled the country.

The IJN received reports in late March, 2008 that Zaler had been spotted at the Regency Hotel in Jerusalem by a member of the Denver Jewish community. In less than a month, federal authorities had issued an arrest warrant for him.

It still remains unknown how Zaler — whose US passport had been turned over to court officials in Denver — managed to travel to Israel. Sources told the Jerusalem Post this week that Zaler may have had another passport with which he was able to leave the country.

Read the related blog entry, “Arnie Zaler – out and about in Israel” on Rocky Mountain Jew.