It could be said that Redstone’s most famous landmark, the Redstone Castle, is also its most infamous.  The Castle, or Cleveholm Manor, was built by the town’s founder, John Cleveland Osgood, as a private home and a showpiece for his model company town.

However, since Osgood’s death in 1926, the castle has endured a dozen different owners, multiple foreclosures, three auctions and a seizure by the IRS. It is the Ponzi scheme leading up to the IRS seizure in 2003 that is the focus of an episode of American Greed, a program to air on CNBC.

On November 21, 2011, American Greed producer, John Pappas, accompanied by a small film crew came to Redstone to interview former castle manager Cynthia (Cyd) Lange. Cyd managed the Castle for 14 years during its heyday as a site for weddings, special events and a B & B.

With permission from current owner Ralli Dimitrius, a several hour interview took place inside the castle.   Cyd explained her role as long-time castle manager and also how she fell victim to the Ponzi scheme perpetrated by then-owner Leon Harte.  

At the height of the “Dot-Com” bubble, Harte purchased the castle at auction in 2000 for $6 million cash, Following a 2-year IRS investigation, the castle was seized By the IRS in 2003. They also seized 60 bank accounts, eight NASCAR race cars (several were stored in the nearby Castle barn) and other cash and property.

Investigators said that from 1999-2003, those behind the investment scheme misrepresented it as being high-yield and low-risk, and used proceeds for purposes different from what had been promised to investors.  “I think this should hopefully send a clear warning to the public that there is no such thing as a risk-free investment; that if you can’t afford to lose it don’t invest it, and that’s it in a nutshell,” said John Harrison, Special Agent/Criminal Investigator at Internal Revenue Service-Criminal Investigation Division.

Hart, who resided in the Castle, was the on-site face of the Ponzi scheme and Norman Schmidt appeared to be the mastermind behind the $56 million fraud scheme.  In 2004, Just two weeks before they were to be indicted, 48 year old Leon Harte died of a heart attack and two weeks later, Norman Eugene Schmidt was indicted.  In 2007, following a six week trial in US District Court, Schmidt was convicted of 37 felony counts, including conspiracy, mail fraud, wire fraud, securities fraud and money laundering. 

American Greed is in its sixth season and is CNBC’s highest rated primetime series.  Each episode profiles cases of financial fraud, corporate crime, insurance fraud, identity theft or murder.

According to Pappas, of Kurtis Productions, producers of the series for CNBC, they learned of the scheme involving the castle from a cellmate of another con man they profiled earlier this season. ‘When I heard about the castle and how much money was involved, it practically wrote itself,” he said.

A native of Colorado, Pappas was not familiar with the Crystal Valley until the interview brought him to Redstone. “Overall I was blown away by the grandeur and exquisite attention to detail at the Castle. After a hundred years, it looks as though it hasn’t aged a day,” he said.

American Greed’s Episode 8 of season 6  “Loan Scam: Money for Nothing,” detailing the fraud scheme involving Redstone Castle, will air on Wednesday, March 21, 2012.

Author Susan McEvoy Strong, 1958-2019, was a prolific writer for the Crystal Valley Echo, manager-caretaker of the Redstone Castle thru several owners, and the secretary of the Redstone Historical Society.  She also was a Pilates instructor, an expert skier, and the Nepal trip leader for Global Dental’s volunteer dental program.  She squeezed a lot of life into her 61 years.