Money for nothing: Keith Simmons stacked the deck against his investors in a Ponzi scheme that took in more than $40 million.

• Author: Martin, Edward
• Position: COVER STORY

Standing at the door of the chartered Cessna Citation II, a beaming Keith Simmons greets his guests. "This is the way we roll!" After bounding up the steps, Scott Mabe, who mows lawns and does repairs for Simmons, sinks into a soft leather seat. Ninety minutes after clearing nearly deserted Wilkes County Airport, the jet touches down in Florida. Mabe, with the others, checks into his $188-a-night hotel room, changes into shorts and relaxes. That evening, he'll watch wide-eyed as Cage Dolls cheerleaders dance while opponents pummel each other in contests staged by Tampa-based Xtreme Fighting Championships Inc., one of Simmons' investments.

"Short and sweet, this was probably the best time I'll ever have in my life," Mabe says. "Each of us had our own room, all the food we could eat at Don Shula's restaurant and all the drinks we could drink. Girls from the office went. He wanted to show them off and show off his money." In 2008, Simmons was rolling in it. But all that's left now are melancholy reminders, such as one in northwest Ashe County where the North Fork of the New River meanders through a deep, green valley near the Virginia and Tennessee state lines. Crows caw in the yard of an empty, stained-wood A-frame house, the dust of disuse clouding its windows.

Places like this on Hidden Mountain Lane suited Simmons. Not only did he invest in ventures such as Xtreme Fighting and burn through $166,000 in a year and a half on chartered jets, gift cards, limousines, parties and junkets like the one Mabe went on, but he sank $4.9 million into real estate. They were good times, and he promised they'd get even better.

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Between 2007 and late 2009, Keith Franklin Simmons committed what investigators call the biggest financial fraud in Tar Heel history. Victims included a Mount Olive Pickle Co. executive who lost at least a million dollars. Others were shorn of smaller sums. "Let's just say, less than $100,000," David Eastman, 66, confides, some of it from insurance the Pawleys Island, S.C., resident collected after his first wife died of cancer. Albert Yale, a 79-year-old Apopka, Fla., retiree and wife Marilyn, 76, were out $36,000 they had saved toward a slot in a Christian retirement home. "We saw an ad in an investment magazine promising investors a 'good night's sleep,'" he says. "I don't take that magazine anymore."

Authorities say the Ponzi scheme sucked in more than $40 million. As it unraveled, Simmons told antsy investors his Black Diamond Capital Solutions hedge fund was worth $378 million. Though the government seized the house on Hidden Mountain and other assets, some suspect he hid millions in offshore banks. Legally, he's indigent, sitting in a cell in Atlanta Federal Penitentiary awaiting a permanent prison home. Sentenced to 50 years, no chance of parole, for securities fraud, wire fraud and money laundering, he'll be 97 if he ever gets out. His court-appointed lawyer denies there was any criminal intent. "It was," he says, "a had business plan."

Beneath the obfuscating language of lawyers and prosecutors lies a tale tangled in audacity and deceit. Tight-lipped federal investigators reveal only that more arrests might follow, silencing Simmons' associates and victims alike. Some speak only under condition they not be identified. But reconstructed from dozens of sources--neighbors who thought they knew him, lawmen who suspected him, employees who trusted him and public records that shed light on him--his is a story steeped in shadows, like those cast by Mount Jefferson, the 4,665-foot green giant that towers over the twin towns where the man one victim calls "a narcissistic psychopath" lived a double life.

West Jefferson had 1,299 residents when last counted, and Jefferson, the conjoined county seat, 1,611. At 7:05 a.m. that Friday, a week before Christmas 2009, after helping buckle their two children into his wife's Lexus, he kissed brown-eyed Suzanne goodbye in Candlelight Park, a West Jefferson development where homes typically range from $300,000 to $400,000. Outwardly, the marriage seemed steady. Inwardly, she was suspicious of his inexplicable absences and behavior.

A few miles away, on South Main Street in Jefferson, his businesses had outgrown the large, 1950s brick house he had converted into offices. With lavish landscaping, backyard gazebo and paved yard with employees' cars often filling all 21 parking spaces, it was conspicuous. But few townsfolk had seen inside the 25,000-square-foot office condo in Jefferson Station, the former chair factory a block off Main Street less than two miles away in West Jefferson.

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Still being upfitted, it was becoming his new center of operations. A door off the office suite opened into a 4,350-square-foot apartment. "It looked like something you'd see in a magazine or New York, not Ashe County," one of his former executives, who had been given a tour by his boss, recalls. In the bedroom, round armchairs with brown cushions and black-and-white checked upholstery sat at the...