Some of the people convicted in the state’s largest real estate fraud, the collapse of Colonial Realty’s $2 billion empire two decades ago, are now tangled in lawsuits over defaulted loans and failed real estate deals, some worth millions of dollars.

West Hartford-based Colonial Realty imploded into bankruptcy in September 1990, costing more than 6,000 investors as much as $350 million. Many investors lost their life savings. Most of the nearly 20 people convicted in the scandal got probation, six were sent to prison and Colonial chief financial officer Frank Shuch killed himself while awaiting trial on fraud charges.

Prosecutors said Colonial officials hid the company’s failing finances from investors and continued to sell shares in limited partnerships when they knew the company was doomed. While some defendants were banned for life from the securities business, no one was barred from buying, selling or investing in real estate.

Kevin Sisti, the son of Colonial co-founder Benjamin Sisti, was sentenced to probation for helping hide his father’s assets as the scandal unfolded. Today, he’s involved in several lawsuits, including one over a $6 million investment he made in two Tennessee apartment complexes.

Kevin Sisti, Colonial co-founder Jonathan Googel and former Colonial executive William Candelori also are named as defendants in lawsuits over $8.7 million in defaulted mortgages on property in Groton. The three men aren’t accused of wrongdoing but are named peripherally because they have interests in the property — tens of thousands of dollars in lost investments.

Googel was sentenced to seven years in prison for the Colonial fraud, while Benjamin Sisti got nine years. Candelori, a former Democratic state representative from New Britain who got probation for tax evasion in the Colonial case, now chairs a regional sewer system authority.

One person who lost money in the Colonial fraud said he is shocked people convicted in the scam have returned to real estate wheeling and dealing.

“To see these guys go back into business, it’s just astonishing,” said Wolcott resident Robert Ficeto, who lost $50,000 in the scandal. “From the depth of the injury these people inflicted, they should be barred from doing any real estate [deals] forever.”

Attorney Hal Hirsch, a trustee for Colonial’s creditors in bankruptcy court, said he didn’t think anyone can be barred from buying and selling real estate and wasn’t surprised that some Colonial players are involved in property deals. “People gravitate to what they know,” Hirsch said. “Real estate is not necessarily well regulated. It’s a very easy cesspool for people who don’t play by the rules.”

Borrowed Money

Kevin Sisti, Googel and Candelori deny they’re doing anything wrong. Sisti, of Farmington, said in an e-mail sent to The Associated Press by one of his attorneys that he has borrowed money for his investments but didn’t say from whom.

In the Tennessee apartments deal, Sisti is suing business partner Selim “Sam” Zherka, of Katonah, N.Y., in federal court. Sisti claims he gave $6 million to Zherka in 2007 to invest in the apartment complexes but hasn’t received any money back, including a promised return of 10 percent a year.

“I’m presently negotiating a settlement with Mr. Zherka, and our relationship continues to be a positive one,” Sisti said.

Zherka and his lawyer, Richard Small Jr., didn’t respond to messages from the AP. Small’s law firm partner is Mark Pagani, who was sentenced to probation for hiding assets from Colonial Realty’s creditors and was suspended from practicing law for four months.

Zherka, publisher of The Westchester Guardian weekly newspaper, has been involved in numerous lawsuits and has accused New York City and Westchester County government officials of wrongly branding him as an Albanian mobster, according to federal court records. Zherka is also being sued by two firms that claim he broke an investment deal involving a Manhattan strip club.

Last month, Kevin Sisti agreed to pay $638,000 to the owners of the former Sands casino in Atlantic City, N.J., to resolve a two-decade-old gambling debt. Sisti said the casino lawsuit was supposed to be part of a larger settlement 15 years ago. He didn’t elaborate.

Several years ago, Sisti, Googel and Candelori were early investors in a 21-acre parcel in Groton where apartments were planned. All three say they lost money in the deal. Land records show Googel and Candelori sold their interests in the property for $20,000 apiece in 2006 and were supposed to get an additional $25,000 apiece when the property was sold. The land, however, remains unsold and undeveloped. “I probably just made a bad investment,” Candelori said. “At this point I’m licking my wounds.”

The Groton property is now the subject of four lawsuits before the state Appellate Court over two defaulted mortgages. The holder of one of the mortgages, Allstar Capital, is owned by Daniel Gordon, a Norwich native sentenced to 42 months in prison in 2005 for stealing $43 million from Merrill Lynch, where he was the chief energy trader.

Googel, Candelori and Sisti said they had nothing to do with the mortgages. Googel said all he wants now is to stay out of any limelight.

“I have a family. I have grandkids,” Googel said. “I’m retired.”•