Elizabeth C. Baldwin, at the Newport Shipyard in 2006, is charged with embezzling $7.3 million from 47 investors. State police say Baldwin used the money to buy and operate a 65-foot yacht, rent a house in St. Barts and travel abroad.

Special to the Journal / Billy Black

NEWPORT

In yachting circles, Elizabeth C. Baldwin was known as “Liza,” an affable divorcée and wealthy commodities trader who spent the high days of summer racing under snapping sails.

In June 2006, Baldwin, then 60, chartered one of the most distinctive sailboats in the harbor, a 65-foot mahogany sloop, for the centennial Newport-to-Bermuda race and announced intentions of buying it after the race.

Baldwin’s boat, the Van Ki Pass, won the race in its category and Baldwin reportedly told a local reporter the experience seemed a “Cinderella story.”

Law enforcement officials say it was part of a tale of deception.

On Monday state police arrested Baldwin at her Newport apartment overlooking the harbor on charges that she embezzled $7.3 million from 47 investors — many of whom she had met or been referred to on waterfronts from Newport to the Caribbean.

Baldwin skippered an elaborate pyramid scheme, officials say, in which she paid off early investors with money she duped from later investors. Some of their money allegedly allowed Baldwin to buy the Van Ki Pass, rent a house in St. Barts and travel through the Caribbean and Europe.

The state felony charges were the latest to beset Baldwin; federal officials leveled civil complaints against her last fall as part of the same investigation.

But the allegations are inconsistent with the woman many have known for years along the Newport waterfront, says Jeff Stone, a marine appraiser who has captained yachts out of Newport for 30 years and who skippered the Van Ki Pass for Baldwin last summer in the Mediterranean.

“What I know of her, she is a very honest and thoughtful, caring and committed person,” said Stone.

Last summer Baldwin told Stone that she was shipping the Van Ki Pass to the Mediterranean rather than have him and a crew sail it across the Atlantic and risk encountering storms.

“She said she felt very uncomfortable shouldering that kind of burden,” he said. “She would have never forgiven herself if anyone had gotten hurt or lost.”

Some of Baldwin’s investors, however, portrayed her much differently to state police investigators.

In a 16-page affidavit, state police Detective Todd E. Catlow described how 11 of Baldwin’s investors from Virginia Beach, Va. — who had collectively invested $1.9 million — first suspected wrongdoing when, through the course of telephone calls, they discovered Baldwin had refused many of their requests to return some of their money. The affidavit gives the following account:

Baldwin initially blamed bad health — “problems with high blood pressure and anxiety” — for the delay in returning their money.

But when none of their money ever came back to them and e-mails and telephone calls went unreturned, eight of the investors agreed to meet, last Sept. 11, at the home of James Altizer, a retired commercial airline pilot now living in Virginia Beach, to discuss what they would do next.

Altizer, one of the investors, had met Baldwin in St. Barts in January 2005. At that time Baldwin told Altizer that she was a trader who had just had a large investor withdraw from her group. Baldwin offered to let Altizer and his wife participate in the fund. Between April and September of 2006 each invested $100,000 and within a year their investments supposedly grew — one to $179,518.84, the other to $248,671.02.

But now Baldwin was refusing to release any of their money back to them.

Three hours before the Virginia investors would meet at Altizers’ home, James Altizer called Baldwin. During that telephone call, Baldwin admitted that she had had “a catastrophic trading loss of $4 million.”

Baldwin said the trading loss occurred because she was dyslexic and instead of “going short” she “went long” with a trade and before she realized it, she was down $4 million.

The investors were not pleased with the news.

Baldwin promised if the investors would just hold on, she would cover their losses. She explained how she had transferred money into a bank account in St. Barts and would pay them, with interest, with those funds.

But when one of the investors asked to see a record of the trade that caused the $4 million loss and the record of the wire transfer for the St. Barts deposit, Baldwin allegedly refused “on advice from her lawyer.”

Two days later, two of the investors met with Rhode Island state police in Scituate.

Baldwin called her investment business The Newportant Group and ran it from her apartment at 1 Commercial Wharf, an elongated brick building overlooking the summer berths of million-dollar yachts.

But according to the affidavit, her state trader’s licenses expired in 2002, her registration with the National Futures Association expired in 2005 “and the Newportant Group has never been registered” with proper agencies.

Not all of Baldwin’s clients, however, apparently lost money.

Janet Booth, for instance, is described in the affidavit as a close friend of Baldwin’s whose investments with her had made her enough “millions” she no longer needed to work. Booth encouraged others to invest with Baldwin, including Thomas Perry, a boat captain.

Perry’s luck wasn’t so good. He told investigators he invested a total of $146,558.67 with Baldwin between 2006 and 2007 and “to date, Perry has never received any funds from his investment.”

Last August, Perry became the captain of the Van Ki Pass and traveled with the sloop to Spain. Baldwin promised to pay Perry’s wages and reimburse him for expenses he paid out of his pocket, amounting to about $98,000.

“Baldwin did not pay Perry,” the affidavit says, and Baldwin owes the shipyard in Spain $80,000 in storage fees.

Baldwin could not be reached for comment yesterday. No one answered her apartment door on Commercial Wharf. Her lawyer did not return a telephone call.

On Monday, District Court Judge Stephen P. Erickson released Baldwin on $100,000 surety bail and ordered her to surrender her passport.

She is expected back in court later this month to enter a plea on the felony charges.

tmooney@projo.com