'Lord and Lady Chisholm' kept a step ahead of the law for years

From the outside, Colin and Andrea Chisholm's $1.6 million home on Lake Minnetonka was a beauty.

Inside, it was in such ­disrepair, with leaking ceilings and peeling paint, that a friend said it should have been torn down.

The Chisholms, who once referred to themselves as Scottish nobility, "Lord and Lady Chisholm," now sit in the Hennepin County jail, charged in one of the most audacious cases of welfare fraud in state history.

They were arrested in March after fleeing Minnesota for the Bahamas and charged with making $167,420 in fraudulent medical and food-stamp claims in Florida and Minnesota from 2005 to 2012. They can't afford the $300,000-each bail, Colin's lawyer says. Their next court date is June 9.

Friends, who were unaware of the pair's alleged crimes, have been left with a mixture of bewilderment, pain and pity. And they're now drawn to the contradictions that were evident in the couple's lifestyle.

For instance, they say, among the Deephaven house's sparse decorations was an electronic frame that rotated photos of the couple with others of media mogul Ted Turner, castles and polo players, leaving the impression that such associations were routine.

According to friends and business associates, there were more puzzles: Colin Chis­holm, who claimed to have more than $97 million in assets, paid some of his employees in cash under the table, $300 here and $500 there. And while allegedly illegally collecting welfare checks, he volunteered at the Basilica of St. Mary in Minneapolis to help people find jobs. He bounced a check to cover a small membership fee to a business owners' association.

Sometimes Colin would be waiting in a car outside his makeshift office building to hustle arriving employees away from unknown trouble, saying only "we got to go" as he drove away.

"I don't wish any ill will on either of them," said Harry Cushing, who worked for Colin Chisholm in Connecticut in 2002. But "as long as he kept on that path, it was eventually going to catch up with him."

Hasty departure

In March 2012, the Chis­holms' benefits were finally cut off when they couldn't explain how they were able to pay their rent and personal expenses with no income. The couple had more than $3 million in bank accounts and a yacht while they were receiving welfare payments, authorities said.

Colleagues and friends helped police track the couple down in the Bahamas. They had disappeared after abandoning their home, leaving nine Cavalier King Charles spaniels with friends and withdrawing their 7-year-old son from private school in midsemester. At last report, the boy was being cared for by relatives.

In arguing for higher bail, Susan Crumb, assistant Hennepin County attorney, wrote that the couple's hasty care arrangements for Andrea Chisholm's 99-year-old grandmother, who has severe dementia, proved that they had no intention of returning to Minnesota. The grandmother had lived with the Chisholms, and authorities said they were using her money for some of their expenses.

Even as they were on the lam, Crumb said, Colin Chisholm tried to arrange for his family to be smuggled out of the Bahamas to the Turks and Caicos, which has no extradition laws.

On April 24, the congregation at St. Martin's by-the-Lake Episcopal Church in Minnetonka Beach received an e-mail from their pastor, the Rev. Dave Langille, saying that several members had been victimized by a couple who attended the church. Although the couple was not named, everyone knew it was the Chisholms.

"It's now my job as their priest and pastor, and our role as their Christian community, to support them at this time," Langille wrote. "This pastoral support includes our prayers, as well as giving these families the privacy they need while allowing law enforcement and the courts to do their job."

Glamorous pair

Amanda Chisholm, 54, was born in Iowa, and Colin Chisholm, 62, was raised in Maine.

They met in New York City, where she was working in human resources for a large retailer. They married in 2001 at an exclusive club in Greenwich, Conn., Cushing said, adding, "Colin was heavy into getting that relationship started."

Mutual friends brought Cushing and Colin Chisholm together, and Colin pitched his business plan to start a satellite TV network in the Caribbean called TCN Networks in 2002.

Cushing was going to be in charge of telecommunications while Chisholm focused on broadcasting and advertising. He was well-organized and a good salesman, Cushing said.

"The business sounded so sexy. I was very drawn to it," said Cushing. "I wanted it to come true so badly."

Meanwhile, Andrea Chis­holm led the membership group of the Stanford (Conn.) Chamber of Commerce. Cushing described her as "quite a classy gal" who never appeared to have nefarious intentions.

"I think she was really taken in by the whole thing," he said. "I have no doubt Colin loves her, but he was so far down the road with his business aspirations that it was hard for him to come clean."

One of Colin Chisholm's biggest business supporters was Ben Oehler, who was pegged to become TCN Networks' chief financial officer in late 2009 if the start-up had taken off. He invested more than $100,000, calling the network a brilliant idea.

An East Coast securities ­brokerage firm set up an offering to raise $20 million to $30 million from large institutional investors like private equity firms, media companies and venture capital firms for the start-up. They received no investment offers, said Oehler.

"I checked out the business concept with a local broadcasting company and a national media investment bank," he said. "Both said it was an interesting idea, but it was a tough time to start up a business.

Lots of loans

"I think clearly it turns out he lied to a lot of people about his background," Oehler said. "He got a lot of personal loans from people he misled about his ­ability to pay … back."

Before the Chisholms moved into their lakeside rental in September 2009, they lived a few miles away in a smaller rental home in south Deephaven.

Neighbor Hugh Jaeger and his wife had Thanksgiving dinner with the couple and complimented their cooking skills. He laughed as he recalled Colin Chisholm asking him to invest $500,000 in his TV network.

"It just didn't quit with this guy," Jaeger said. "They were very good neighbors to us. I don't have anything bad to say about them at all."

Jay Halvorson met Colin Chisholm in 2010 at a monthly breakfast meeting of about 50 west metro business owners. He said Colin presented himself as wealthy, but he was shocked at the condition of the Chisholms' house during a Christmas party. Most didn't know the house was a rental.

"It was impressive when you drove up," Halvorson said. "Inside, there was water damage in the living room, plaster all bubbled up. It appeared they were breeding dogs in the house, which I thought was unusual."

At last month's bail hearing, attorney Tom Kelly said Colin Chisholm is willing to take responsibility for the welfare fraud charges. The couple had been living off gifts from friends and loans for the past several years after people around him recognized he was in dire straits, he said.

"The television network was his dream," Kelly said. "And he chased it to his undoing."

David Chanen • 612-673-4465