El Paso County has reached a $3 million settlement with the developer Ray Marshall to resolve his federal lawsuit alleging a former investigator for the El Paso County District Attorney’s Office fabricated evidence and withheld evidence from his criminal defense lawyers. The lawsuit, which sought damages as high as $475 million, alleged Marshall was wrongfully prosecuted from 2009 until 2020 during the tenure of El Paso County District Attorney Dan May despite evidence of his innocence. Marshall faced 86 criminal charges through the filing of two criminal cases but was never convicted. The lawsuit stated that weeks after May took office as El Paso County District Attorney in 2009, his chief investigator, Linda Dix, launched a malicious investigation into Marshall’s business dealings that resulted in a tainted prosecution. The previous district attorney in El Paso County, John Newsome, confirmed that no criminal case or investigation into Marshall existed before May took office, according to the lawsuit. May was El Paso County’s District Attorney for three terms before exiting the office in 2021 after reaching a term limit. Michael Madsen, a spokesperson for El Paso County, said the former insurance carrier for El Paso County and the El Paso County District Attorney’s Office will pay the $3 million settlement. He said the insurance company "settled this matter over the objection of the county and District Attorney’s office," adding that both "maintain that neither they nor any of their employees engaged in any wrongful or illegal act." Other settlements with other parties may have been reached, but potential terms of those settlements could not be determined as of late Friday afternoon.

The criminal cases against Marshall accused him of embezzling more than $1 million from a city of Colorado Springs incentive package meant to keep the U.S. Olympic and Paralympic Committee in the city. A jury acquitted Marshall on 42 counts in the 2009 case, and prosecutors dismissed the remaining charges in May 2020 after another former investigator for the district attorney’s office claimed evidence had been manufactured against Marshall. Because case law affords prosecutors a strong presumption of immunity for their prosecutorial decisions, Marshall’s civil defense lawyers concentrated on the role of Dix, an investigator in May’s office, his lawyers said. May was never named as a defendant in the lawsuit. Documents and information obtained during the civil litigation indicated the El Paso County District Attorney’s Office spent about $5 million in work hours and expenses on the two ill-fated criminal investigations and prosecutions, according to an accounting prepared for Marshall’s civil litigation lawyers. "Defendant Dix engaged in malicious corrupt behavior to essentially ruin Mr. Marshall’s life and career for over 11 years," the lawsuit claimed. May and Dix did not respond to messages seeking comments.

In one letter obtained during discovery, Dix told May and another prosecutor she was instructed to file the charges quickly. "When I worked on this case, I was told to get what I could file as fast as I could and we would continue to investigate and amend the charges," Dix said in the April 25, 2019, letter she wrote to May and Senior District Attorney Amy Fitch that was uncovered during discovery. Dix added in that letter that after she left the District Attorney’s Office to care for her daughter, who had been injured in a car crash, the criminal case languished. She said the DA’s office asked her to help on the case again in 2014 or 2015, and when she returned to the case, she found that "nothing had been done on the case in all the years." "The current assigned DAs had not even had time to read the case as they were tied up for weeks on various homicides," she added in her letter. "In frustration, I was done and wanted nothing more to do with the case, and frankly, still feel that way," she further stated in the letter. Robert Sexton, the former district attorney investigator who claimed Marshall was innocent, filed a court affidavit in 2020 claiming that Dix "misled the court as to the true and relevant facts of the case." Sexton also was a former investigator for the Colorado Bureau of Investigation, a former agent in charge of major crimes for the state lottery and a former director of security and investigation for the state’s revenue department.

When a final prosecutor on the case, then- Senior District Attorney Amy Fitch decided to dismiss the final criminal case, another prosecutor in a text message told her to "consider a well-crafted written motion to dismiss." "I hope the grounds for dismissal will not concede any of the facts of our case as we know them," said Robyn Cafasso, then the chief deputy district attorney in El Paso County. "We all know that Marshall is a vindictive person." "We hope to avoid any civil ramifications," Cafasso added. Marshall’s civil litigation team was led by Denver lawyer Jane Fisher-Byrialsen, who pursued a successful civil rights case on behalf of one of the so-called Central Park Five – New York City teenagers imprisoned in a jogger’s 1989 rape and later exonerated. In 2014, Fisher-Byrialsen’s New York client was awarded $12.2 million in a settlement.

The lawsuit claimed Dix concealed recordings of Colorado Springs City Council executive sessions that allegedly showed the city of Colorado Springs and the U.S. Olympic and Paralympic Committee "colluded" against Marshall to sabotage the redevelopment package. Those recordings weren’t turned over to Marshall’s criminal defense lawyers for nearly a decade despite "numerous" court orders that "all discovery be turned over to Mr. Marshall’s defense lawyers," the lawsuit alleged. In one recording, then-City Councilwoman Margaret Radford is heard stating: "My heart just wants to kick his ass out of the deal and then get the building at a fire sale." Another then-Council Member Randy Purvis, stated during one executive session that Marshall and his development company "are being set up by the city to take the fall." U.S. District Court Judge Nina Wang dismissed claims in the lawsuit alleging that Dix conspired with the city of Colorado Springs and Colorado Springs City Council members to keep those executive sessions from the criminal defense team. "The court agrees that Mr. Marshall fails to sufficiently allege a concerted action on the part of city defendants," Wang wrote in the ruling. "Plaintiff’s allegations, though numerous, are largely conclusory and lacking in factual support." However, Wang rejected in her ruling Dix’s contention that she was entitled to absolute immunity from Marshall’s claim that Dix withheld potentially exculpatory evidence from the defense. Wang noted in her ruling that case law has established "that where a court orders the production of certain evidence, the court ‘removes all discretion from the prosecution.’” Wang also found that Marshall’s claim that Dix used a "false, sworn statement of fact in an arrest warrant affidavit” if proven true could amount to a constitutional violation of due process. Marshall had contended in the lawsuit that the prosecution forced him to sell substantial real estate holdings and caused foreclosures on other properties, which he claimed harmed him financially. Those properties, owned by others after his liquidation of his assets, sold in 2022 for $33 million. As a result of the liquidation of his assets, Marshall’s losses in real property ranged from $132 million to $283 million because he lost out on the increases in value of those properties, according to Gary Schwartz, a managing partner in a forensic accounting firm hired by Marshall’s civil lawyers. His losses in ongoing income and cash-flow from those properties ranged from $127 million to $192 million, Schwartz further added in his forensic accounting report.