Brian Peterson, who reeled about $3 million into his hedge funds, used the slogan "protecting your retirement when it matters most."

But when it mattered most, and investors wanted to know what had happened to their nest eggs, the investment adviser disappeared, state regulators said.

Peterson abandoned his office in Colorado Springs, disconnected his phone and broke off communication, the Colorado Division of Securities alleged in a lawsuit unveiled Friday. Unable to reach him, a number of investors contacted authorities, the lawsuit stated.

Peterson, who persuaded dozens of people to invest in his Integrity Funds, also is accused of self-dealing.

Regulators said he lent $130,000 of the funds' money to Universal Exports, a company he owned, and failed to disclose the deal to investors. They said the company then lent the sum to Pure Distilleries, which he partially owned.

Attorney David Zisser said that while his client Peterson had shuttered his office, "he didn't feel he had been unavailable" and had remained in Colorado Springs.

Zisser said that Peterson had told the Colorado securities division he was in the process of winding down his hedge fund and had planned to distribute the money to clients.

In a Feb. 27 letter to investors, Peterson cited "disappointing performance" and wrote that "we think it is best to close the fund."

The attorney said he believed investors would have been better off had Peterson been allowed to complete the closure of the fund. Instead, a receiver has been appointed in the case.

Peterson marketed each offering as a "fund-of-funds," meaning it pooled investors' money and then re-deployed the cash into portfolios run by other managers.

It's not the first time Peterson has appeared on state regulators' radar. In 2006 he settled a case brought by the Division of Securities after steering investors to a money manager in Colorado Springs, Alan Bird.

Bird, accused of inflating his Vision Fund's returns and misappropriating millions of dollars, faces criminal charges and is awaiting trial.

patonj@RockyMountainNews.com or 303-954-2544