Two people accused of stealing $132 million from hundreds of investors pleaded not guilty to charges in federal court in Richmond yesterday.

Lara Coleman, 40, of Richmond and Edward Hugh Okun, 57, of Miami were arraigned on charges of misappropriating money they were supposed to be keeping for the owners of investment properties.

Okun is in custody pending trial. He wore a two-piece striped, black and gray jail outfit in court yesterday and appeared to be anything but the tycoon portrayed in media accounts elsewhere.

He is the owner of Investment Properties of America and The 1031 Tax Group LLP. Coleman was chief operating officer for the Richmond-based IPA commercial real estate investment business.

According to published reports in Indianapolis and Miami, Okun paid $6.7 million in 2005 for the Miami mansion where he and his wife live and owns a $15.5 million, 131-foot However, Michael S. Dry, an assistant U.S. attorney, asked for an earlier date.

He told Payne there were 577 victims in the case, some of them in the courtroom yesterday. "They've been living with this nightmare for a year and a half. Justice delayed is justice denied," he said.

The documents in question are in a searchable computer database, he said. "This is not a situation where the government provided them 2 million pages of documents in a warehouse and said, 'Have at it.'"

The indictment alleges that from August 2005 through April 2007, Okun and Coleman used 1031TG, a "qualified intermediary company," and its subsidiaries, all owned by Okun, in a scheme to defraud clients of millions of dollars through false pretenses.

Section 1031 of the Internal Revenue Code allows investment-property owners to defer the capital gains tax that otherwise would be due on properties sold, if the proceeds are used to purchase new property in a specified time frame.

Investment-property owners can deposit proceeds from the sale of property with qualified intermediaries and sign exchange agreements, which include various promises by the qualified intermediaries to clients regarding the safekeeping and use of exchange funds.

According to the indictment, 1031TG obtained funds by promising clients that their money would be used solely for 1031 exchanges.

Instead, they are charged with misappropriating $132 million in client funds to pay for Okun's lavish lifestyle, invest in commercial real estate and purchase additional qualified intermediary companies to obtain access to additional client funds.

Robert J. Wagner, one of two federal public defenders representing Okun, said yesterday that his client needed time to collect evidence showing he believed he always had money to repay the alleged victims.

Dry countered that "this case is not about Mr. Okun's belief that he could repay the victims. . . . He lied to people to get their money.

"This case is not complex," Dry said.

Lawyers for both sides and presumed victims in the courtroom yesterday did not comment on where the alleged victims live.

Contact Frank Green at (804) 649-6340 or fgreen@timesdispatch.com.