California Ponzi Inventment Fraud Targets Hispanics
In what has been called a Ponzi scheme with a twist, a California investment firm operated a $23 million fraud, specifically targeted at Latino investors.
The U.S. Securities and Exchange Commission (SEC) filed a lawsuit against the El Segundo-based investment firm, Maximum Return Investments Inc., accusing the owner Clelia A. Flores of operating a Ponzi scheme. Flores solicited investments from 150 investors in New York, Georgia, California, Texas, Utah, Illinois, and Nevada between 2006 and 2008. She promised investors she would invest the money in banking, real estate, and oil exploration; and offered returns of up to 25%. Instead, Flores simply took money from new investors and paid interest to older investors.
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According to the SEC lawsuit, as much as $3.5 million was spent on lavish personal expenses, including a down payment on a $1.9 million home. She also threw a grand party to celebrate the company’s "success" at the Ritz Carlton in Marina Del Ray, which unsuspecting investors paid for. Of the $23 million, approximately $13 million was spent making interest payments to investors while more than $5 million was lost in speculative investments. There is no information yet on whether there is a criminal investigation into Flores' actions. The SEC lawsuit is seeking restitution and penalties.
Securities attorneys deal with Ponzi fraud schemes all the time, but this one is slightly unusual because it seems to have been specifically targeted at the Latino community. Flores used old fashioned and effective methods of attracting investors. Not only did she promise high returns, but she also offered a referral fee of 10% to clients who referred other clients to her.
Ponzi Scheme Attorney
A Ponzi scheme investment fraud can only succeed when the numbers of investors are limited and there is a free flow of funds. When the funds dry up or when the number of investors balloons out of control, and the fraudster does not have sufficient funds to pay off anxious investors, the scheme begins to disintegrate. The credit squeeze has unraveled a number of Ponzi schemes from Bernard Madoff's $65 billion Ponzi fraud to smaller frauds like the one Clelia Flores operated.
If you have lost money in a Ponzi scheme the experienced investment fraud attorneys at Arnold & Itkin LLP can help you recover your investments. Contact a securities attorney at Arnold & Itkin LLP to discuss your case.
