SEC Charges Miami Fraudster in Ponzi Scheme for “No-Risk” Loan Agreements

On June 2, 2010, the SEC charged Luis Felipe Perez in a $40 million Ponzi scheme who raised funds to purportedly support jewelry businesses and pawn shops.

Perez arranged “no-risk” loans with mostly Hispanic investors and promised to pay them guaranteed annual returns of 18 percent to 120 percent. Perez misrepresented to investors that their investments were collateralized by diamonds.

Instead of financing his jewelry businesses, Perez misappropriated new investor money to pay prior investors and stole at least $6 million for lpersonal spending.

Perez spoke of his track record in providing risk-free investments in order to solicit new investors through word-of-mouth from existing investors.

Perez told some investors that diamonds from the pawn shops had specifically been set aside for them as collateral securing their investments. In some instances, Perez placed them in a bank safety deposit box to which he and the investor had access. The diamonds, however, were fake.

Perez told other investors that he added them as beneficiaries on his life insurance policy. He omitted, however, that he defaulted on his policy premiums and let the policy expire.

Why does South Florida remain the Ponzi Scheme capital of the United States? It appears that a combination of cultural and demographic factors make our area fertile ground for fraud.