Miami Resident Pleads Guilty in Multi-Million Dollar Ponzi Scheme that defrauded Friends and Family
Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida, John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, and Linda Charity, Interim Commissioner, State of Florida’s Office of Financial Regulation (OFR), announced yesterday’s guilty plea of defendant Juan Carlos Rodriguez, 49, of Miami, for his role in a Ponzi scheme that solicited more than $5 million from approximately 115 victims, according to the charges. Rodriguez pled guilty to committing wire fraud to execute his Ponzi scheme, in violation of Title 18, United States Code, Section 1343.
Sentencing is scheduled for August 30, 2012 before U.S. District Judge William P. Dimitrouleas. At sentencing, Rodriguez faces a possible maximum statutory sentence of up to twenty years in federal prison and mandatory restitution to the victims of his crime.
This case is part of the Southern District of Florida Securities and Investment Fraud Initiative (the Initiative), first announced in December 2010 and designed to combat securities and investment fraud and protect the interests of the investing public. The Initiative was established to address the increase in securities and investment fraud schemes in the Southern District of Florida. In addition to the U.S. Attorney’s Office, FBI, SEC and OFR, other participating agencies in the Initiative include the Internal Revenue Service, Criminal Investigation Division (IRS-CID), U.S. Secret Service (USSS), U.S. Postal Inspection Service, Federal Deposit Insurance Corporation, Office of Inspector General (FDIC-OIG), U.S. Commodity Futures Trading Commission (CFTC), and the Federal Trade Commission (FTC) Southeast Region. Among the goals of the Initiative is to alert the public about the prevalence of these types of schemes, educate the public on how to avoid falling prey to these schemes, and to highlight the law enforcement response to the problem.
The Southern District of Florida ranks second in the nation in securities and investment fraud investigations and prosecutions. Using the strike force model successfully developed in the health care and mortgage fraud areas, the Securities and Investment Fraud Initiative has yielded similar success. Since its inception in December 2010, the Initiative has resulted in charges against 85 defendants in the Southern District of Florida, resulting in more than $1.5 billion in restitution ordered.
According to the factual proffer introduced at Rodriguez’ change of plea hearing, MDN Financial Group, Inc. (MDN Financial) was a Florida corporation located in Coral Way, Miami. MDN Financial solicited money from investors claiming that the company invested in stocks, bonds, and other securities. Rodriguez was the sole officer, director, and registered agent for MDN Financial. Between January 2007 and October 2010, Rodriguez solicited individuals to invest in MDN Financial. Rodriguez recruited colleagues and friends, and encouraged them, along with their family members, to recruit others to invest in MDN Financial. Rodriguez told investors that through MDN Financial their money would be in stocks, bonds, and other securities. In fact, however, Rodriguez did not use the money to invest on behalf of the individuals, but instead used the money for his personal benefit and to further the fraud.
To induce individuals to invest their money with MDN Financial, Rodriguez falsely told investors that by giving MDN Financial thousands of dollars to hold for six months or a year, MDN Financial would guarantee that the investors received a large monthly payment. Rodriguez further falsely promised investors that they would receive twenty, thirty, forty, and in some cases even fifty percent returns on their investment. The more money invested, Rodriguez said, the higher the rate of return.
To convince investors of the safety of their investment, Rodriguez falsely claimed that at the end of the six month or one year period he would return the original investment to the investors. Based on Rodriguez’s false representations, prospective investors provided their money to MDN Financial with the belief their money would be invested in stocks, bonds, and other securities. Rodriguez caused MDN Financial to send investors monthly “annuity” payments to lull investors into a false sense of security and to conceal the false and fraudulent nature of the scheme. Rodriguez would use other investor money to fund the monthly distributions to the investors. At the end of the six month or one year investment period, Rodriguez induced investors to renew their investment agreements with the company and not seek the return of their initial investment money.
Because Rodriguez did not invest as promised, and instead used the money collected to pay for his personal expenses, he could not afford to continue paying investors the significant monthly payments required to be paid under the supposed investment agreements. In response to investor complaints, Rodriguez falsely blamed the banks for his failure to send the monthly payments, and if he paid at all, it was less than what was owed under the investment agreements. By October 2010, Rodriguez and MDN Financial had no money to make monthly payments any longer, nor could he return the investors’ initial investments.
Mr. Ferrer commended the investigative efforts of the FBI and OFR. This case is being handled by Assistant U.S. Attorney Robert J. Luck.
A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.