SAMMAMISH PONZI SCHEMER PLEADS GUILTY TO MAIL FRAUD AND MAKING A FALSE STATEMENT
Former Boeing Employee Took in More than $3,000,000 in Investments in Fake Company
LORENZO V. MOLINA, JR., 49, of Sammamish, Washington, pleaded guilty today in U.S. District Court in Seattle to mail fraud and making a false statement. In his plea agreement, MOLINA agrees to pay more than $1.9 million in restitution to victims. The victims invested in a company that MOLINA claimed was in the business of purchasing, rehabilitating, and reselling used aircraft parts. The company was a sham. When sentenced by U.S. District Judge John C. Coughenour on October 8, 2010, MOLINA faces up to 20 years in prison on the mail fraud count, and up to five years in prison on the false statement count.
According to the facts in the plea agreement, between October 2006, and August 2009, MOLINA took in approximately $3,972,431 from investors who thought he was operating a company called “Commercial Aviation Services.” The company allegedly purchased used aircraft equipment, such as emergency slides, refurbished the equipment, and then sold them to airlines at a profit. MOLINA represented that his prior employment with Boeing provided him expertise in this area. In fact, neither the company nor MOLINA purchased, rehabilitated, and resold any such equipment. As in a typical Ponzi scheme, MOLINA used some of the money from later investors to pay off prior investors – inducing them to believe the company was a good investment. Some of the early investors were encouraged to “roll over” their investment, leaving the money with MOLINA for even greater returns.
When MOLINA ran out of money to pay investors in March 2008, he told investors that payments from airlines were being blocked by government agencies because of concern about the source of funds. MOLINA repeated these claims to officials with the Treasury Department’s Office of Export Enforcement and Department of Homeland Security in February 2009. The statements were false – there were no government blocks on any of his bank accounts. The money had simply been spent on a Steinway & Sons grand piano, tuition for private schools for MOLINA’s children, horses, and real estate for himself and his extended family, including homes in Issaquah, Maple Valley, Fall City, and Ft. Mohave, Arizona.
The case was investigated by the United States Postal Inspection Service (USPIS). The case is being prosecuted by Assistant United States Attorney Aravind Swaminathan and Andrew Friedman.
For additional information please contact Emily Langlie, Public Affairs Officer for the United States Attorney’s Office, at (206) 553-4110 or Emily.Langlie@USDOJ.Gov.