Peruvian National Pleads Guilty In Manhattan Federal Court To Commodities And Wire Fraud For Running Million-Dollar Ponzi Scheme
Joon H Kim, the Acting United States Attorney for the Southern District of New York, announced that PEDRO JARAMILLO, a/k/a “Enrique Jaramillo,” pled guilty in Manhattan federal court yesterday to commodities fraud and wire fraud stemming from his scheme to defraud more than two dozen investors, mostly retirees and professionals from Peru and countries in Latin America, of more than $1.2 million through a fraud scheme in which JARAMILLO solicited investments largely for the purported purpose of short-term commodity futures contracts but instead diverted the funds for his own purposes. As a result of their investments with JARAMILLO, investors have lost their life savings, retirement funds, and their homes.
Among other false and misleading statements, JARAMILLO represented to clients that he was an accomplished Wall Street commodities trader who partnered with a certain well-known international investment bank (the “Global Investment Bank”) to earn returns of 25 percent every 90 days for his investors. In fact, JARAMILLO utterly failed to invest monies as promised, had no partnership with the Global Investment Bank, and instead diverted the majority of investor funds to his own use through cash withdrawals, debit purchases, and by wiring funds offshore. The investor funds not diverted offshore or directly to JARAMILLO were used to repay earlier investors whose redemption requests could not be forestalled, in a Ponzi-like fashion.
JARAMILLO was arrested on December 2, 2016, and pled guilty yesterday before United States District Judge Laura Taylor Swain.
Acting U.S. Attorney Joon H. Kim said: “As he admitted, Pedro Jaramillo lured investors with the promise of guaranteed high returns, but the only one who profited was Jaramillo. He failed to invest funds as promised, and paid back early investors with funds from later investors. Many of the victims of his frauds lost their life savings. I want to thank the FBI for working with us to protect investors.”
According to the Complaint, the Indictment, and other statements made in open court:
From at least January 2014 to in or about December 2016, JARAMILLO solicited more than $1.2 million in investments from more than two dozen investors, primarily for the purported purpose of investing in commodity futures contracts, by falsely representing, orally and in writing, that investor monies would be invested in short-term commodities contracts with a guaranteed rate of return.
To help attract investors, JARAMILLO maintained an office on Wall Street (the “Wall Street Office”) where he met with prospective investors to tout his prior success and relationship with the Global Investment Bank. JARAMILLO also starred in a youtube.com video (the “Video”) set to the soundtrack of Frank Sinatra’s “New York, New York.” The Video featured a series of images of Wall Street, the New York Stock Exchange, and JARAMILLO in front of the Wall Street Office. In the video, JARAMILLO told prospective investors that he was a “proven winner” and “trusted partner” who would maintain individually managed and federally insured accounts for each client. JARAMILLO told prospective investors that these safeguards would ensure that prospective investors would “be protected against fraud and brokerage failure.”
In truth and in fact, JARAMILLO not only failed to create individual investment accounts, he also failed to use investor funds to make any legitimate investments, instead diverting the majority of funds to his own use, out of the country, or to repay earlier investors whose redemption requests could not be forestalled. In total, JARAMILLO diverted more than $700,000 to his own use in the form of cash withdrawals and debit card purchases used to fund his lifestyle, including thousands of dollars on three vacations to Disney World for JARAMILLO, family, and guests.
To hide his misappropriations and continue to fund his personal lifestyle, JARAMILLO also used new investor funds to pay back other investors in a Ponzi-like fashion. In total, since January 2014, JARAMILLO distributed more than $200,000 back to investors from funds deposited by new investors. During that time, JARAMILLO also diverted more than $100,000 of investor funds out of bank accounts he controlled in the United States to foreign bank accounts, including in Peru, where JARAMILLO is a citizen.
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JARAMILLO, 48, a Peruvian National who was residing in Queens, New York, before his arrest, pled guilty to one count of commodities fraud and one count of wire fraud. The commodities fraud count carries a maximum sentence of 10 years in prison and a maximum fine of $1 million, or twice the gross gain or loss from the offense. The wire fraud count carries a maximum sentence of 20 years in prison and a maximum fine of $250,000, or twice the gross gain or loss from the offense. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. The defendant, who has been detained since his arrest, will be sentenced at a future date by Judge Swain.
Mr. Kim praised the work of the Federal Bureau of Investigation. He also noted that the investigation is continuing.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Andrea M. Griswold is in charge of the prosecution.