A 28-year old Seattle man was charged today with five counts of wire fraud in connection with what authorities classified as a Ponzi Scheme. Jose Nino de Guzman, Jr., a former employee and investment group manager at U.S. Bank, was arrested in California and is currently in the process of being transported back to Seattle to face the charges. Each count of wire fraud carries a maximum of 20 years in federal prison along with a monetary penalty.
In the indictment, brought by the United States Attorney for the Western District of Washington, Guzman is alleged to have collected more than $20 million for 160 investors under the premise that Guzman would make real-estate investments in Peru. According to authorities, these investments did not exist. Instead, Guzman is alleged to have used the money to fund a lavish lifestyle, which included the purchase of a $1.8 million house, a $600,000 yacht, a $250,000 suite at Seattle Seahawks games, and a $200,000 Bentley automobile.
A recent graduate of the University of Washington, Guzman started NDG Investment Group, which was used as the vehicle to solicit prospective investors. Annual returns of 40%-60% were promised in return for investments. Guzman solicited family and friends from both his former position at U.S. Bank and also from those whom he had hired to work at NDG. According to the U.S. Attorney prosecuting the case, Guzman also sought out prospective clients in lavish presentations at Seattle clubs and hotels.
A similar investigation into Guzman and NDG was disclosed by the Washington State Department of Financial Institutions ("DFI") in June 2010, charging Guzman with the same crimes alleged in the indictment unsealed today. Additionally, DFI alleged that neither the salespeople selling the securities nor the securities themselves were ever registered with DFI. The status of that investigation is unknown.