A California district court recently ordered two men who operated a Ponzi scheme targeting members of the Spanish speaking community in Los Angeles to pay $8 million in restitution and penalties. In conjunction with an earlier complaint filed by the United States Commodity Futures Trading Commission, Ruben Gonzalez, of West Covina, and Jose Naranjo, formerly of La Mirada, California, along with New Golden Investment Group, LLC ("New Golden"), were ordered to pay a total of $8 million consisting of over $4 million in restitution, $1 million in disgorgement, and $3 million in civil monetary penalties. Gonzalez had previously pled guilty to one count of mail fraud, one count of money laundering, and one count of misuse of a Social Security number and was sentenced to over 11 years in federal prison in December 2010. Naranjo is believed to have fled the United States and remains a fugitive.
According to the CFTC complaint, Naranjo and Gonzalez operated a Ponzi scheme that began in August 2008 and targeted approximately 165 members of the Spanish-speaking community in Los Angeles. Investors were solicited with advertisements in Spanish-speaking newspapers that promised returns exceeding 100% trading commodity futures. The company, New Golden, had offices in West Covina, California, and Las Vegas, and claimed to also be involved in various business activities in Mexico including mining and real estate. According to the complaint, New Golden was never registered with the CFTC. In total, approximately $3.65 million was raised from investors, who were given promissory notes indicating their investment and promised monthly returns ranging from 5% to 15%. Of this amount, nearly $2 million was used to pay purported profits to existing investors, and hundreds of thousands of dollars were misappropriated by Naranjo and Gonzalez. Authorities estimate that the total loss to victims was $2.2 million.
Along with his 11-year prison sentence, Gonzalez was also ordered to pay over $2 million in restitution to defrauded investors.
A copy of the CFTC Complaint filed May 20, 2010 is here.