A Miami man received a seven-year sentence in federal prison for masterminding a Ponzi scheme that took in $5 million from victims. Juan Carlos Rodriguez, 49, faced up to twenty years after pleading guilty to wire fraud in June. In addition to the sentence, United States District Judge William Dimitrouleas ordered Rodriguez to pay nearly $1.1 million in restitution to his victims, along with a $10,000 fine. Before being taken into custody, Rodriguez apologized to Judge Dimitrouleas and pledged to satisfy his restitution obligations.
Rodriguez operated Vares Tax, which performed various accounting work for clients. Using those connections, Rodriguez solicited his clients to invest with him through his investment business, MDN Financial, Inc. ("MDN"). Potential investors were promised monthly returns ranging from twenty to fifty percent through investments in stocks, bonds, and other securities - promises which resulted in approximately 116 investors entrusting nearly $5 million. Offering 6-month to 1-year investment periods, Rodriguez encouraged investors to "roll-over" their acquired gains into a new investment, to which most investors complied. Some investors also received regular "annuity" payments in an effort to lend an air of legitimacy to the scheme.
However, Rodriguez's operations - purporting to pay annual returns exceeding 400% - were nothing more than a Ponzi scheme, with Rodriguez failing to invest as advertised and instead using investor funds for a variety of unauthorized purposes. This included hundreds of thousands of dollars in mortgage, credit card, and car payments. In October 2010, as investor redemption requests faced increasing delays, Rogriguez vanished from his office, and the scheme collapsed. According to authorities, victim losses were pegged at $1.9 million.
Prosecutor Robert Luck termed Rodriguez's promise to repay victims as "comical" and suggested that victims would likely only receive pennies on the dollar.