A college dropout that swindled investors out of $30 million through an elaborate Ponzi scheme has pleaded guilty to wire fraud and money laundering charges. Jose L. Nino Guzman, 30, of Seattle, Washington, entered the plea last week, approximately two years after he was arrested and charged with five counts of wire fraud. While each count of wire fraud carries a statutory maximum term of twenty years, prosecutors are recommending a 151-month sentence, or roughly 12.5 years. Guzman is scheduled to learn his fate at a November sentencing.
Guzman attended the University of Washington, where he also worked as a bank teller for U.S. Bank. He did not finish his schooling, instead choosing to drop out and form an investment company known as NDG Investment Group ("NDG"). Beginning in 2006, potential investors were told that Guzman had an extensive background in real estate, having served as a business and commercial lending officer. Guzman told investors he would use their funds to develop real estate in Peru, which he had previously done quite successfully. These investments carried little risk, as Guzman represented that each investment was secured by Peruvian real estate, and also would generate an above-average rate of return. To convince investors of the legitimacy of the investment, Guzman provided periodic "updates" showing progress in the projects. Based on these representations, Guzman collected more than $30 million from over 200 investors - including family members, friends, and co-workers.
While several pieces of land were purchased in Peru, neither Guzman nor NDG successfully completed any of the projects, and there were no lucrative profits. Rather, Guzman operated the classic Ponzi scheme, using incoming investor funds to satisfy obligations to existing investors. Additionally, Guzman used investor funds to support a lavish lifestyle that included a $365,000 diamond ring, a $600,000 yacht, a $250,000 suite to watch Seattle Seahawks football games, and a $200,000 Bentley automobile.
The Washington State Department of Financial Institutions issued a cease-and-desist order against Guzman and NDG in 2009 after an NDG employee became aware of the scheme.