A California con man has been sentenced to 22 years in prison for two independent fraud schemes targeting the Latino community.
In the first criminal act, Juan Rangel led a Ponzi scheme that brought in at least $30 million from more than 500 victims. The second act consisted of a mortgage fraud scheme that stole the equity from working-class homeowners and secretly took title to their properties.
“This investment fraud scheme and related mortgage fraud scheme involved a high degree of sophistication and went far beyond a typical fraud case,” said prosecutors from the Central District of California.
In the $30 million Ponzi scheme, Rangel used his company Financial Plus Investments to recruit investors through advertisements in Spanish-language newspapers and television infomercials. Rangel promised to pay investors annual returns as high as 60%, claiming Financial Plus’ real estate investments and lending business generated substantial profits.
But in an Oct. 27 plea agreement, Rangel said that the company did not realize any profits from real estate or lending. Instead, Rangel used the victims’ money to make Ponzi payments to prior investors and for his own personal use, including the monthly mortgage payments on his $2.5 million mansion and monthly payments for his Lamborghini sports car.
The investment fraud scheme resulted in losses of approximately $20 million.
A second scheme that Rangel operated targeted Latino homeowners who were facing foreclosure. Rather than assisting the distressed homeowners, Rangel took titles to their homes and drained the equity out of the properties.
As part of the mortgage scheme, Rangel arranged to sell the homeowners’ properties, most of the time without their knowledge, to straw buyers. Rangel then applied for loans using the straw buyers’ names by utilizing false documents to ensure the fraudulent loans were approved.
The prosecutors said Rangel utilized dozens of employees including recruiters who signed up new investors and a Spanish-speaking “street team” that was sent into neighborhoods to target homeowners who were behind on their mortgage payments.
“The victim investors were mostly working-class families, and nearly all of them invested money with Financial Plus that they could not afford to lose,” said the government’s sentencing position memorandum. “Rangel encouraged them to invest as much as possible and advised people against putting their money in the bank.”
Rangel said in his plea agreement that the mortgage fraud scheme caused lenders to fund more than $10 million in fraudulent loans.
“Rangel targeted the most vulnerable members of the community—homeowners who had fallen behind on their mortgages,” said prosecutors in court papers. “These families came to his company for help, and he took advantage of them for his own profit. These victims lost the equity they had built up in their properties, and many of the victim homeowners have lost their properties or are in foreclosure.”
California is asking United States District Judge S. James Otero to make Rangel pay a substantial amount of restitution to his victims. A May 6 hearing is set to determine how much Rangel will be ordered to give back to his fraud victims.
Rangel has been in federal custody since August 2008 and pleaded guilty on the October hearing to one count of mail fraud and one count of money laundering. In the plea agreement, federal prosecutors and Rangel agreed to a 15-year prison sentence, but Otero said Rangel needed to serve a 22-year sentence because of the impact Rangel’s actions had on his victims.
