Brothers Plead Guilty To $30 Million Ponzi Scheme
Monday, January 3, 2011
Two brothers pleaded guilty in San Diego federal court today for their roles in masterminding a $30 million Ponzi scheme and related mortgage cons.
Matthew "Beau" La Madrid of San Diego and Lance La Madrid of Arizona pleaded guilty to conspiracy and mail fraud in connection with their operation of Plus Money Premium Return Funds and related real estate and mortgage fraud schemes.
Matthew La Madrid pleaded guilty to conspiracy to commit mail fraud, wire fraud, bank fraud and conspiracy to commit money laundering. Lance La Madrid pleaded guilty to mail fraud.
According to court records and the defendants' admissions in court today, Matthew La Madrid fraudulently solicited from PMPRF investors more than $30 million that he promised to use in "covered calls" stock option trading.
Instead, he used a substantial part of new investor funds to make monthly payments to earlier investors and secretly funneled more than $7 million to a bank account that he controlled in the name of Vision Quest Investments, authorities said.
To mislead investors into believing that their investments were profitable and intact, Matthew La Madrid, 44, sent them monthly account statements that reported fictitious brokerage account values and trading returns and concealed his diversion of investor funds, according to federal prosecutors.
Matthew La Madrid also admitted that, as a member of Real Estate Investment Group -- a related investment company -- he fraudulently obtained investor funds by falsely promising to secure real estate investments with promissory notes and recorded deeds of trusts.
In reality, the deeds of trusts were not recorded, and victims lost their investments when the properties purportedly securing the notes were sold, prosecutors said.
Mathew La Madrid also admitted that he obtained millions of dollars for his investment programs by fraudulently securing mortgage loans for himself and others, prosecutors said.
For purposes of sentencing, Matthew La Madrid admitted that the collapse of his various fraud schemes caused losses of between approximately $20 million to $50 million, according to prosecutors. He is expected to be sentenced to 10 years in federal prison at a hearing April 4.
Lance La Madrid, 46, admitted that he fraudulently obtained real estate loans in 2005 and 2006 and admitted that the applications for the loans contained false statements that the potential borrowers earned substantial income as employees of certain businesses, when in fact, the borrowers performed no such work, according to prosecutors.
Lance La Madrid -- an assistant general manager of Plus Money and a trader for one of the PRF funds -- admitted that his fraudulent conduct caused losses of between approximately $400,000 and $1 million.
Today's convictions mark the eighth and ninth guilty pleas in the ongoing investigation into Plus Money and related investment fraud schemes, prosecutors said. Seven other defendants are also awaiting sentencing.
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