Luis Felipe Perez’s $40 Million Ponzi Scheme uncovered

June 8th, 2010
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The Securities and Exchange Commission has charged Luis Felipe Perez with orchestrating and conducting a $40 million Ponzi scheme that targeted the Hispanic community in his Miami neighborhood. According to the SEC’s press release, Mr. Perez assured his investors that their loan agreements were risk free and guaranteed them annual returns of 18% and monthly interest payments of 120%. The SEC further claims Mr. Perez “falsely told investors that their investments were collateralized by diamonds, and even led some investors to believe they were beneficiaries on his life insurance policy without disclosing that the policy had lapsed.”

Instead of using his investors’ money to finance his pawn shops investments and jewelry businesses, Mr. Perez developed the classic Ponzi scheme setup and used funds from new investors to pay older investors. Starting in 2006, Mr. Perez lured members of his local community in Miami to invest in his two businesses, Lucky Star Diamonds Inc. and Luis Felipe Jewelry Design Corp. He also claimed that his investors’ funds were financing pawn shops in New York with 5 to 10% monthly return rates that he promised to pass on to his investors, when in reality the SEC alleges that “Perez had no dealings with pawn shops and never provided financing to them.”

For some investors, Mr. Perez promised security by keeping pawn shop diamonds in safety deposit boxes as collateral to secure their investments with him. However, unknown to investors, the diamonds were fake.

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