Seattle man pleads guilty to $30 million Ponzi scheme; money used for lavish lifestyle

gavelSEATTLE — A 30-year-old Seattle man pleaded guilty Friday to federal charges he ran a $30 million Ponzi scheme involving bogus real estate investments in Peru and that he used investors’ money to furnish his lavish lifestyle, including a $600,000 yacht.

Jose L. Nino de Guzman Jr. pleaded guilty in U.S. District Court to wire fraud and money laundering. His sentencing is set for Nov. 1, but under a plea agreement in the case, federal prosecutors will recommend a sentence of 151 months in prison.

De Guzman, who founded and ran NDG Investment Group LLC from 2006 to 2009, raised more than $30 million from more than 200 investors for real estate investments in Peru, U.S. Attorney Jenny Durkan said.

NDG had ever successfully completed any real estate projects in Peru and, despite raising funds for about 20 projects, had only purchased a limited number of real properties, Durkan said.  No projects ever generated a profit.

Nevertheless, De Guzman told the investors their projects were completed or were progressing, and he sent periodic, fraudulent “updates” to investors, including showing “construction” sites for projects in which the land had not even been purchased, Durkan said.

Investors’ funds instead were used to fund De Guzman’s lavish lifestyle, including the purchase of a $365,000 diamond ring, a $600,000 yacht, a $250,000 suite at Qwest Field for Seahawks games and a $200,000 Bentley automobile, Durkan said.

Moreover, as in a classic Ponzi scheme, De Guzman used millions of dollars of investors’ funds to pay off previous investors to continue the illusion that De Guzman was a successful developer, and to induce additional investors, she said.

“This defendant brazenly and persistently defrauded investors by lying about his background and success and misused millions of their dollars for his personal benefit,” Durkan said.

“His victims included family members, friends and co-workers who did not know he paid for his glitz with their money,” she added. “When the scheme crumbled, they sadly learned that Mr. De Guzman had perpetuated a massive fraud.”

“The FBI is pleased that Mr. De Guzman is finally taking responsibility for his actions,” said Special Agent-in-Charge Laura M. Laughlin of the FBI Seattle office.  “He exploited friends, loved ones, and coworkers indiscriminately to fund a lavish lifestyle for himself.  The FBI stands with the prosecutors and victims in refusing to tolerate such heartless criminal activity.”

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