McHenry County Blog

Woodstock’s Francis X. Sanchez has been sentenced to 11 and a third years in Rockford Federal Court fraudulently obtaining $7 million from investors in his InvestForClosures business.

Sanchez admitted wrong-doing, which can be read in the press release from the U.S. Attorney’s Office below.

This is the case in which Sanchez promoted a Mexican resort called Sands of Gold.

In his scheme, he raised about $9 million, but only repaid $1.7 million.

Sanchez was ordered to pay back $7.8 million.

Here’s the U.S. Attorney’s press release:

McHENRY COUNTY BUSINESSMAN SENTENCED TO 11 YEARS IN PRISON FOR $7 MILLION FRAUD SCHEME

ROCKFORD — A Woodstock, Ill., man was sentenced today in federal court by U.S. District Judge Philip G. Reinhard in Rockford to 136 months in prison for conducting a $7 million fraud scheme. Francis X. Sanchez (“Sanchez”), 52, co-owned and operated a business in McHenry County, known as InvestForClosures.

On May 3, 2012, Sanchez pled guilty and admitted that he had fraudulently obtained more than $7 million from InvestForClosures’ investors.

According to Sanchez’s plea agreement, InvestForClosures purportedly bought distressed houses, rehabilitated those houses, and sold the houses for a profit. Sanchez admitted in his plea agreement that he solicited people to invest in InvestForClosures by making various misrepresentations, including:

1. their investments would be safe because they would be backed by real estate;
2. InvestForClosures used the majority of their investors’ funds to purchase real estate; and
3. because of the business’ efficient cash flow from buying and selling houses, InvestForClosures had never failed to make an interest payment on time or return an investor’s principal when requested.

These representations were false, because:

1. the business did not own sufficient real estate to secure all of the investments;
2. the business did not use the majority of investor funds to purchase real estate, but instead used most of the investors’ funds to pay other expenses, including the salaries of the defendants, and to pay Ponzi type interest to prior investors; and
3. InvestForClosures was not making enough money from property sales to pay the interest owed to the investors, but was instead using cash received from new investors to pay the prior investors with Ponzi type payments.

Sanchez further admitted that, in order to conceal from the investors his false promises and misrepresentations, and to prevent the investors from demanding the return of their principal, he told the investors that he was developing an exclusive, luxury, residential community in Mexico known as the “Sands of Gold.”

Sanchez solicited his investors to purchase lots at Sands of Gold and to invest additional monies for the Sands of Gold project.

Sanchez admitted that he made several misrepresentations to his investors regarding Sands of Gold, including:
the government of Mexico had promised to invest millions of dollars in infrastructure necessary for the development of the Sands of Gold;

1. efforts to obtain financing for the project were going well and a financing deal was imminent;
2. he was finishing negotiations with a major hotel chain for the construction of a hotel at Sands of Gold; and
3. a major accounting firm had agreed to do the accounting work necessary so that the business could go public.

During the course of the scheme, Sanchez fraudulently obtained more than $9 million from the investors.

Of this amount, approximately $1,711,711.18 was paid back to the investors through Ponzi type payments.

In addition to sentencing Sanchez to prison, the court also ordered him to pay more than $7.8 million in restitution to the victims of his crime.

Sanchez’s business partner and co-defendant, James D. Bourassa, 55, of Gilberts, Ill., pled guilty to mail fraud on February 27, 2012. Bourassa was sentenced on June 11, 2012, to 51 months in federal prison.

The case was investigated by the Rockford Office of the Federal Bureau of Investigation, the Chicago Office of the United States Postal Inspection Service, and the Illinois Secretary of State’s Securities Department. The investigation was conducted under the auspices of the Financial Fraud Enforcement Task Force, which includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit: www.StopFraud.gov.

The sentencing was announced by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois; William C. Monroe, Acting Special Agent-in-Charge of the Chicago Office of Federal Bureau of Investigation; Thomas P. Brady, Postal Inspector-In-Charge of the Chicago Division of the U.S. Postal Inspection Service; and Illinois Secretary of State Jesse White.

The government was represented by Assistant U.S. Attorney Scott A. Verseman.

A press release from the U.S. Attorney’s Office:

McHENRY COUNTY BUSINESSMAN PLEADS GUILTY TO $7 MILLION FRAUD

ROCKFORD — A Woodstock, Ill., man pleaded guilty today in federal court in Rockford to conducting a $7 million mail fraud scheme. Francis X. Sanchez (“Sanchez”), 51, co-owned and operated a business in McHenry County, known as InvestForClosures, with his business partner James D. Bourassa. In his guilty plea today, Sanchez admitted that he fraudulently obtained more than $7 million from InvestForClosures’ investors.

Sanchez’s and Bourassa’s business was initially known as InvestForClosures.Com, but later changed its name to InvestForClosures Financial, LLC. According to Sanchez’s plea agreement, he represented to potential investors that this business bought distressed houses, rehabilitated those houses, and sold the houses for a profit.

Sanchez admitted in his plea agreement that he, Bourassa, and their employees solicited people to invest in InvestForClosures.Com and InvestForClosures Financial. Sanchez acknowledged that he and his employees made various representations to their potential investors, including:

1. their investments would be safe because they would be backed by real estate;
2. InvestForClosures used the majority of their investors’ funds to purchase real estate; and
3. because of the business’ efficient cash flow from buying and selling houses, InvestForClosures Financial had never failed to make an interest payment on time or return an investor’s principal when requested.

As Sanchez admitted today, each of these representations was false.

First, the business did not own sufficient real estate to secure all of the investments.

Secondly, the business did not use the majority of investor funds to purchase real estate, but instead used most of the investors’ funds to pay other expenses, including the salaries of the defendants, and to pay Ponzi type interest to prior investors.

In addition, InvestForClosures was not making enough money from property sales to pay the interest owed to the investors, but was instead using cash received from new investors to pay the prior investors with Ponzi type payments.

Sanchez further admitted that, in order to conceal from the investors his false promises and misrepresentations, and to prevent the investors from demanding the return of their principal, he told the investors that he was developing an exclusive, luxury, residential community in Mexico known as the “Sands of Gold.”

Sanchez and Bourassa formed a new business, known as InvestForClosures Ventures, LLC, doing business as Realty Opportunities International, to operate the Sands of Gold project. Sanchez acknowledged that he and Bourassa solicited their investors to purchase lots at Sands of Gold and to invest additional monies with InvestForclosures Ventures.

Sanchez admitted that he made several misrepresentations to his investors regarding Sands of Gold, including:

1. the government of Mexico had promised to invest millions of dollars in infrastructure necessary for the development of the Sands of Gold;
2. efforts to obtain financing for the project were going well and a financing deal was imminent; and
3. they were finishing negotiations with a major hotel chain for the construction of a hotel at Sands of Gold.

Sanchez further admitted that, during the course of the scheme, he and co-defendant Bourassa fraudulently obtained approximately $7,238,506.40 from the investors.

Of this amount, approximately $1,711,711.18 was paid back to the investors through Ponzi type payments.

The indictment, which was filed on November 16, 2010, charged both Sanchez and Bourassa with mail fraud and wire fraud. Bourassa pled guilty to mail fraud on February 27, 2012.

The sentencing hearing for Sanchez will be conducted on August 13, 2012, at 9:00 a.m.

Bourassa will be sentenced on June 11, 2012, at 9:30 a.m.

Mail fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, or a fine totaling twice the loss to any victim or twice the gain to the defendant, whichever is greater, as well as restitution to the victims. The actual sentences will be determined by the United States District Court, guided by the advisory United States Sentencing Guidelines.
The case was investigated by the Rockford Office of the Federal Bureau of Investigation, the Chicago Office of the United States Postal Inspection Service, and the Illinois Secretary of State’s Securities Department. The investigation was conducted under the auspices of the Financial Fraud Enforcement Task Force, which includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit:
www.StopFraud.gov

The guilty plea was announced by Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois; Robert D. Grant, Special Agent-in-Charge of the Chicago Office of Federal Bureau of Investigation; Thomas P. Brady, Postal Inspector-In-Charge of the Chicago Division of the U.S. Postal Inspection Service, and Illinois Secretary of State Jesse White.

The government is being represented by Assistant U.S. Attorney Scott A. Verseman.

The Ponzi schemes being uncovered by the U.S. government are getting closer to home. This case had assistance from the Illinois Secretary of State’s Office and is based in Woodstock:

TWO McHENRY COUNTY BUSINESSMEN INDICTED ON FEDERAL CHARGES FOR DEFRAUDING INVESTORS OUT OF MORE THAN $7 MILLION

ROCKFORD — PATRICK J. FITZGERALD, United States Attorney for the Northern District of Illinois, ROBERT D. GRANT, Special Agent-In-Charge of the Chicago Office of the Federal Bureau of Investigation, THOMAS P. BRADY, Postal Inspector-In-Charge of the Chicago Division of the U.S. Postal Inspection Service, and Illinois Secretary of State JESSE WHITE today made the following announcement:

A federal grand jury in Rockford today returned a twenty-count indictment charging FRANCIS X. SANCHEZ (“Sanchez”), age 49, of Woodstock, Illinois, and James D. Bourassa (“Bourassa”), 53, of Gilberts, Illinois, with twenty counts of mail fraud and wire fraud.

The indictment charges Sanchez and Bourassa operated various businesses which were used to defraud investors out of more than $7,000,000.

According to the indictment, Sanchez and Bourassa operated a business known as InvestForClosures.Com, which later changed its name to InvestForClosures Financial, LLC.

This company was located in Woodstock, Illinois.

This business allegedly bought distressed houses, rehabilitated those houses, and sold the houses for a profit.

As stated in the indictment, Sanchez, Bourassa, and their employees solicited people to invest in InvestForClosures.Com and InvestForClosures Financial. The indictment alleges that defendants made various representations to their potential investors, including:

1. their investments would be safe because they would be backed by real estate;
2. InvestForClosures Financial used the majority of the investors’ funds to purchase real estate; and
3. because of the business’ efficient cash flow from buying and selling houses, InvestForClosures Financial had never failed to make an interest payment on time or return an investor’s principal when requested.

According to the indictment, each of these representations was false.

The indictment states that the business did not own sufficient real estate to secure all of the investments made and that the majority of the investors’ funds were used to pay other expenses, including the salaries of the defendants, and to pay interest to prior investors.

In addition, the indictment charges that InvestForClosures Financial was not making enough money from property sales to pay the interest owed to the investors, but was instead using cash received from new investors to pay the prior investors.

According to the indictment, in order to conceal from the investors their false promises and misrepresentations, and to prevent the investors from demanding the return of their principal, Sanchez and Bourassa told the investors that they were developing a real estate project in Mexico known as the “Sands of Gold.”

Sanchez and Bourassa formed a new business, known as InvestForClosures Ventures, LLC, doing business as Realty Opportunities International, to operate the Sands of Gold project.

Sanchez and Bourassa marketed Sands of Gold as an exclusive, luxury residential community that would be built on oceanfront property in the area of Playa Ventura, Mexico. Sanchez and Bourassa then solicited their investors to purchase lots at Sands of Gold and to invest additional monies with InvestForclosures Ventures.

The indictment charges that Sanchez and Bourassa made several misrepresentations to their investors regard Sands of Gold, including:

1. the government of Mexico had promised to invest millions of dollars in infrastructure necessary for the development of the Sands of Gold;
2. efforts to obtain financing for the project were going well and a financing deal was imminent; and
3. they were finishing negotiations with a major hotel chain for the construction of a hotel at Stands of Gold.

The arraignment on the indictment is scheduled for Tuesday, November 23, 2010, at 10:30 a.m. The arraignment hearing will be conducted by United States Magistrate Judge P. Michael Mahoney at the federal courthouse in Rockford.

The investigation was conducted under the auspices of the Financial Fraud Enforcement Task Force, which includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit: www.StopFraud.gov

Each of the charges carries a maximum potential sentence of up to 20 years in prison without parole, and a fine of up to $250,000, as well as any restitution ordered by the court. If convicted, each defendant’s actual sentence will be determined by a United States District Court Judge, guided by the United States Sentencing Guidelines.

The case is being investigated by the Rockford Office of the Federal Bureau of Investigation, the Chicago Division of the Postal Inspection Service, and the Securities Department of the Illinois Secretary of State’s Office. The case is being prosecuted in federal court by Assistant United States Attorney Scott A. Verseman.

Members of the public are reminded that a criminal indictment is only a charge and is not evidence of guilt. Each defendant is entitled to a fair trial at which time the government has the burden of proving each defendant’s guilt beyond a reasonable doubt.