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:
- their investments would be safe because they would be backed by real estate;
- InvestForClosures Financial used the majority of the investors’ funds to purchase real estate; and
- 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:
- the government of Mexico had promised to invest millions of dollars in infrastructure necessary for the development of the Sands of Gold;
- efforts to obtain financing for the project were going well and a financing deal was imminent; and
- 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.
You never know when a legitimate money manager or company will turn evil. Look at Enron or Madoff; both were legitimate for years.
After hearing a commercial on WGN radio for “Sands of Gold” I went to Playa Ventura, about 90 miles from Acapulco. Found a lovely beach with no sign of any real development going on. A local who said he was a realitor showed me an area that he said was for sale but there was no road allowing access. There was a rather rustic restaurant and one very nice house under construction but no sign of any development-I lost interest.