SEC Files Charges in Ponzi Scheme Targeting Hispanic Community
Edward Espinal, a 44-year-old from Wayne, New Jersey, and his company, Cash Flow Partners LLC, were charged by the Securities and Exchange Commission (SEC) on December 19, 2019, for perpetrating a Ponzi Scheme that mainly targeted members of the Hispanic community. The scheme is alleged to have raised over $5 million from around 90 investors. Cash Flow Partners used online videos and advertisements to target its victims. These videos included a former telenovela star. Cash Flow also hosted seminars where it promised to help low-earning individuals obtain bank loans.
The SEC‘s complaint “alleges that from at least July 2016, Espinal and Cash Flow Partners deceived investors into believing that they were investing in a pooled fund that would purchase and renovate houses, and then flip the houses for profit. Espinal and Cash Flow Partners allegedly guaranteed investors rates of return between 1.25% and 4% per month. The complaint alleges that, in reality, Cash Flow Partners’ purported real estate “fund” owned only two residential properties, neither of which were ever sold. Instead, Espinal allegedly used money from new investors to pay monthly “returns” to other investors, to bankroll his personal living expenses, and to sustain his separate fraudulent bank loan scheme.”
According to New Jersey News Network, Espinal applied for bank loans using fraudulent documentation and posed as his customers in communications with banks. Further, Espinal told investors that their funds would go towards real estate development, a gold mine in Ecuador, and construction outside of the United States. In reality, he used the funds to pay back earlier investors in the ponzi scheme and continue to fund himself and his scheme.
In a parallel action, the U.S. Attorney’s Office for the District of New Jersey today announced criminal charges against Espinal. On all charges, he faces up to 50 years in prison and $6 million in fines.
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