A New Jersey couple who purportedly owned a hedge fund has admitted its role in a Ponzi scheme in which at least 25 investors were defrauded out of more than $500,000.
Alcibiades Cifuentes and Jennifer Wee Cifuentes pleaded guilty to four counts of wire fraud, one count of conspiring to commit wire fraud, and one count of theft. They are set to be sentenced in late February 2020, the US Department of Justice said in a news release.
The fraud charge that both defendants face carries a maximum potential penalty of 20 years in prison and a $250,000 fine. Further, the commodities fraud charge could net each a decade in prison and a fine of $1 million.
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“They fraudulently induced victims to invest in the foreign currency and commodity markets through Cifuentes Fund Management (CFM), their hedge fund that purportedly invested in foreign currencies. Instead, they almost immediately spent those investment funds on personal items, such as an Audi R8 and jewelry,” the DoJ said.
Specifically, the US regulators said in its complaint that from April 2013 through March 2015, the Cifuentes engaged in a fraudulent scheme that netted nearly $600,000 from victims. While it was actually running a Ponzi scheme, the couple claimed that these funds would participate in a commodity pool for trading in a portfolio of financial instruments, including forex, commodities, and other investments.
In connection with the promotion of their pool, the defendants, using a demonstration account, made a series of materially false claims to lure investors interested in forex trading. The claim was made that pool participants could get extraordinary investment returns.
Instead of using the investors’ monies in trading, the fraudsters allegedly misappropriated all of the pool participants’ funds, which were largely spent on personal expenses such as luxury vehicles, jewelry, and clothing, among other items. As also charged, they used some new investors’ funds to pay back other investors in a Ponzi-like fashion, so that they would invest or refer additional money, thereby allowing the scheme to continue for a longer period of time.