A man who caused millions of dollars in fraud losses to hundreds of people, mostly from the vulnerable population, was sentenced today by the federal court in San Juan to 11 years and three months in prison.
Carlos Maldonado Vargas will also have to pay $1,986,734.26 in restitution and serve five years of supervised release.
In 2019, Maldonado Vargas had been found guilty by a federal jury on 16 counts of bank fraud and insurance fraud.
Since then, Maldonado Vargas had been waiting to find out how much time he would spend behind bars as a sentence for having taken advantage of multiple people who lent him money from his life savings, compensation and inheritance, without knowing that they were being deceived in a “pyramid scheme” or as it is known in English: “Ponzi scheme”.
In fact, some of the victims were present at the hearing, before the federal judge John Woodcockof the District of Maine, but assigned to this case in the court of San Juan.
At least 15 victims testified during the trial, in addition to agents and an expert in the Ponzi schemes, that Maldonado Vargas operated under the Business Planning Resources International Corporation (BPRIC).
According to prosecutorial documents in the case file, Maldonado Vargas took advantage of his education and background in the insurance industry “to reach the most vulnerable and unsuspecting victims through false promises of high guaranteed returns.”
The prosecution noted that it “particularly took advantage of the elderly, widows just receiving an insurance payment for the death of their spouse, people looking to maximize their severance package after a layoff, and people desperate to recover losses from the financial crisis.
“To tie them down, the defendant promised staggering returns that did not follow a logical structure,” he added.
The indictment estimated that Maldonado Vargas raised more than $5 million through the scheme, while causing victims to lose more than $3.5 million.
Like other Ponzi schemes, the convict used the money he was receiving to pay some victims to give the “false impression” of success” and thus attract more people to fall into the trap.
In addition, he paid “promoters” to get him more victims, while using the money collected to pay for personal and family expenses, including school, travel, cars and purchases in stores.
At the same time, he sent victims false account statements of “staggering profits” from businesses that were not producing income, explained the federal prosecutor’s office.
What they didn’t know was that Maldonado Vargas owned or was involved in managing so-called successful companies like Glorimar Fashions and Tailoring, LLC, Global Business Insurance Agency Inc., Pet Card Systems Inc., and Datavos Corporation.
The scheme lasted from 2007 until 2012, when financial problems began for the scheme and the deception began to be exposed.
“The Ponzi scheme had worked. The investors believed that the defendant had helped them secure their financial future. These satisfied customers would refer their family and friends to ‘grow their money’ too. But, as always happens with Ponzi schemes, Maldonado was ultimately unable to maintain the appearance of success,” the Public Ministry stated.
“When the tranquilizer payments stopped, the victims started demanding their money. Unable to keep her own promises, in 2011, she moved to Florida. Broke after spending millions of victims’ dollars, he continued to push the lies and seek investors.”added the prosecution, mentioning that he admitted to the feds that he offered Chinese, Brazilian mine and Obamacare bonds.
Although the charges exposed him to a maximum of 30 years in prison, since last year the prosecution has been asking for at least 15 years in prison for Maldonado Vega, due to the seriousness of the accusations and the consequences for the victims.
He also stated that the punishment could not be mitigated due to the fact that it is the first time that he has been criminally prosecuted. The prosecution emphasized that it was well aware of the deception that he was operating.
“As expected, most of the families and the mental health of the victims were marked forever. Many suffered a complete loss of their savings, had to postpone retirement and change their lifestyle. Many are still struggling with the psychological effects of falling into the defendant’s scheme and have sunk into depression.”highlighted the prosecution.
“Some families and relationships did not survive the coup. Other investors, affected by anxiety and depression, have lost their will to live and have barely managed to survive on their own,” he stated.
Pyramid fraud is named after Charles Ponzi, born in Italy and who, after trying his fortune in the United States and Canada, developed a business selling “international postal coupons” in Boston. According to investor.gov, an educational website of the SEC, Ponzi offered investors a 50% return, a profit he paid as other investors bought more coupons.