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Financial Crimes
06/02/2010

South Florida resident charged in $40 million Ponzi scheme

MIAMI - A 38-year-old jewelry business owner residing in Fort Lauderdale, Fla., was criminally charged in connection with a $40 million Ponzi scheme following a U.S. Immigration and Customs Enforcement (ICE) led investigation.

Luis Felipe Perez, president of Miami-based Lucky Star Diamonds Inc. and Luis Felipe Jewelry Design Corp., was criminally charged with six-counts of securities fraud. Both businesses have ceased operation.

ICE special agents in Miami and the City of Miami Police Department initiated an investigation in June 2009 after victims/investors residing in the South Florida area reported the alleged fraud.

According to court documents, from approximately 2006 through mid-2009, Perez solicited funds from approximately 35 individuals in exchange for promissory notes or oral loan agreements. Perez falsely informed investors that they would be investing in his jewelry businesses or in pawn shops that were located in New York City. However, only a small portion of investor money was used for Perez's jewelry businesses and none of the money was ever invested with any pawn shops.

According to the charges, Perez also promised investors high returns from these investments of between 2 to 10 percent monthly, which would result in 24 to 120 percent paid annually. Perez created an unsustainable Ponzi scheme in which he used the monies collected from new investors to pay the returns promised to the earlier investors. This Ponzi scheme ultimately collapsed in May 2009.

Perez had told investors that their funds would be secured with diamonds that were stored in safety deposit boxes. However, the investments were not secured by diamonds and, to the extent any purported gem stones were placed in safety deposit boxes, they were fake. Most of Perez's investors never recovered their investments, while Perez made millions of dollars and lived an extravagant lifestyle that included a multi-million dollar home, expensive cars, and international travel.

The investigation was conducted by ICE's Office of Investigations in Miami, U.S. Secret Service and the Miami Regional Office of the Securities and Exchange Commission.

The case is being handled by Assistant U.S. Attorneys Andrew K. Levi and Richard Gregorie.

This law enforcement action is sponsored by President Barack Obama's Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force 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.

An information is only an accusation and a defendant is presumed innocent unless and until proven guilty.