Real Estate Scam Of The Day: Mortgage Fraud/Ponzi Combo Lands California Man In Jail For More Than 20 Years
Juan Rangel of California was heartless when it came to taking money from his victims, and he would get it nearly any way that he could think of. Rangel operated a $30 million Ponzi scheme in California targeting Hispanic investors and also managed to talk many of them into signing over title to their distressed properties as well[1]. He has been in court on multiple charges since 2008 and finally was sentenced yesterday as part of a plea agreement in which he pled guilty in exchange for 15 years in prison. A judge added seven more years because of the “devastating impact Rangel’s actions had on his victims.” Those victims number more than 500[2].
The two-part scheme involved promising to pay investors high returns on investments – often as high as 60 percent – by placing their money in real estate and lending situations that would realize high profits. In reality, Rangel simply took new money to pay off old investors and also bought a mansion and a Lamborghini. He also targeted Latino homeowners in preforeclosure, taking title to homes, draining equity and selling the properties without the owners’ knowledge to a number of straw buyers. These straw buyers then were used to apply for more loans on the home, few or none of which were ever paid.
While all this is bad enough, Rangel had a completely “callous disregard” for his investors, said the court. One victim testified that she had invested all the money she received after her son, a marine, was killed in Iraq. He also did everything possible to scare his investors away from putting money in banks and recommending that they give all funds to him instead.
It seems like every day a new mortgage fraud story breaks. Do you think that new mortgage regulations will help this situation? Have you personally encountered this type or a similar type of fraud?
Thank you for being part of REJournalOnline’s Investor Academy!
Leave your comments and questions below.
[1] http://nationalmortgageprofessional.com/news23646/california-man-gets-22-year-sentence-leading-ponzi-scheme-and-mortgage-fraud-scam
[2] http://www.businessweek.com/ap/financialnews/D9LDAOA80.htm
Yes the guy was a con. Yes he mis-lead people. But come on people use common sense as an investor. The people who invested were just as greedy. They wanted a dream not reality. Be smarter next time. Look into the business and understand it instead of taken someone’s word. The homeowners in foreclosure got scammed but most likely were losing the house anyway. I’m not saying the guy wasn’t a crook but these people invested their own money of their on free will. They weren’t held up at gun point. This happens in business everyday. If this guy was convicted of these crimes why hasn’t the crooks in Washington been convicted. You know all those guys in office that worked for companies like Goldman Sachs. I’ll stop before I get mad but if you invest into a dream and not a sound plan you’re own fault so stop crying and be smarter.
Leave your response!