West Covina Woman Sentenced to Nine Years in Federal Prison for Running Investment Scheme That Raised Nearly $7 Million
|U.S. Attorney’s Office October 25, 2011|
Guadalupe Valencia, 47, was sentenced late yesterday by United States District Judge S. James Otero after a nearly five-hour hearing.
In addition to the nine-year prison term, Judge Otero ordered Valencia to pay restitution of $5.2 million, which is the total loss figure.
Valencia has been in custody since she pleaded guilty last December to two counts of mail fraud, two counts of wire fraud, and two counts of tax fraud.
Valencia ran her scheme out of the Downey offices of companies she called Real Estate & Loan Consultants and R.E. Equity Group, Inc.
Beginning in 2001 and continuing through 2009, Valencia promoted two types of investment pools, with one purportedly funding loans to purchase real estate, and a second purporting to fund short-term loans to businesses.
According to court documents, Valencia promised high rates of interest in both investment vehicles—from 8 percent to 20 percent in as little as 45 days.
Valencia admitted that she falsely told investors that their investments were fully secured, backed by deeds of trust on valuable real estate, as well as promissory notes that equaled “money-back guarantees.”
When she pleaded guilty, Valencia admitted that the investments she promoted did not generate any profits and that she used newer investor funds to pay original investors.
Further, Valencia admitted that she had provided victims with worthless promissory notes that she had created.
Valencia “callously victimized over 150 people,” prosecutors wrote in sentencing papers. “She was a major force in a Ponzi scheme that negatively impacted the lives of the victims and the families of the victims.”
Valencia’s scheme raised approximately $6.9 million.
With Ponzi payments that were made to some victims during the course of the scheme, the actual loss amount is $5.2 million.
In addition to the mail and wire fraud charges, Valencia pleaded guilty to two counts of subscribing to false tax returns for the tax years 2007 and 2008.
In her plea agreement, Valencia admitted that she filed the returns with the Internal Revenue Service knowing that they were false. Specifically, for the 2007 tax year, Valencia failed to report more than $280,000 to the IRS. For the 2008 tax year, Valencia failed to report more than $470,000 on the tax return that she filed.
The investigation of Valencia was conducted by IRS - Criminal Investigation and the Federal Bureau of Investigation.