Realtor pleads guilty to running Ponzi scam

DOWNEY - A Downey realtor is facing up to 86 years in prison after pleading guilty last month to spearheading a real estate and small business Ponzi scheme that cheated more than 150 investors out of $6.9 million.On Dec. 20, Guadalupe Valencia, 46, pleaded guilty to two counts of mail fraud, two counts of wire fraud, and two counts of tax fraud before U.S. District Judge S. James Otero, who immediately remanded Valencia back into custody. From 2001 through 2009, Valencia falsely promised investors high rates of interest, from 8 to 20 percent in as little as 45 days, if they invested in her two companies, Real Estate & Loan Consultants and R.E. Equity Group Inc., which she ran out of an office building in Downey. Valencia, a Downey resident from 1990 to 2007, promoted two types of investment pools; one, she said, would fund loans to purchase real estate, and a second would fund short-term, bridge loans to emerging businesses. From her offices in Downey, Valencia falsely told victims that their investments were fully secured, sending out phony deeds of trust on valuable real estate, as well as worthless promissory notes that equaled "money-back guarantees." According to her plea agreement, Valencia later admitted that the investments she promoted generated no profits and that she used newer investor funds to pay original investors. However, a substantial portion of the investor's money was used by Valencia for her own personal benefit. Over the span of eight years, Valencia used investor funds to buy several cars and a new home in West Covina, as well as cars for her family members and friends. In 2009, the scheme collapsed after wary investors began to doubt Valencia's claims. After connecting with one another, the victims united together to contact the authorities. Aware of the emerging allegations, Valencia turned herself in. Along with mail and wire fraud charges, Valencia pleaded guilty to two counts of subscribing to false tax returns for the tax years of 2007 and 2008, admitting that she filed the returns with the Internal Revenue Service knowing they were false. Valencia now faces a maximum of 86 years in federal prison and fines totaling $1.5 million, prosecutors said. Valencia is scheduled for sentencing on May 23, 2011.

********** Published: January 6, 2011 - Volume 9 - Issue 38