Fraud, Money Laundering Charged Against Miami Millionaire

A Miami millionaire whose business model was built around providing shelter to those who had suffered disaster has been arrested by federal authorities on charges of money laundering and fraud. dollarbill.jpg

Our Broward criminal defense lawyers know that while this case is exceptional for the fact that it involved many millions of dollars and well-known, wealthy investors, we tend to see more of these type of cases than other areas of the country.

Why?

Many of those who live in Miami are not native. They are newcomers and they are often on the hunt for opportunities to generate wealth. The combination of this, according to former federal prosecutors, leaves the area ripe for fraud.

The defendant in this case was, himself, from Venezuela. He used to boast about climbing some of the world’s highest peaks. He lived in a $12 million mansion in Miami, and a mountain lodge in Colorado. He drove a Maserati. He was a country club regular. He and his wife threw glittering, extravagant parties, attended by high-level politicians and celebrities.

All of this, prosecutors say, provided the illusion that his ventures were legitimate. However, they say the truth was less solid than the ready-made disaster shelters he was attempting to market.

The defendant’s company was founded seven years ago, and was pitched to investors as an innovative way to house those who had lost their homes in the wake of a natural disaster. It involved the use of a newly-created fiber-composite panel. Each panel locked into the others, kind of like Legos. The idea was to provide an affordable form of temporary housing post-disaster in areas like Haiti and other developing countries, where people could not rely on a strong federal government to provide immediate and adequate assistance.

His investors included several NBA players and a group of wealthy businessmen from the United Arab Emirates. His board of directors included former Florida Gov. Jeb Bush. He even finagled his way into a White House meeting, where he was able to land a $10 million government loan to kick-start the disaster home business.

In all, investigators say the defendant was able to rake in $40 million in investments, primarily by deceiving investors into believing that his LLC had millions more in equity and cash.

One of those was a prominent developer and attorney, who handed over $4 million. He would later say it was the seeming stability of the company, combined with all the well-known others who were involved, that made it seem legitimate.

In truth, before the company even went public, a judge had taken away his authority to continue running the Miami Beach-based firm. Creditors, including the Swiss Bank, were knocking on his door, claiming he owed nearly $225 million in loans he was given after reportedly being dishonest about an electronics business he previously owned, which had gone bankrupt back in 2000.

Some began to suspect, however, that the model of disaster housing that the defendant was hawking simply didn’t make much sense in terms of cost-effectiveness. However, by the time many of them began to suspect something was up, investigators say, it was too late.

As of now, the company has gone bankrupt. The defendant has promised to repay creditors some $50 million, but it’s unclear whether he will be able to do so. His mansion has been auctioned off, and the formula for the disaster housing panels was sold to a company in Brazil.

Cases like these can be incredibly complicated, and require a legal team that can devote significant time and energy researching the complexities.

18 U.S.C. 1956 defines money laundering as conducting transactions with money obtained unlawfully, while representing the proceeds as being lawful. This can be done with either the intent to promote or carryout that unlawful activity, with the intent to defraud the IRS and/or state and federal authorities or knowing that the transaction is at least partially set up to conceal the nature of its source. A conviction will result in up to 20 years in prison and fines of either $500,000, or twice the value of the property involved in the transaction – whichever is more.

If you are charged with a crime in Palm Beach or Broward counties, contact the Law Offices of Leifert & Leifert, a Partnership of Former Prosecutors, for a free consultation to discuss your rights. Call 1.888.5.DEFEND.

Additional Resources:
High-flying Miami millionaire was a fraud, feds say, Dec. 8, 2012, By Julie Brown, Sun Sentinel
More Blog Entries:
Former Cop Strikes Plea Deal on South Florida Weapons Charges, Nov. 20, 2012, South Florida Criminal Defense Lawyer Blog

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