SEC Files Charges in Ponzi Scheme Targeting Hispanic Community
Washington, D.C.--(Newsfile Corp. - December 19, 2019) - The Securities and Exchange Commission today announced charges against Edward Espinal, of Wayne, New Jersey, and his company, Cash Flow Partners LLC, in connection with an alleged $5 million Ponzi scheme that defrauded at least 90 investors, many of whom were members of the Hispanic community.
The SEC’s complaint alleges that from at least July 2016, Espinal and Cash Flow Partners deceived investors into believing that they were investing in a pooled fund that would purchase and renovate houses, and then flip the houses for profit. Espinal and Cash Flow Partners allegedly guaranteed investors rates of return between 1.25% and 4% per month. The complaint alleges that, in reality, Cash Flow Partners’ purported real estate “fund” owned only two residential properties, neither of which were ever sold. Instead, Espinal allegedly used money from new investors to pay monthly “returns” to other investors, to bankroll his personal living expenses, and to sustain his separate fraudulent bank loan scheme.
“As alleged in our complaint, Espinal exploited his shared ethnic background to entice members of the Hispanic community to invest more than $5 million with Cash Flow Partners,” said Marc P. Berger, Director of the SEC’s New York Regional Office. “Protecting retail investors is a Commission priority, and we encourage investors to use the resources available on the Commission’s website to help identify risks and red flags, such as promises of guaranteed returns.”
The Commission’s Office of Investor Education and Advocacy and the Division of Enforcement’s Retail Strategy Task Force encourage investors to review the Investor Alerts on affinity fraud, Have Something in Common with Someone Selling an Investment? It May Make You a Target for Fraud and Avoiding Investment Fraud in Your Faith-Based Community, and to access the investor protection resources at Investor.gov. Spanish language Investor Alerts on affinity fraud are available at: Alerta a los inversores: Fraude de afinidades and Cómo detener el fraude de afinidad en su comunidad. General investor protection resources for Spanish-speaking investors are available at: Investor.gov/espanol.
The SEC’s complaint, filed in the U.S. District Court for the District of New Jersey, charges Espinal and Cash Flow Partners with violating the antifraud provisions of the federal securities laws and seeks permanent injunctions, disgorgement of allegedly ill-gotten gains with prejudgment interest, and civil penalties.
In a parallel action, the U.S. Attorney’s Office for the District of New Jersey today announced criminal charges against Espinal.
The SEC’s investigation was conducted by Kim Han, Brenda Wai Ming Chang, Thomas Feretic, Christopher Dunnigan, and Judith Weinstock, with assistance from Yvette Fuentes, and under the supervision of Lara Shalov Mehraban. An SEC compliance examination that contributed to the investigation was conducted by Stephen Debella and Matthew Chan and supervised by Michael McAuliffe and Ronald Krietzman. The SEC’s litigation is being led by Christopher Dunnigan. The SEC appreciates the assistance of the U.S. Attorney’s Office for the District of New Jersey, the Federal Bureau of Investigation, and the Federal Deposit Insurance Corporation.