Texas Businessman Pleads Guilty to Federal Charge in Nearly $1.7 Million Fraud Scheme
Defendant Kept Proceeds of Business Loan for Personal Benefit
| U.S. Attorney’s Office January 14, 2014 |
WASHINGTON—Arnold Rojas Rivas, 46, a businessman from San Antonio, Texas, pled guilty today to a federal charge stemming from a scheme in which he defrauded a federal agency and a private company of nearly $1.7 million, announced U.S. Attorney Ronald C. Machen, Jr. and Valerie Parlave, Assistant Director of the FBI’s Washington Field Office.
Rojas pled guilty in the U.S. District Court for the District of Columbia to wire fraud. The Honorable Robert L. Wilkins scheduled sentencing for May 14, 2014. Under federal sentencing guidelines, he faces a likely range of 33 to 41 months of incarceration, as well as a fine of up to $75,000. Under the plea agreement, he also must pay restitution. Finally, he is subject to an additional forfeiture money judgment in the amount of at least $1,655,925.
According to the government’s evidence, Rojas was the director of Corporativo Papelero y De Suministros Basicos S.A. DE C.V. (COPASBA), a company based in Mexico that produced toilet paper and napkins for the Mexican market by converting large rolls of raw paper into final products. The company applied for and obtained access to a $10 million credit facility from a finance company based in Hartford, Conn. At the time that COPASBA applied for the credit facility, it was the fifth biggest producer of toilet paper and napkins in Mexico. Funds borrowed from this credit facility were supposed to be used to build a warehouse to house COPASBA’s product and to assist with the company’s general operations.
The credit facility was guaranteed by the Overseas Private Investment Corporation (OPIC), an agency of the U.S. government that has as one of its missions providing insurance, guarantees, financing, and reinsurance for projects in less developed countries and areas. Under the terms of the guarantee agreement, OPIC guaranteed 97.5 percent of any losses.
In order to obtain access to the funds, Rojas had to submit requests explaining how COPASBA would use the funds, and these requests required Rojas to make a number of representations about COPASBA’s financial condition. In mid-2006, COPASBA requested and received more than $6 million from the facility. In the months after receiving the last of these funds, COPASBA’s position weakened significantly; the company’s cash-on-hand plummeted, workers went on strike, and suppliers began refusing to do business with the company. The company’s condition became so bad during this time that Rojas ordered workers to disassemble the machines the company used to make its paper goods so the machines could be sold. By June 2007, COPASBA had essentially ceased functioning as a company.
Nevertheless, Rojas requested another disbursement of over $1.8 million for COPASBA, failing, in violation of the credit agreement, to inform the finance company or OPIC of the many problems the company had encountered. Unaware of the fact that COPASBA had ceased functioning, the finance company released over $1.8 million from the credit facility to COPASBA. Within moments of COPASBA receiving the funds, Rojas transferred nearly $1.7 million to his personal account. He used these funds for his and his family’s personal benefit.
In announcing the plea, U.S. Attorney Machen and Assistant Director in Charge Parlave commended the work of those who investigated the case from the FBI’s Washington Field Office. They also acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including Paralegal Specialists Tasha Harris, Lenisse Edloe, and Shanna Hays; former Assistant U.S. Attorney Matthew C. Solomon, who investigated the matter; and Assistant U.S. Attorney Diane Lucas, who handled forfeiture issues. Finally, they expressed appreciation for the work of Assistant U.S. Attorney Matt Graves and former Acting Deputy Chief Glenn S. Leon and former Trial Attorney Mary Ann McCarthy of the Department of Justice’s Fraud Section, who investigated and prosecuted the matter.