Two Men, Including Maryland Attorney, Indicted for Allegedly Defrauding 125 Business Owners of $2 Million in ‘Advance Fees’
CHICAGO—Two principals of a defunct suburban company that purported to have billions of dollars to finance small businesses were indicted on federal fraud charges for allegedly swindling about $2 million in advance fees from approximately 125 business owners nationwide. With no such assets and no history of funding small businesses, the defendants instead allegedly used the money they collected for personal purposes, including more than $1.1 million in so-called “loans” to themselves and others.
One defendant, ALBERTO B. COLÓN, was the chairman of the board and chief executive officer, while the other defendant, ARTEMIO RIVERA, was the treasurer and chief corporate counsel of the Commercial or Residential Development Group, Inc., also known as COR, which had a mailing address in Hoffman Estates.
Colón, 46, of West Dundee and formerly of Elgin, and Rivera, 56, of Falls Church, Va., who is a licensed attorney in Maryland, were each indicted on four counts of wire fraud and one count of mail fraud in a five-count indictment returned yesterday by a federal grand jury in Chicago. The indictment also seeks forfeiture of approximately $2 million from both defendants, who will be ordered to appear for arraignment on a date to be determined in U.S. District Court in Chicago.
According to the indictment, Colón and Rivera defrauded business owners between September 2008 and December 2011 by making false representations that COR had billions of dollars in assets and would provide business owners with billions of dollars in funding; provide the funding within a specific time period; use the advance fees they collected for specific purposes related to the business owners’ requests; and refund the fees if COR failed to provide funding. Both defendants knew that COR had no such assets and no history of funding businesses, the indictment alleges.
The defendants allegedly solicited business owners themselves and also used individuals they sometimes referred to as “rangers” to solicit business owners to apply for funding. They fraudulently represented that COR had approved requests for funding in amounts ranging from $100 million to $1.2 billion, knowing that they had not secured funding for those projects, the charges allege.
Colón and Rivera also allegedly promised business applicants who signed so-called “Project Partner Agreements” and paid an advance fee of $20,000 that COR would apply the advance fee toward the creation of a new corporation, trust, and foundation to accept funding from COR. Further, the charges allege that they falsely promised COR would contribute an additional $80,000 to the funding entities in exchange for signing project agreements.
As part of the scheme, Colón and Rivera allegedly made false statements in proceedings before the Illinois Department of Securities.
Each count of wire and mail fraud carries a maximum penalty of 20 years in prison and a $250,000 million fine, or, alternatively, a fine totaling twice the loss or twice the gain, whichever is greater. If convicted, restitution is mandatory and the court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.
The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The Illinois Department of Securities cooperated with the investigation.
The government is being represented by Assistant U.S. Attorney Cristopher McFadden.
The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.