Florida Man Charged in Manhattan Federal Court in Connection with Multi-Million-Dollar Real Estate Fraud Scheme
|U.S. Attorney’s Office May 14, 2014|
Preet Bharara, the United States Attorney for the Southern District of New York, and George Venizelos, the Assistant Director in Charge of the New York Field Office (FBI), announced today that Joseph del Valle, an owner and partner of various investment companies, including Vanquish Acquisition Partners LLC and PM Capital Management LLC, which were based in Manhattan, New York, surrendered this afternoon on charges of wire fraud and wire fraud conspiracy for operating a fraudulent scheme related to a Florida real estate development project. Del Valle is alleged to have obtained approximately $6.4 million from investors for a real estate development project in Miami, Florida. Del Valle allegedly took more than $3 million of the investors’ money and used it for other investments and his personal expenses. He will be presented in the United States District Court for the Southern District of New York today.
Manhattan U.S. Attorney Preet Bharara stated, “Joseph del Valle solicited and obtained over $6 million from people who thought they were investing in a Miami real estate development. But, as alleged, del Valle misappropriated much of that money, using it for his own purposes, including for hotels, restaurants, and a cruise. There are inherent market risks in most investments but being swindled is not one that investors should have to bear.”
Assistant Director in Charge George Venizelos stated, “This is the same old song. Del Valle promised lucrative real estate investments, but what he delivered was a house of cards. We expect people to make money legitimately, not by stealing from others as alleged in today’s complaint.”
According to the allegations in the complaint unsealed today in Manhattan federal court:
Beginning in 2005, Joseph del Valle, a co-conspirator (CC-1), and an employee of Vanquish Acquisition Partners LLC began soliciting investors for a real estate development project in the Little Havana neighborhood of Miami (referred to herein as Project Miami). Project Miami involved two high-rise buildings in which the bottom floors would house retail shops and the top floors would be residential condominiums. Project Miami was designed to provide affordable housing to middle-income individuals and included an arrangement for financing so that purchasers of the condominiums would receive government-subsidized mortgages. From 2005 through 2007, del Valle, CC-1, and the employee obtained approximately $6.4 million from investors for Project Miami.
Prior to making any investments, investors were told that the investment was solely for Project Miami. Investors were provided with various materials that specified the investments were for Project Miami and provided that del Valle and his company would only take a five percent management fee. However, almost immediately after investors transferred funds for Project Miami, almost all of which were sent to banks in Manhattan, New York, del Valle and CC-1 transferred amounts far greater than five percent to other bank accounts and began using the funds for other purposes, including investments in a wine magazine and for del Valle’s personal use. For example, in October 2007, del Valle used $30,000 of investor money in Europe for, among other things, hotels, restaurants, a cruise, and cash withdrawals. In total, del Valle and CC-1 used over $3 million for other investments or personal expenses.
When investors became suspicious and requested financial statements for their investments and a return of their money, del Valle represented to investors in phone calls and e-mail communications that the investment funds were secure when, in fact, a large portion of the investors’ money had already been misappropriated and/or diverted to other uses. Del Valle also falsely told investors that financial statements were in the process of being prepared and would be mailed to them shortly, but in fact, del Valle and CC-1 had not provided any financial information to the accountant responsible for the preparation of financial statements of the relevant entities.
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Del Valle, 59, of Aventura, Florida, has been charged with one count of conspiracy to commit wire fraud and one count of wire fraud, each of which carry a maximum potential penalty of 20 years in prison and a fine of $250,000 or twice the gross gain or loss from the offense. The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Bharara praised the work of the FBI.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Since the inception of FFETF in November 2009, the Justice Department has filed more than 12,841 financial fraud cases against nearly 18,737 defendants including nearly 3,500 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Parvin Moyne is in charge of the prosecution.
The charges contained in the complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
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