It’s not entirely clear if the increase in Ponzi arrests has been due to more Ponzis actually taking place, or simply more coming to the attention of authorities due to the brutal economic times. Madoff’s $65 billion scheme — the largest in American history — unraveled only because the stock market crashed in 2008, and his investors tried to pull out their money. He didn’t have it.
TARGETING THOSE WHO ARE LIKE YOU
Locally, Gaston E. and Teresita Cantens are among those targeted in recent years by the SEC’s Miami branch. The local real estate developers defrauded more than 400 investors by offering bogus promissory notes claiming annual returns of 9 to 16 percent, the commission says.
In all, their scheme totaled $135 million, much of which came from fellow graduates and supporters of Gaston Cantens’ alma mater, Belen Jesuit Preparatory School. Along with the SEC suit, Gaston Cantens, 73, pleaded guilty to mail and wire fraud. He is currently serving a five-year stint in a low-security prison in North Carolina.
Cantens followed a now-familiar fraudulent blueprint: Target those who are like you — and, by extension, trust you. He went after fellow Cuban Americans.
Eduardo Arango, 80, invested more than $800,000 — money from the sale of his house, and nearly his entire life savings — in Cantens’ business. He got just $24,000 of that back in bankruptcy court. Now, Arango’s home is a rental property in Kendall, and he lives far more modestly than before he got mixed up with Cantens. He drives cheaper cars, and can’t take vacations.
“I’m still angry; I don’t forgive him at all,” said Arango. “He didn’t mind taking everything from his friends.”
Even Belen got fleeced, losing a half-million dollars in the Ponzi.
Madoff, whose enterprise was based in New York , not only cleaned out fellow Jews — many from Palm Beach County — but even ripped off Jewish charities.
So in this way, South Florida’s demography — and the sense of autonomy among its various ethnic groups — makes it uniquely susceptible to scammers.
And while it’s now a tired (and, to a degree, outdated) cliché that we’re the home of the blue-haired army, retirees still make up a disproportionate chunk of our population — and they have money to invest.
“Given their age and frequently their lack of sophistication of what they bring to the investment process, they always have been and continue to be a vulnerable group,” Levi said.
WHY SCAMMERS TARGET FLORIDA
Matthew Menchel was a prosecutor before switching sides. He is now a defense attorney with the global litigation boutique Kobre and Kim that deals in white-collar criminal cases, including alleged pyramid schemes.
Miami is a financially “immature” city, Menchel says. Swindles that would never fly in savvier places like New York are able to flourish here because investors concerned solely with making a quick buck don’t do the proper due diligence.
And unlike other towns, flash is in our DNA.
“It’s easier to blend in here because of the nature of how things are,” said Eric Bustillo, the SEC’s regional director.
“If a guy goes from driving a Toyota to a Ferrari over a few months, it doesn’t necessarily raise the eyebrows here it would in a place like Wisconsin.”