For Miami accountant Juan Carlos Rodriguez, spotting vulnerable investors for his Ponzi scheme was effortless, because he was already doing their personal income taxes.
He targeted one client whose son was fatally stabbed in a Miami-Dade public school, and another who was dying of terminal cancer.
Rodriguez, 49, who pleaded guilty to fraud in June, was sentenced Friday to serve seven years in federal prison. U.S. District Judge William Dimitrouleas also ordered Rodriguez to pay nearly $1.1 million in restitution and pay a $10,000 fine.
Federal marshals immediately handcuffed Rodriguez, who had apologized to the judge and promised to repay his victims. They took him from the courtroom into custody to begin his prison term.
Prosecutors say he bilked $1.9 million from about 50 victims until his investment scam involving purported stocks, bonds and gold unraveled in fall 2010. Among the victims: Jorge and Maria Gough, the parents of 14-year-old Jaime, who was fatally stabbed by his best friend in the bathroom of Southwood Middle School in 2004.
After obtaining a $1.7 million settlement from the Miami-Dade School Board, the Goughs invested $100,000 with their accountant, Rodriguez.
“We put it in his hand, with someone who we really trusted, who had no heart,” Jorge Gough told the judge, emphasizing that Rodriguez “knew we had gotten this money for the death of our son.”
“This is something I don’t understand,” said Gough, as he and his wife turned to look at Rodriguez. “He has kids.”
Rodriguez’s defense attorney, Lane Abraham, argued his client should be sentenced to under four years, saying he did not initially set out to swindle his clients. Abraham said the accountant made money for them for years, until the economy and stock market soured in 2008.
But rather than face them, “his pride and embarrassment” prevented him from stopping, the lawyer said. “It just spiraled out of control into a Ponzi scheme.”
Rodriguez’s scheme was not as grandiose as those of imprisoned Ponzi figures such as Wall Street investor Bernard Madoff, Fort Lauderdale lawyer Scott Rothstein or Miami-Dade businessman Gaston E. Cantens. But the accountant shared a similar M.O., preying on people close to him and using the money of new investors to pay off old investors — until the money well dried up.
“This case is about greed, and we know it because the bank records show it,” Assistant U.S. Attorney Robert Luck said, accusing the defendant of lying to the judge about his promise to repay his victims.
Luck said the accountant’s motivation was to steal other people’s money to support a “good lifestyle,” including a four-bedroom home in a gated community off Old Cutler Road, a beach house in Jensen Beach, a BMW for his wife and private schools for his children.
As Rodriguez carried out the fraud between 2007 and 2010, his bank records showed he made $181,000 in mortgage payments, $229,000 in credit card payments and $105,000 in car payments.
Rodriguez ran his accounting business, Vares Tax, with a half-dozen employees out of a storefront on Coral Way in Miami. Under the same roof, he also had an investment business, MDN Financial Group.
Rodriguez lured in his accounting clients, friends and relatives to invest with him, guaranteeing returns of 20 to 50 percent each month on his purported investments. A total of 116 investors plunked down about $5 million, signing “investment management agreements” with his company, according to court records.
At the end of a six-month or one-year investment period, Rodriguez “induced” investors to renew their agreements without the return of any of their initial investment principal, according to court records. As he juggled their accounts, he sent “annuity” payments “to lull investors into a false sense of security and to conceal the false and fraudulent nature of the scheme,” according to records.
In late October 2010, Rodriguez vanished from his office. Several investors began calling and showing up at the office to complain that they had not received their monthly payments.
The employee who had to face their wrath: Rodriguez’s secretary, Araceli Valle, who had worked for him for 20 years.
She quickly realized that dozens of her bosses’ customers — including herself — had been duped. She went to the FBI to tell agents that Rodriguez, whom she trusted like a friend, had betrayed her and others.
Valle lost about $90,000 — money that she and her late husband, Fernando, had invested with Rodriguez from a line of credit on their West Miami home.
The month before his Ponzi scheme collapsed, Rodriguez had attended the funeral of Fernando Valle, who died of lung cancer.
“I not only lost my husband,” Valle told the judge at Friday’s hearing. “I lost my friend, my job. ... At this point I am at a loss for words.”