South Floridians indicted in $150 million global fraud case

Providence Financial CEO Antonio Buzaneli.
Providence Financial CEO Antonio Buzaneli.

The top two principals of a South Florida-based firm that took in millions in investors’ money were indicted for their roles in orchestrating a $150 million Brazilian-factoring scheme, according to federal prosecutors.

A federal indictment charges Antonio Carlos de Godoy Buzaneli, 56, of Coral Gables, and Jose Manuel Ordoñez Jr., 46, of Davie, in a $150 million investment fraud scheme involving purported Brazilian factoring. Julio Enrique Rivera, 61, of Pembroke Pines, pleaded guilty on Nov. 9 and has been convicted. Buzaneli and Ordoñez were taken into custody on Nov. 17 and have made their initial appearances in U.S. District Court in Miami, Acting U.S. Attorney Gregory G. Brooker of the Minnesota District announced last week.

“Factoring” is a financial transaction in which accounts receivable are purchased at a discount.

According to the indictment and court documents, Buzaneli, Ordoñez and Rivera were the principals of Providence Holdings International, a company based in Key Biscayne. In 2009 and 2010, the three formed Providence Financial Investments Inc. and Providence Fixed Income Fund LLC to raise money from investors. Until June 2016, Providence raised approximately $150 million from investors worldwide — nearly half of that from U.S. investors — by representing that Providence would invest the money in Brazilian factoring.

Buzaneli, Providence’s CEO, and Ordoñez, the chief operating officer, were each charged with one count of conspiracy to commit mail fraud and 12 counts of mail fraud. Rivera pleaded guilty to one count of conspiracy to commit mail fraud.

According to the court documents, Providence’s marketing materials explained that in Brazil, consumers would write 10 separate post-dated checks for $100 — one per month — to pay for $1,000 in retail items such as consumer electronics or groceries. The retailer then would sell the post-dated checks to Providence for approximately $820, earning Providence $180 over 10 months as the checks matured. As a result, Providence claimed to make a 48 percent annual return on money invested in Brazil.

In the U.S., Providence used a network of unlicensed brokers who sold $64 million in promissory notes bearing annual interest rates between 12 percent and 24 percent to about 400 investors, many of them senior citizens and a number from Puerto Rico. The indictment alleges that Buzaneli and Ordoñez diverted investor funds to other companies they controlled, including an import/export company, a travel company, a credit restoration service, a catering company and a food truck operated by Buzaneli’s wife, the indictment said.

Two men from Tampa, who asked not to be identified, say they are among the victims who will likely never get their money back. They said they met with company executives, including the CEO, on several occasions, including in Key Biscayne, Panama and Brazil. They had been investing smaller amounts for a few years, “and everything seemed to be going well,” they told the Miami Herald. They said they then increased their investment by $207,000 in early 2016 for a total of about $350,000 — “a lot of cash up in smoke” and a life savings, the Tampa men said.

As the scheme was unfolding, Providence opened offices around the world, including in London, Hong Kong, Taipei, Shanghai, Singapore, Vancouver and Panama. When a judge for the Royal Court of Guernsey, a financial center in the British Channel Islands, was told that investors there would likely never see the $48.4 million (37 million pounds) they had invested, he called the findings “a reeking pile of guano.”

As the U.S. Securities and Exchange Commission office in Minnesota investigated the firm, Providence Financial Investments and Providence Fixed Income Fund declared bankruptcy in June 2016, claiming to have estimated assets between $0 and $50,000. The FBI, U.S. Postal Inspection Service, and the Minnesota Commerce Fraud Bureau joined the investigation, as well as foreign entities.

Nancy Dahlberg: @ndahlberg.