Florida pair charged with $150m "fraud scheme" linked with Jersey losses

Thursday 30 November 2017

Executives behind an alleged $150million “fraud scheme” that lost some Jersey investors their life savings have been charged in the US.

Antonio Carlos De Godoy Buzaneli (56) and Jose Manuel Ordoñez Jr (46), the bosses of the Miami-based parent company of Guernsey’s collapsed Providence Investment Funds (PIF) PPC, were arrested two weeks ago for allegedly swindling investors out of over $100million.

The Floridian pair were subsequently charged, and a third defendant – Julio Enrique Rivera (61) – pleaded guilty to one count of conspiracy to commit mail fraud.

The PIF scheme at the heart of the case was marketed to Jersey investors by Lumiere Wealth, a company formerly based at Castle Quay.

Those investors lost significant sums of money when the PIF collapsed in Guernsey last year, leading to an investigation by the JFSC over the advice provided by Lumiere Wealth to its clients. Related court proceedings are still ongoing. 

The investment scheme itself involved purported Brazilian factoring.

A statement from the US District Attorney’s Office in Minnesota said: “Providence’s marketing materials explained that in Brazil consumers write ten 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 sells the post-dated checks to Providence for approximately $820, and Providence earns $180 over ten months as the checks mature. As a result, Providence claimed to make a 48 percent annual return on money invested in Brazil.”

But the indictment claims that Mr Buzaneli and Mr Ordoñez instead used “a significant amount of the investors’ funds” to pay profits to other investors, as well as redirecting some of that money to their own companies. Those included a travel company, a catering company and a food truck operated by Mr Buzaneli’s wife.

Providence offices were opened across the globe, including in Guernsey, generating around $85million from offshore investors.

They closed in in July 2016, however, when it emerged that the alleged fraud scheme had lost more than $100million, leaving the fund with assets of up to just $50,000.

Investigations by the FBI, US Postal Inspection Service and the Minnesota Commerce Fraud Bureau led to the recent arrests, and the 13 charges levied against each of the executives.

In Jersey, meanwhile, Lumiere’s former Managing Director will face a trial next year over more than a dozen charges relating to alleged dishonesty in dealing with investors in the Providence Fund. 

The JFSC told Express that their investigation into the sale of Providence funds to Jersey residents is still ongoing. They declined to comment further.