A total of 25 investors were defrauded, collectively losing over $500,000 in funds. The two actors of the Ponzi scheme were a couple from New Jersey who has admitted their guilt of managing a Ponzi scheme.

The End of Cifuentes

Both Jennifer Wee Cifuentes and Alcibiades Cifuentes pled guilty to theft, conspiring to commit wire fraud and four counts of wire fraud. The Department of Justice notified the press that sentencing is due in late February of 2020.

Both parties have the potential of sitting in prison for 20 years for the crime of fraud as well as a $250,000 fine. This is excluding the commodities fraud charges that could tally up to 10 years in prison as well as a fine worth $1 million.

The Public Notice

The Department of Justice gave a public statement in regards to their sentencing and the reason behind it. They explained that the two parties lied to their victims in order to convince them to invest in the commodity and foreign currency markets through Cifuentes Fund Management (CFM). The two claimed that the hedge fund invested within the forex industry. Instead of using the money for their intended purpose, the defendants instead wasted the money on personal items, including an Audi R8.

The events that led to this admission of guilt started back in April 2013. US regulators told the public that it received complaints from April 2013 to March 2015 in regards to Cifuentes and Wee. The scheme Wee and Cifuentes were in managed to rope them almost $600,000 from the respective victims. As both parties claimed that the funds would take part in a commodity pool to facilitate trade in forex, commodities, and other investments, they were instead operating a Ponzi scheme.

As is usual of schemes like these, the defendants falsified demonstration accounts in order to promote their pool. The typical promise of incredible investment returns was used in tandem with falsified gains to lure naive investors into the pool.

The Classic Ponzi

Instead of trading, the fraudsters misappropriated the funds into their personal accounts to spend on various luxuries they desired. Things like jewelry, clothing, and luxury vehicles were all among the items the fraudsters bought with the stolen funds. In order to keep the scheme going on for longer, the fraudsters gave the money from new investors to older investors. This was to facilitate the illusion of legitimacy and thus delay the scheme’s inevitable collapse. Through doing so, they planned on roping in even more money.

Ponzi schemes always sound like a great idea. It is, in fact, the entire purpose of a scheme to look as desirable as possible. Regulators can’t prevent every single scheme that pops up, so please take care not to fall for anything that looks suspicious.