Guadalupe Valencia Pleads Guilty to Federal Fraud Charges in Nearly $7 Million Investment Scheme

Source- http://losangeles.fbi.gov/dojpressrel/pressrel10/la122010a.htm

LOS ANGELES—A West Covina woman pleaded guilty today to six federal fraud charges, admitting that she ran a Ponzi scheme that bilked more than 150 victims out of approximately $6.9 million.

Guadalupe Valencia, 46, pled guilty to two counts of mail fraud, two counts of wire fraud and two counts of tax fraud. Valencia pleaded guilty before United States District Judge S. James Otero, who remanded Valencia into custody after she pled guilty.

Valencia ran her scheme out of the Downey offices of companies she called Real Estate & Loan Consultants and R.E. Equity Group, Inc. Beginning in 2001 and continuing through 2009, Valencia promoted two types of investment pools, with one purportedly funding loans to purchase real estate, and a second purporting to fund short-term loans to businesses. According to her plea agreement, Valencia promised high rates of interest in both investment vehicles—from 8 percent to 20 percent in as little as 45 days. Valencia admitted that she falsely told investors that their investments were fully secured, backed by deeds of trust on valuable real estate, as well as promissory notes that equaled “money-back guarantees.”

By pleading guilty, Valencia admitted that the investments she promoted did not generate any profits and that she used newer investor funds to pay original investors. Further, Valencia admitted that she had provided victims with worthless promissory notes that she had created.

In addition to the mail and wire fraud charges, Valencia pled guilty to two counts of subscribing to false tax returns for the tax years 2007 and 2008. In her plea agreement, Valencia admitted that she filed the returns with the Internal Revenue Service knowing that they were false. Specifically, for the 2007 tax year, Valencia failed to report more than $280,000 to the IRS. For the 2008 tax year, Valencia failed to report more than $470,000 on the tax return that she filed.

Judge Otero is scheduled to sentence Valencia on May 23, 2011. At that time, the defendant faces a statutory maximum sentence of 86 years in federal prison and fines totaling $1.5 million.

The investigation of Valencia was conducted by IRS - Criminal Investigation and the Federal Bureau of Investigation.


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