The former CEO of a Miami-based investment advisory firm has been sentenced to 10 years in prison for running an investment scheme that allegedly cost investors over US$130 million.
In a federal court in New York on Thursday, U.S. district court judge Carol Bagley Amon sentenced the co-founder and former CEO of Biscayne Capital, Roberto Gustavo Cortes Ripalda (Cortes), to 10 years in prison, to forfeit US$3.4 million, and to pay US$103 million in restitution to investors.
Cortes previously pleaded guilty to conspiracy to commit wire fraud in connection with a scheme to raise capital for his real estate development business after it ran into financial trouble, which was allegedly run as a Ponzi scheme.
Through his investment advisory firm, Biscayne Capital, Cortes allegedly sold private structured products to investors, ostensibly to finance the real estate developer.
However, U.S. authorities alleged that, between 2007 and 2018, investors’ funds were largely used to pay returns to other investors, until the scheme ultimately collapsed, and investors lost over US$130 million.
According to court filings, Cortes directed the firm’s financial advisors to raise funds from new investors to repay older investors, he directed the preparation of falsified account statements, and helped develop and market the structured products.
“Using illegal Ponzi payments to their victims, Cortes and his co-conspirators were able to disguise and perpetuate this scheme for years until Biscayne Capital finally collapsed under the defendants’ lies. Today’s sentence demonstrates our Office’s commitment to holding accountable investment professionals who abuse the trust of their clients for personal profit,” said John Durham, U.S. attorney for the Eastern District of New York, in a release.
A co-conspirator in the case also previously pleaded guilty to conspiracy to commit wire fraud and is awaiting sentencing.
Prior to the criminal case, the U.S. Securities and Exchange Commission (SEC) settled allegations against Cortes and several others at the firm for regulatory breaches involving undisclosed conflicts of interest in the sale of Biscayne’s proprietary products.
They settled the allegations without admitting or denying the SEC’s findings. Cortes agreed to pay a US$50,000 penalty, and to a three-year ban, while the firm paid a $125,000 penalty and $30,000 in disgorgement.