posted June 26, 2008
) Luis H. Rivas |
A criminal complaint there charges that Rivas used the U.S. mail to obtain money through fraudulent means.
Rivas is also facing an involuntary bankruptcy in Chattanooga, and attorneys are trying to track down as many assets as possible for a host of creditors.
Rivas disappeared around the end of May. He is believed to be on the run with one of his associates, Angie Jefferson.
For the past year, Rivas mainly operated out of an office in Bonny Oaks, but he also set up offices in Spartanburg and elsewhere. All those offices have been closed.
In a seven-page affidavit, FBI Agt. James R. Lannamann said he found millions of dollars in Rivas' bank accounts, but also learned that he was far short of the funds needed to pay back investors, who had received extravagant promises from him.
He said Rivas spent lavishly on himself and his associates during the spree.
Agt. Lannamann said authorities in February began suspecting that Rivas was running a Ponzi scheme.
He said after Rivas promised five percent a month in returns, Constance Godenick attended one of his seminars in Nashville and then sent him a $30,000 check. She said she was soon hired by Rivas as an "equity agent."
The affidavit says that last October, Chattanooga realtor Beverly Ruiz came to the Radisson Hotel in Spartanburg and made two presentations. Ms. Godenick said she afterwards wired about $100,000 to the Chattanooga office.
Rivas in November presented a seminar in Greenville, S.C., and Ms. Godenick sent about $50,000 to Chattanooga after that.
Agt. Lannamann said on Feb. 27 a Rivas employee contacted the Columbia Division of the FBI with concerns about his operation. He said the employee had heard Rivas talk of having $50 million in the bank, then learned that some payroll checks and investor payments might bounce.
The employee "was concerned that people working for Rivas appeared to lack experience and there was little record keeping for all the deposits being made by the investors. In addition, this employee saw suspect spending by Rivas to include his buying cars and houses for employees and on one occasion giving four employees $6,000 each to go on a 'shopping spree.'"
Agt. Lannamann said he interviewed Rivas on March 3 at the Spartanburg FBI office. He said Rivas told him he had been currency trading for about three years and he formed The Forex Project in 2006. He said at seminars Rivas said he had been trading for over 30 years He said Rivas told him he held his first training seminar for clients in September 2006.
He said Rivas told him he had 222 clients with a total of $25 million in 15 different accounts at Interbank FX in Salt Lake City, Utah.
Rivas said all client payments came from his earnings in currency trading, saying he had mastered the "Fibonacci Filter" and "Ripple Effect" methods.
He said Rivas admitted being a convicted felon who had served time in prison. The agent said Ms. Godenick told him that Rivas told her he had not gone to prison, but that was another Luis Rivas from Mexico.
She said Rivas paid the equity checks on time until early February. She said checks began to arrive late and to bounce. She said the last payment on her $57,000 investment was Feb. 28.
A securities investigator from Nashville, Carmen Jones, on May 19 said a review of accounts at CapitalMark Bank and Trust, Dupont Community Credit Union and First Tennessee Bank showed over 315 deposits totaling more than $22.5 million.
The investigator said there was more than $6.5 million in suspect spending from the CapitalMark account made at hotels and restaurants and included limousine service and spending at clothing and jewelry stores.
There was over $1.2 million in an account at Dupont Community Credit Union in the name of Rivas' wife. The investigator said this account showed over $700,000 spent on personal items, including home furnishings, carpet, window treatments and other home improvements.
An AmSouth Bank account had $3.7 million reflecting investments of another 50 clients.
Bjorn Kvammen of Landrum, S.C., said he invested half a million dollars with Rivas on a promise he would get $25,000 a month for 36 months. He did not get any payments.
At the Salt Lake City bank, Rivas withdrew over $3.4 million, causing him to lose over $2.5 million in what had been open trades in the foreign currency markets. On May 15 alone, he lost $1.785 million from a single trading account.
Salt Lake City bank officials said Rivas stopped depositing money there last Oct. 15. On one account, he had a $4.8 million profit. On all the other accounts, he had a $1.5 million loss.
Agt. Lannamann said for Rivas to fulfill his promises to all the investors, he would have needed $1,250,000 per month as well as $500,000 per month to the equity agents.
In addition, he was supposed to have returned the total of investments after three years.
Agt. Lannamann said Steve Fox, a former Forex equity agent, said he brought some $7 million into the firm from the fall of 2007 to early 2008. He said on May 10 that Rivas told him he was having financial problems. He said Rivas later told him he could only repay investors about 80 percent.
He said Fox began going through client files at the Chattanooga office and found that there were over 500 clients who had invested approximately $31 million. Fox stated that Rivas told him he would bring $17 million to him on the morning of May 19, but he had not shown up by 9:10 a.m. He said he called Rivas, who said he was getting off the freeway and would be there in a few minutes. He said he called Rivas again when he did not show up, and Rivas said he had changed his mind and was not going to deliver the $17 million. Fox said he has not had any direct contact with Rivas since that time.
The agent said there were over $2 million in investments at AmSouth Bank in Chattanooga and Coastal Community Bank in Panama City, Fla. The accounts show Rivas spending on hotels, limousines, houses and rental cars.
From April 24 to May 7, Rivas had $41,000 in charges at the Ritz Carlton and other Florida hotels and a $22,000 charge at the Gaylord Opryland Hotel in Nashville. On April 19 and May 8 he bought vehicles from Lincoln-Mercury dealerships for $56,437 and $61,432.
The agent said $665,000 in investor funds were placed in a Spartanburg bank. Joy Terry, Rivas' personal assistant and girlfriend, was allowed access to one of the accounts at the bank. Spending out of the account included $108,328 at Century BMW, $94,000 at Wakefield Buick, over $15,000 at Circuit City and over $4,000 for a pool table. Checks for cash and petty cash written by Joy Terry totaled over $158,000.
The agent said bankruptcy trustee Grey Steed had retrieved $1,246,000 in cash and a $459,000 home from Rivas' wife. He recovered a $50,000 ring, fur coats and furniture and is going after a number of vehicles.
Joy Terry said Rivas bought her an engagement ring and diamond ring, several mink coats, a new BMW, and a six-month lease on a home.
She said at one time Rivas had 170 employees with a weekly payroll of around $200,000. She said he was spending $200,000 a month on employee mortgages.
She said after March 1, Rivas stopped making payments to investors except for a small number who complained.
She said Rivas told her on March 3 that he was $3 million down" in his investor payments and later said he was $10 million short.
She said after he quit making investor payments, he went to Panama City and Miami and took in more investment money. She said on May 19 he told her he could not pay back even 50 percent of the money owed. She said she has had no contact with him since May 21. She said he talked about going to California or Massachusetts.
Agt. Lannamann said he has identified 479 individuals who invested over $27 million with Rivas. There were 40 investors who gave Rivas over $2 million in self-directed IRA funds.
| Dining Out | Business | Movies | Focus | About Us |
| Church | Living Well | Memories | Outdoors | Real Estate | Student Scene | Travel |