NJ Couple Faces Prison, Civil Fine Over Alleged Ponzi Scheme
By Jeannie O’Sullivan of law360.com
Law360, Jersey City (May 27, 2016, 2:23 PM ET) — A New Jersey couple who purportedly owned a hedge fund was hit with criminal charges and a hefty civil penalty Friday for allegedly collecting money from two dozen investors and spending it on a lavish lifestyle as part of a Ponzi scheme that netted nearly $600,000 from victims.
Husband and wife Alcibiades Cifuentes, 33, and Jennifer Wee Cifuentes, 35, of West New York, New Jersey, were scheduled to appear before U.S. Magistrate Judge Leda Dunn Wettre in Newark federal court Friday afternoon to answer to charges of commodities fraud and mail fraud, U.S. Attorney Paul Fishman said.
Each faces up to 30 years in prison and $1.3 million in fines for criminal charges and their company is subject to a $2 million civil penalty leveled Friday by the New Jersey Bureau of Securities.
The couple is accused of making extraordinary guarantees about investment returns and using the cash they fetched to buy luxury items, such as two Audi cars, clothes and jewelry, and to pay off other victims, according to Fishman and the bureau.
“The Cifuenteses days of preying on investors are over,” Acting New Jersey Attorney General Robert Lougy said. “The Bureau of Securities’ action today sends a clear message to anyone thinking about using fraud and deceit to help themselves to investors’ hard-earned savings: you will be caught and held accountable.”
An attorney for Jennifer Wee Cifuentes said his client maintains her innocence.
“Mrs. Cifuentes vehemently denies the allegations asserted against her,” Jeffery Greco told Law360.
Alcibiades Cifuentes’ public defender didn’t return a request for comment.
The Cifuentes allegedly induced the victims to invest in the foreign currency and commodity markets through their Cifuentes Fund Management from 2012 through March 2015, fetching $590,000 from about 25 victims, Fishman said. At least 11 of the victims were offered and sold the unregistered securities to or from New Jersey. Other victims came from Maryland, Minnesota, New York and Florida, according to the indictment.
CFM offered prospective clients the options to invest in a portfolio of high liquidity currencies, which guaranteed a 10 percent monthly return, or to trade funds in the foreign currency market, the bureau said. An investigator in the criminal case noted in a charging document that “guaranteed investment returns of this magnitude are nonexistent.”
The investors’ funds really went to the couple’s lifestyle, according to the bureau. In addition to the cars, the ill-gotten money went to high-end stores like Hermes, Ferragamo, Hugo Boss, Omega and Sydney Thomas Jewelry. The couple also used investor funds to pay for rent, groceries, liquor, and fast food, the bureau said.
“They victimized investors in a case of outright thievery born of unmitigated greed and selfishness,” said Steve Lee, acting director of the Division of Consumer Affairs.