California Insurance Agents Arrested for Ponzi Scheme

jailIt is never a good idea to attempt to run a Ponzi scheme. An insurance agent, and a former insurance agent, from Southern California, just got arrested for allegedly running a million-dollar Ponzi scheme. The men targeted Latino senior citizens as their victims.

Do you know what a Ponzi scheme is? It is what Bernie Madoff got in trouble for running a few years ago. Madoff ripped off several celebrities including Kevin Bacon and Kyra Sedgwick, Zsa Zsa Gabor and her husband Prince Frederic von Anhalt, and others.

A Ponzi scheme, according to the United States Securities and Exchange Commission, “is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors.” The Ponzi scheme organizers try and get new investors by making a promise that they will invest funds into things that will generate high returns. They emphasize that this is a “no risk” situation.

What ends up happening with a Ponzi scheme is that the people running it don’t actually make the investments that they promised. Instead, they use the money they get from the people they have tricked on personal expenses. The people who invested money lose everything.

Two men in Southern California have been arrested for allegedly running a Ponzi scheme. They got discovered as the result of a joint investigation with California Department of Insurance and the California Department of Justice. Michael Zuniga is currently an insurance agent. (Administrative action against his insurance license is pending). Edwin Salazar is a former insurance agent (whose license expired in 2009).

The two men allegedly owned and conducted business as the Omega Investment Group. They targeted Latino senior citizens whom they had met and become friends with through their insurance business. The men entered the homes of the senior citizens, and “helped” them to refinance their homes in what they called a “risk free” scheme. They took money from eighteen senior citizens and then used that money on their own, personal, expenses.

The two men have a 57 count complaint against them. The complaint includes violations of the California Corporations Code for Securities Fraud, and violations of the Penal Code including Grand Theft, Elder Abuse, Burglary, and Conspiracy.

Be very careful when someone tries to convince you to give them money as an “investment”, especially if they insist that their plan is “risk free”. Those of you with relatives who are senior citizens may want to warn them about crimes like this one, so they won’t get taken advantage of.

Image by Andrew Bardwell on Flickr