By Cathy Locke
clocke@sacbee.com
A Folsom man has pleaded guilty to investment fraud following investigation by federal agencies.
Luis Fernandez, 36, pleaded guilty to wire fraud and conducting monetary transactions in criminally derived property in connection with his operation of an investment scheme, according to a federal Department of Justice news release.
According to a plea agreement filed today in U.S. District Court in Sacramento, Fernandez was the owner and president of Fernandez Financial Inc., or FFI, in Folsom. Between September 2004 and March 2009, he collected approximately $7.4 million from investors by promising them a 3 percent monthly return on their money.
Fernandez falsely represented to investors that the firm was profitable in both good markets and bad, and that it was consistently generating a return on investment that was sufficient to pay the promised rate of return. During this time, however, Fernandez invested approximately $4.6 million in the stock market, sustaining a loss in five of the six calendar years.
To lull existing investors into keeping their money with FFI, Fernandez and others acting at his direction falsely represented that the firm was doing well and provided investors with false documentation showing stock market gains and concealing the losses. After subtracting a total of $5.3 million in monthly payments to investors, Fernandez caused a total loss to investors of approximately $2.1 million.
Fernandez also admitted that he used investors' money to purchase cashier's checks made payable to Elliot Homes for $168,872.75 for the purchase of a house in Folsom.
The case resulted from investigations by the Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigation.
Fernandez is to be sentenced in August.
Call The Bee's Cathy Locke, (916) 321-5287.
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