Miami couple facing federal charges for alleged Ponzi scheme involving South Florida real estate

A Miami couple was accused last week by the Securities and Exchange Commission of running a real estate Ponzi scheme in South Florida— the latest high-profile arrest in South Florida’s battle against real estate fraud.

The SEC accuses the couple of operating a $135 million Ponzi scheme through a real estate investment scam that defrauded hundreds of people, mostly elderly Cuban-Americans in the Miami area, according to the Fort Myers News-Press.

The complaint filed Wednesday in Miami federal court claims the 71-year-old Miami resident and his 73-year-old wife promised unusually high returns (ranging from 9 to 16 percent) on investments in their Royal West Properties Inc.

The couple is accused of using money from new investors to pay off older ones after mortgage holders began to default amid the economic downturn and South Florida’s real estate bust. The SEC also accuses the couple of paying themselves $20 million in salaries as well as paying “consulting fees” to children and grandchildren who performed no work for the company.

“(The defendants) used their prominent standing in a close-knit Cuban-American community to ruthlessly exploit vulnerable elderly investors who trusted them with their life savings,” Eric Bustillo, SEC regional director of the Miami office, told the Associated Press.

A statement from the couple’s public relations firm denied they defrauded anyone and instead blamed business problems on the broader economic downturn.

“It is regrettable that the SEC would so grossly mischaracterize the business difficulties of (the defendants) and Royal West Properties,” the statement said. “They too have suffered devastating financial losses.”

Royal West’s website describes the company’s main business as selling property in Cape Coral, Port Charlotte and Lehigh Acres. Both Cape Coral and Lehigh Acres have been featured in the New York Times and Wall Street Journal as poster children for South Florida’s devastated real estate market.

The SEC complaint accuses the couple of violating securities registration and fraud provisions of federal securities law. It seeks a halt in business practices, a freeze on assets and unspecified penalties.