California charges 15 for alleged $5M Ponzi scam aimed at elderly Filipinos

Rendition of supposed Pagudpud Sands Resort in the Philippines, which California prosecutors say has not opened or earned any income.

OAKLAND, California  – California Attorney General Rob Bonta filed charges against 15 individuals for allegedly defrauding elderly Filipino victims out of a combined $5 million in a Ponzi scheme.

The fraudulent scheme solicited millions in investments from at least 30 known elderly victims for the construction of the Pagudpud Sands Resort (PSR) in the Philippines, a venture that has not or generated income.

The defendants face 98 separate charges, with felony counts including grand theft, financial elder abuse, sale of unqualified security, communications containing untrue statements and omissions of material facts, and use of a device, scheme, or artifice to defraud in the offer, purchase, or sale of a security.

One 83-year-old invested $230,000, the charges say. An 84-year-old woman put in $500,000, while others invested tens of thousands of dollars.

“Those who take part in the financial abuse of elders must be held accountable for their actions,” said Bonta. “Our most vulnerable loved ones should never be deceived and defrauded of their hard-earned retirement money,”

The defendants allegedly used their positions as financial advisers to convince elderly victims since around December 2015 into investing in the development of PSR, making

gross sales misrepresentations. These included the false claim that Wyndham Resorts, a well-known hotel company, had committed to managing the facilities.

Victims were also told their investments would go toward the construction of PSR, when instead, the money was used to pay two of the defendants at least $10,000 a month, in commissions for those who brought investors to PSR, and other multi-level marketing schemes unrelated to PSR.

The suspects also failed to follow through on promises made to their investors, who  were promised “interest payments” on their investment, but did not know that these were actually derived from other victims’ investments and not the resort itself. In most cases, the suspects failed to deliver the interest payments completely.

The California Department of Justice is seeking out additional victims who have been defrauded by this scheme.  Victims can contact the AG’s office at (800) 722-0432.

This case stems from a joint investigation conducted by the California Department of Justice’s Division of Medi-Cal Fraud and Elder Abuse (DMFEA), the U.S. Department of Health and Human Services – Office of the Inspector General, the California Department of Financial Protection and Innovation, and the Federal Bureau of Investigation (FBI).