Florida Man Sentenced In Manhattan Federal Court In Connection With Two Multimillion-Dollar Fraud Schemes
Thursday, July 14, 2016
Preet Bharara, the United States Attorney for the Southern District of New York, announced that JOSEPH DEL VALLE, an owner and partner of various investment companies, was sentenced yesterday in Manhattan federal court to 98 months in prison for wire fraud and aggravated identity theft charges for operating two fraudulent schemes that resulted in more than $5 million in investor losses. DEL VALLE pled guilty on February 8, 2016, and was sentenced yesterday by United States District Judge Richard M. Berman.
Manhattan U.S. Attorney Preet Bharara stated: “Joseph Del Valle defrauded investors out of millions of dollars, taking money meant for investments and instead spending it on himself on luxury vacations, fine dining, and personal expenses. To fool investors who thought they were investing in wine, restaurant and hotel businesses, Del Valle fabricated emails purported to be from well-known chefs and business people.”
According to the allegations contained in the Superseding Indictment, the underlying criminal Complaint, and other statements made during court proceedings:
The Project Miami Scheme
Beginning in 2005, JOSEPH DEL VALLE, a co-conspirator (“CC-1”), and an employee of Vanquish Acquisition Partners LLC, began soliciting investors for a real estate development project in the Little Havana neighborhood of Miami (referred to herein as “Project Miami”). Project Miami involved two high-rise buildings in which the bottom floors would house retail shops and the top floors would be residential condominiums. Project Miami was designed to provide affordable housing to middle-income individuals and included an arrangement for financing so that purchasers of the condominiums would receive government-subsidized mortgages. From 2005 through 2007, DEL VALLE, CC-1, and the employee obtained approximately $6.4 million from investors for Project Miami.
Prior to making any investments, investors were told that the investment was solely for Project Miami. Investors were provided with various materials that specified the investments were for Project Miami, and provided that DEL VALLE and his company would take only a five percent management fee. However, almost immediately after investors transferred funds for Project Miami, almost all of which were sent to banks in Manhattan, New York, DEL VALLE and CC-1 transferred amounts far greater than five percent to other bank accounts and began using the funds for other purposes, including investments in a wine magazine and for DEL VALLE’s personal use. For example, in October 2007, DEL VALLE used $30,000 of investor money in Europe for, among other things, hotels, restaurants, a cruise, and cash withdrawals. In total, DEL VALLE and CC-1 used over $3 million for other investments or personal expenses.
When investors became suspicious and requested financial statements for their investments and a return of their money, DEL VALLE represented to investors in phone calls and email communications that the investment funds were secure when, in fact, a large portion of the investors’ money had already been misappropriated and/or diverted to other uses. DEL VALLE also falsely told investors that financial statements were in the process of being prepared and would be mailed to them shortly, but in fact, DEL VALLE and CC-1 had not provided any financial information to the accountant responsible for the preparation of financial statements of the relevant entities.
The Project WT/Bistro, Project Chateau, & Project Rioja Scheme
From in or about 2009 through in or about 2014, DEL VALLE conducted a second scheme in which he solicited investors to wire investments to various bank accounts for the purpose of investing in three purported investment projects, Project WT (later named Project Bistro), Project Rioja, and Project Chateau, all of which DEL VALLE controlled. According to DEL VALLE, Project WT/Bistro was created for the purpose of raising money to expand two restaurants, Project Chateau was created for the purpose of raising money to invest in the high-end segment of the hospitality industry, and Project Rioja was created for the purpose of raising money to invest in the high-end segment of the wine industry. DEL VALLE raised more than $2 million from investors for these projects.
Among other things, DEL VALLE falsely represented to investors that their money would be used solely to fund the specific projects in which the investors had decided to invest. However, almost immediately after investors transferred funds to bank accounts controlled by DEL VALLE, DEL VALLE withdrew money from the bank accounts (often through debit card purchases, ATM withdrawals, and wire transfers) and spent approximately all of the funds on restaurants, hotels, clothing, mortgage payments and payments to DEL VALLE’s family members and his fiancée, among other things. In addition, to induce investors to invest money in the specific projects, DEL VALLE frequently sent investors multiple fabricated emails that purported to come from well-known chefs and businesspeople.
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In addition to the prison sentence, DEL VALLE, 61, of Aventura, Florida, was sentenced to five years of supervised release. The Court further ordered that DEL VALLE forfeit $5,333,722 and pay $5,333,722 in restitution.
Mr. Bharara praised the work of the FBI.
The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Aimee Hector and Damian Williams are in charge of the prosecution.