The Latex Glove Ponzi schemer pleads Guilty – Looks like Miguel Salazar is headed for Prison!

Now for those of you who follow this blog…I often report on, what appears to be the crime of the decade – the ponzi scheme.  In fact if you want to know more about them…here’s a link to a recent blog – The Anatomy of a Ponzi Scheme.

But back to business.  The concept of a Ponzi scheme is that the fraudster convinces the victim that he/she has some investment that’s a sure bet and will provide a better return than most folks receive on their investments.  Of course, most of the time there is no investment.  Rather, new investors funds are used to pay old investors returns…at least enough to cause them to keep their money invested and the scheme alive.

This version however is frankly, cute.  The Justice Department reports that a West Covina man has pleaded guilty to federal mail fraud charges for running a Ponzi scheme that took nearly $700,000 from victims who thought they were investing in latex gloves, which were portrayed as being in high demand following the 9/11 terrorist attacks.

Miguel Salazar, 36, pleaded guilty late yesterday to one count of mail fraud.  Salazar’s former partner, Carlos Flores, 43, of Lakewood, pleaded guilty to mail fraud in December.

Salazar and Flores operated SF Capital, which had mail drops in Alhambra and Glendale, and was described to investors as being in the business of factoring accounts receivable for latex gloves. Investors in SF Capital were typically told that the terrorist attacks of 9/11, concerns about infectious diseases, and other global issues had resulted in an extraordinarily high demand for latex gloves and that this enormous demand provided a secure investment vehicle for individuals and institutions. SF Capital investors were typically promised quarterly returns of 5 percent.

NOTE: Step one of any Ponzi scheme is a promise of a return on investment that is far greater than most investors would expect to receive!  The Ponzi schemer relies on the greed of the investor which turn them (the investors) into Victims.

Between 2002 and 2006, more than 30 individuals invested more than $1.3 million with SF Capital. Many individuals renewed or increased their investments after receiving payments from SF Capital that appeared to be interest or dividend payments.  However, SF Capital was not in the business of financing accounts receivable and the purported investment returns paid to investors were Ponzi payments that came from other investors. Flores and Salazar also used proceeds from the scheme for their personal benefit. For example, Salazar used investor money to pay more than $140,000 for luxury dugout seats at Dodger Stadium.

As a result of the scheme, victims lost nearly $700,000.

Salazar is scheduled to be sentenced by Judge Real on May 3. Flores is scheduled to be sentenced on February 22. Both men face statutory maximum sentences of 20 years in federal prison.

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One Response to The Latex Glove Ponzi schemer pleads Guilty – Looks like Miguel Salazar is headed for Prison!

  1. Joan says:

    What ever happened to Miguel Salazar?

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