Florida Executive Pleads Guilty To Orchestrating $150 Million Brazilian Factoring Scheme

https://www.justice.gov/usao-mn/pr/florida-executive-pleads-guilty-orchestrating-150-million-brazilian-factoring-scheme

Department of Justice
U.S. Attorney’s Office
District of Minnesota

FOR IMMEDIATE RELEASE
Thursday, April 19, 2018

Florida Executive Pleads Guilty To Orchestrating $150 Million Brazilian Factoring Scheme

United States Attorney Gregory G. Brooker today announced the guilty plea of ANTONIO CARLOS DE GODOY BUZANELI, 56, for his role in a $150 million investment fraud scheme involving Brazilian factoring. BUZANELI entered his guilty plea earlier today before Senior Judge Michael J. Davis in U.S. District Court in Minneapolis, Minnesota. BUZANELI’S co-conspirators, JOSE MANUEL ORDOÑEZ, JR., 47, and JULIO ENRIQUE RIVERA, 61, each pleaded guilty to one count of conspiracy to commit mail fraud on February 13, 2018 and November 9, 2017, respectively. Sentencing dates for the three defendants have yet to be scheduled.
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According to the defendant’s guilty plea, BUZANELI, ORDOÑEZ and RIVERA were the principals of Providence Holdings International, Inc., a company based in Key Biscayne, Florida. BUZANELI and ORDOÑEZ became principals of Providence Financial Investments, Inc. and Providence Fixed Income Fund LLC (collectively, along with Providence Holdings International, Inc., “Providence”) in order to raise money from investors.

According to the defendant’s guilty plea and documents filed in court, from about 2010 until June 2016, Providence raised approximately $150 million from investors worldwide by representing that Providence would invest the money in Brazilian factoring. “Factoring” is a financial transaction in which accounts receivable are purchased at a discount. Providence’s marketing materials explained that in Brazil consumers write ten separate post-dated checks for $100 – one per month – to pay for $1,000 in retail items such as consumer electronics or groceries. The retailer then sells the post-dated checks to Providence for approximately $820, and Providence earns $180 over ten months as the checks mature. As a result, Providence claimed to make a 48 percent annual return on money invested in Brazil.

According to the defendant’s guilty plea and documents filed in court, Providence raised more than $64 million from U.S. investors by employing a network of brokers who sold promissory notes bearing annual interest rates between 12 percent and 24 percent. Investors were told their money would be used to factor accounts receivable in Brazil. BUZANELI, ORDOÑEZ and RIVERA provided the brokers with marketing materials to show investors that their money would be used to factor accounts receivable in Brazil. The materials falsely stated that funds would be used “for the sole purpose” of making loans to a Brazilian subsidiary of Providence “which will use the proceeds of the loan to acquire receivables or financial instruments such a post-dated checks and/or Duplicatas in the Brazilian Factoring Market.”

According to the defendant’s guilty plea and documents filed in court, BUZANELI and ORDOÑEZ instead used a significant amount of the investors’ funds to pay purported profits to other investors and to make commission payments to brokers. BUZANELI and ORDOÑEZ also diverted investor funds to other companies they controlled, including an import/export company, a travel company, a credit restoration service, a catering company and a food truck operated by BUZANELI’S wife.

According to the defendant’s guilty plea and documents filed in court, BUZANELI and ORDOÑEZ also opened Providence offices and affiliates around the world, including in London, Hong Kong, Taipei, Shanghai, Singapore, Vancouver, and Panama. In 2011 and 2012, for example, BUZANELI and ORDOÑEZ opened Providence-affiliated entities in the Bailiwick of Guernsey and in Hong Kong, through which they raised approximately $85 million from offshore investors by falsely representing they would use the investors’ money to invest in Brazilian factoring. In reality, Providence did not use the international investors’ money to purchase receivables in the Brazilian factoring market. Instead, much of the investors’ money was transferred to other Providence-controlled entities around the world as well as to bank accounts controlled by BUZANELI and ORDOÑEZ, where the money was used for payments unrelated to Brazilian factoring, including to pay commissions to U.S. brokers and to make interest payments to American investors in Providence’s U.S.-based entities. As a result of the fraud scheme, Providence investors worldwide lost a total of more than $100 million.
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