SAN JOSE - Four San Jose residents have been charged with running an investment scam that bilked Latino residents in San Jose and elsewhere out of more than $700,000, the Santa Clara County District Attorney's Office said Tuesday
Maria Penaloza, 37, Efrain Lechuga, 34, Javier Betancourt, 52, and Araceli Cabrera, 23, are named in 23 felony counts including securities fraud, grand theft of more than $500,000 and passing bad checks, Deputy District Attorney Victor Chen said.
Penaloza, considered by prosecutors as the ring's leader and who benefited the most from the scam, faces additional charges that could get her up to 33 years in prison if convicted, Chen said.
The members of the ring targeted Latinos in San Jose, Los Angeles, Chicago, Seattle and Texas by promising them profits of 50 to 80 percent in exchange for short-term loans to small businesses, Chen said.
The ring led the victims to believe that they were investing in businesses such as "Inversiones Monarcas," "Gabriela Santana Salon," and "Centravel" but many of the businesses were merely registered names or storefronts with minimal operations, according to prosecutors.
Cabrera herself took victims to some of the businesses to falsely tell them where their money was going, often asking them for $10,000 and claiming it would turn to $15,000, or a 50 percent profit, in only six months, according to Chen.
One of the businesses shown to an investor was a tire store at a storefront but it was only open once a week, he said.
The people taken in by the fraud were naove, not very sophisticated and trusted the members of the ring, Chen said.
The funds received by the scammers "went straight into her (Penaloza's) bank account" and she used the money to buy luxury items such as BMW cars and vacations, according to Chen.
Some victims started coming forward to the district attorney's office, which sent investigators out to the businesses the people supposedly invested in and found they were barely functioning, Chen said.
Most of the investors lost all of their money and some their entire life savings, prosecutors alleged.
In one case, a laborer tearfully told investigators that he lost all of the $30,000 that took him 18 years to save, according to Chen.
Penaloza had the investments come due way into the future knowing that she would be gone from the areas where the victims gave her money, Chen said.
She was arrested on July 16 in Bastrop, Texas where she and Lechuga, who is her husband, fled to live with family members, Chen said.
Authorities barely missed Lechuga, who remains at large, when they arrested Penaloza, who will be extradited within days to San Jose, prosecutors said.
Cabrera and Betancourt were arrested in San Jose this past week, according to Chen.
Investigators so far have found 17 victims of the ring, most of them residents of San Jose and Los Angeles, who invested more than $700,000 with Penaloza and the ring between December 2012 and June 2013, prosecutors said.
The district attorney's office believes there are other victims who are undocumented and afraid to come forward because they fear deportation, but the office will assist them regardless of their immigration status, Chen said.
Copyright © 2014 by Bay City News, Inc. Republication, re-transmission or reuse without the express written consent of Bay City News, Inc. is prohibited.