Two Florida Residents Federally Indicted For Orchestrating $150 Million Brazilian Factoring Scheme

Acting United States Attorney Gregory G. Brooker today announced a federal indictment charging ANTONIO CARLOS DE GODOY BUZANELI, 56, and JOSE MANUEL ORDOÑEZ, JR., 46, in a $150 million investment fraud scheme involving purported Brazilian factoring. JULIO ENRIQUE RIVERA, 61, a third defendant involved in the conspiracy, was charged by felony information and pleaded guilty on November 9, 2017. BUZANELI and ORDOÑEZ were taken into custody on November 17, 2017, and made their initial appearance in U.S. District Court in Miami, Fla., that afternoon. A detention hearing for BUZANELI and ORDOÑEZ is scheduled for November 21, 2017, before Magistrate Judge John O’Sullivan at the C. Clyde Atkins U.S. Courthouse in Miami, Fla.

According to the indictment and documents filed in court, BUZANELI, ORDOÑEZ and RIVERA were the principals of Providence Holdings International, Inc., a company based in Key Biscayne, Fla. In 2009 and 2010, BUZANELI, ORDOÑEZ and RIVERA formed 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 indictment 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 indictment and documents filed in court, Providence raised more than $64 million from U.S. investors by employing a network of unlicensed 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.”

The indictment alleges that 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 indictment and documents filed in court, one of Providence’s brokers, an individual identified in the indictment as J.C., owned and operated a financial advisory firm in Saint Louis Park, Minn. Between July 2013 and January 2016, J.C. raised approximately $2.4 million for Providence from Minnesota investors by representing that Providence would invest their money in factoring in Brazil.

According to the indictment 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 about 2011, 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.

According to the indictment and documents filed in court, on July 28, 2016, Providence Financial Investments, Inc. and Providence Fixed Income Fund LLC declared bankruptcy, claiming to have estimated assets between $0 an $50,000. As a result of the fraud scheme, Providence investors worldwide lost a total of more than $100 million.

This case is the result of an investigation conducted by the FBI, United States Postal Inspection Service, and the Minnesota Commerce Fraud Bureau.

Assistant U.S. Attorneys Kimberly A. Svendsen and Joseph H. Thompson are prosecuting the case.

Defendant Information:                                                                                                                     

ANTONIO CARLOS DE GODOY BUZANELI, 56

Coral Gables, Fla.

Charges:

• Conspiracy to commit mail fraud, 1 count
• Mail fraud, 12 counts

JOSE MANUEL ORDOÑEZ, JR., 46

Davie, Fla.

Charges:

• Conspiracy to commit mail fraud, 1 count
• Mail fraud, 12 counts

JULIO ENRIQUE RIVERA, 61

Pembroke Pines, Fla.

Convicted:

• Conspiracy to commit mail fraud, 1 count

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United States Attorney’s Office, District of Minnesota: (612) 664-5600