Chicago Latinos Say They Were Lured Into Investing in a Ponzi Scheme

“Who is Latino who would like to become a millionaire?”

That is how Mauricio Chavez introduces himself to a room full of people, including a group from Chicago, at a meeting in Houston which was posted on YouTube last August.

Chavez is the CEO of a company called CryptoFX, which in recent years has solicited money from people in Latino communities to invest in crypto currency in return for potential riches. “We already have more than 20 people becoming millionaires,” Chavez tells his audience in the video. “Over five thousand people …. literally mak[ing] over $500,000 …. And there are many, many, many, many – literally paying off all their debts.”

That video is now an exhibit in a lawsuit, filed by the U.S. Securities and Exchange Commission last September, accusing CryptoFX of operating as “a Ponzi scheme” which – according to a court-appointed receiver — has defrauded as many as 40,000 people out of $150 million or more.

The court case alleges that Chavez and his partner Giorgio Benvenuto have been “targeting the Latino community” to raise millions of dollars from people who thought their money would be invested in digital currency. Instead, the suit says, “the vast majority of investor funds …. went to purposes unrelated to crypto asset investments, including real estate … personal spending, and to make Ponzi payments.” The SEC suit says Chavez and his company took in money from “unsophisticated investors” and led them to believe they could earn a “90% [profit] in [just] six months.” But – instead of investing that money – the SEC says Chavez and Benvenuto turned around and paid most of it out to previous investors, who were often family and friends. That’s the “Ponzi” payment. The government also alleges that Chavez and Benvenuto also spent investors’ money on themselves, for homes, cars, credit cards, luxury retailers, a hotel residence, travel, restaurants, jewelry, adult entertainment, and a hair salon.

And although CryptoFX is based in Houston, Texas, it turns out many of CryptoFX’s clients are right here in Chicago.

“I lost $20,000,” says Jose Herrera, who joined 25^th Ward Alderman Byron Sigcho-Lopez today for a press conference at City Hall.

“I lost $200,000,” says Cesareo Molina, who also attended today’s press conference. “All my life.”

In his press conference, Ald. Sigcho-Lopez called on the Illinois Attorney General’s office to launch a statewide investigation into CryptoFX and its Illinois victims. “We don’t see the authorities taking this issue seriously,” he said today. “We need to stop the scams.” He says hundreds of people have contacted his office to complain about CryptoFX, which – according to several court filings – has continued to operate and solicit money from “investors” – despite being ordered to stop all business back in September.

A spokesperson for Illinois Attorney General Kwame Raoul says the office is referring potential victims to the SEC, since that agency is spearheading the case against CryptoFX. And there is a special website that has been set up, where victims can email or call the office of the court-appointed receiver in the case to tell their individual stories.

That website is here, which includes information about the ongoing case; a dedicated phone line (713-546-5653) and an email, receivership@shb.com. Both Attorney General Raoul and the SEC encourage anyone who dealt with CryptoFX to use those contacts.