Giving fraud a bad name: The Ponzi scheme
A Tri-Cities web designer and real estate agent are accused of running a $500,000 Ponzi scheme that scammed at least 11 investors.
Gabriel Ramos started “raising funds” in January 2015, just months after he filed for Chapter 13 bankruptcy. Investors say he portrayed himself as a successful businessman with his company Social WebNet.
He then used the money to cover personal expenses, including his wedding at the Moore Mansion in Pasco and a honeymoon in Dubai and the Maldives, court documents show.
Miguel A. Miranda Jr., who at the time worked with Coldwell Banker Tomlinson Group in Kennewick, was one of Ramos’ early investors.
He solicited people he knew through his real estate dealings, and eventually created G/M Business Investments with Ramos, documents said.
This week, Ramos, 28, and Miranda, 41, were criminally charged with 22 felonies in Franklin County Superior Court.
The charges are first-degree theft and securities fraud with aggravating circumstances.
Judge Jackie Shea Brown issued warrants for their arrests on Monday and set bail set at $25,000 each.
Victims promised ‘huge profits’
One of their victims includes a Pasco senior citizen battling lung cancer.
She signed 40 separate agreements and invested $100,000 to help cover her $8,000-a-month chemotherapy pill, and is still owed more than $98,000, documents said.
Ramos and Miranda allegedly promised “huge profits” to people who wanted to invest in local small business borrowers, like a landscaper, painter or contractor. The identities of the purported loan recipients were not given.
The loans were to be repaid within three months and include a 30-percent return for the investors, along with a 2-percent transaction fee to be split between the two businessmen.
They said the returns were guaranteed, but the business had a reserve in case a borrower defaulted, court documents show.
“Based on these assurances, some investors liquidated or took loans from their retirement accounts, and some invested most of their life savings,” wrote Robert Kondrat, a financial legal examiner with the Washington state Department of Financial Institutions’ securities division.
Pasco and Kennewick police were also part of the investigation.
22 felony charges and counting
Kondrat, who called it a Ponzi scheme operation, said bank records show Ramos and Miranda used money from new investors to repay prior investors.
That gave off the impression of profits when there weren’t any.
The alleged scam started unraveling after 1 1/2 years when they no longer had money to repay people. Ramos blamed it on “bad borrowers” who weren’t fulfilling the terms of their loans.
Of the $500,000 raised from 11 people, more than $300,000 has yet to be returned, documents said.
The theft and securities fraud charges includes the aggravating factor that the crime was a major economic offense, involved a high degree of sophistication or planning and required the defendants to use their position of trust or fiduciary responsibility to commit.
Deputy Prosecutor Laura Mapes, in requesting the arrest warrants, said it is likely Ramos and Miranda will not respond to a summons to appear in court.
Ramos and Miranda could be looking at charges in Benton County as well, since some of the investors live in Kennewick and Richland.
HAPO had $75,000 loss
Carolina Campuzano, Ramos’ wife, also is named in the 18-page probable cause affidavit for her alleged involvement in the investment scam. She has not been charged.
Court documents say she worked for HAPO Community Credit Union, where her husband had multiple accounts that were used in the scheme.
In October 2016, with pressure mounting to repay one investor, Ramos carried out a “check-kiting scheme” that caused HAPO to lose more than $75,000, documents said.
Ramos and Campuzano allegedly conducted transactions at four different HAPO branches in the course of one day, depositing checks with large amounts and immediately withdrawing cash or getting cashier’s checks before it was discovered there were insufficient funds. The bad checks were on an account at different credit unions.
Campuzano later was fired by HAPO, documents said.
Investors got weekly solicitations
Investigators say after filing for bankruptcy in October 2014, Ramos was ordered to pay about $300 per month to a trustee.
His fund-raising started in early 2015, and by August of that year he was running Social WebNet. The company, which eventually got an office in Richland, created websites and did digital marketing for small businesses.
The company name was used on investor agreements until Ramos and Miranda started G/M Business Investments in 2016.
Ramos’ focus was on the borrowers, while Miranda claims he was “the investor’s primary contact.”
Miranda sent out weekly email solicitations to more than 150 investors and potential investors, with instructions to send him a text message if interested in any of the listed opportunities that started at $500. He described them as “micro loans” geared to help businesses grow.
At one point he claimed to have 85 to 90 investors, and said they were “very close” to reaching $1 million in investments, court documents said.
Miranda also frequently met with investors, collected their checks and cash, signed agreements as a witness and sent out an “audit” email with outstanding investments. In total, more than 150 service agreements were signed with investors, documents said.
‘Definitely a proud moment’
Investigators say Ramos tried to impress potential investors by posting photos on Facebook of newly purchased vehicles and watches, and trips to Texas, Las Vegas, Disneyland and Mexico.
Days after his wife bought a 2014 GMC Sierra truck for $45,000 and a 2009 Cadillac CTS for $20,000, Ramos wrote, “These 2 vehicles are products of hard work, countless hours of no sleep, headaches, patience and dedication. Definitely a proud moment.”
However, Miranda said in one email that “he only received his fee on one occasion and that he and Ramos ‘had the pleasure of working for free for the last two years,’” Kondrat wrote. “Ramos and Miranda led some investors to believe that they set aside their fees into a ‘reserve’ that was available in case a borrower failed to repay their loan.”
Ramos allegedly told two people in September 2016 that he won a government contract with a community college in Western Washington to rebuild parts of its website and needed to hire programmers from Texas.
The father-and-son investors, who’d already given him $173,600, went in for another $45,000 once Ramos turned over three checks totaling $115,180 for previous returns.
Two checks total $95,680 bounced since Ramos’ personal checking account had less than $120, court documents said.
One of the investors tried to stop payment on his $22,500 share to Ramos, but found his check had already been deposited and cashed, documents said.
Repayment through ‘weed money’
Investigators say both Ramos and Miranda failed to disclose to investors that they both had prior personal bankruptcy actions.
Ramos told some investors in 2017 he was working on a plan to repay their money using funds from the sale of marijuana, or “weed money” as he called it.
A year later, he pleaded guilty in Franklin County Superior Court to attempted theft of a vehicle and cocaine possession. He got two months in the county jail.
According to court records from that case, Ramos got into a stranger’s car at a Pasco apartment complex, buckled his seat belt and tried to use his own keys to start the car. The car’s owner and others interrupted Ramos, and he got out of the car and ran away.
An officer searched the area and found Ramos at a nearby financial institution. He was found with a small bag of cocaine in his pocket when being searched for arrest.
Ramos admitted being in the stranger’s car, but “insisted it was an accident and he made a mistake,” records show.
One last investment opportunity
Police were investigating Ramos for the alleged Ponzi scheme in the middle of his car theft case.
He said he didn’t know how many investors he had but thought it got up to 40 at one time, and said he was owed “roughly $700,000” from borrowers, according to court documents.
Shortly after Miranda’s August 2018 interview with Pasco police, he solicited the father-and-son investors with a new money-making opportunity.
Miranda claimed to “know a guy” who needed help paying the inheritance tax on $15 million left to him in a London bank account by his late great uncle, documents said.
Miranda told the investors that the guy would double their money, the offer was not bogus and he needed an answer ASAP because he was running out of time.
The investors did not take the bait this time, investigators said.