Antonio Buzaneli, 56, who was the CEO, pleaded guilty to conspiracy to commit mail fraud before Senior Judge Michael J. Davis in the US District Court in Minneapolis, Minnesota.
His co-conspirators, Jose Manuel Ordonez, jr., 47, and Julio Enrique Rivera, 61, each admitted one count of conspiracy to commit mail fraud on 13 February and 9 November respectively.
Guernsey was among the jurisdictions worldwide where Buzaneli and Ordonez set up Providence-affiliated entities and local police investigations continue into what happened.
‘Antonio Buzaneli orchestrated a massive fraud scheme that victimised hundreds of individual investors around the globe, including in Minnesota,’ said US Attorney Greg Brooker.
‘Many of these victims were elderly or vulnerable, and they invested their hard-earned retirement savings based on sophisticated lies about a complex investment Mr Buzaneli and his co-conspirators claimed to be making in Brazil.
‘Instead, they used the investors’ money to fund their lifestyles, to travel first class around the world, and to fund their other business ventures.
‘The US Attorney’s Office is grateful for the skilled investigative efforts put forth by our law enforcement partners to hold Mr Buzaneli and his co-conspirators accountable for their scheme.’
Acting Special Agent in Charge, Robert C. Bone II, said: ‘This vast and sophisticated fraud scheme truly circled the globe, touching venues as near as St. Louis Park, Minnesota and as far as Brazil, the United Kingdom, and China.
‘Mr Buzaneli and his co-conspirators lured their victims with the promise of novel international investments and huge financial returns.
‘In reality, they stole millions simply to fund their personal interests and maintain their fraudulent conspiracy.’
According to the defendant’s guilty plea and documents filed in court, from about 2010 until June 2016, Providence raised approximately $150m. from investors worldwide by representing that it 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 wrote 10 separate post-dated cheques for $100 – one per month – to pay for $1,000 in retail items such as consumer electronics or groceries.
The retailer then sold the post-dated cheques to Providence for approximately $820, and Providence earned $180 over 10 months as the cheques matured.
As a result, Providence claimed to make a 48% annual return on money invested in Brazil.
Also according to the defendant’s guilty plea and documents filed in court in 2011 and 2012, they opened Providence-affiliated entities in Guernsey and in Hong Kong, through which they raised approximately $85m. from offshore investors by falsely representing they would use the investors’ money to invest in Brazilian factoring.
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 Ordonez, where the money was used for payments unrelated to Brazilian factoring, including to pay commissions to US brokers and to make interest payments to American investors in Providence’s US-based entities.
Sentencing dates for the three defendants have yet to be scheduled.
n A Guernsey Law Enforcement spokesman said: ‘Investigations into the collapse of the Providence investment fund are ongoing.
‘The investigation is complex and involves officers making enquiries with numerous entities and individuals in various jurisdictions across the globe. As such it continues to be a protracted and time-consuming enquiry.
‘However, officers are working diligently to progress this investigation as rapidly as possible.’
Four men were arrested on the island on 11 May 2017 on suspicion of fraud as part of an investigation that began in October 2016.