SOURCE: Capretz & Associates

July 12, 2011 17:04 ET

Class Action Lawsuit Filed Against Bank of America on Behalf of Latino Homeowners Who Lost Millions to LA Fraud Operator Juan Rangel

LOS ANGELES, CA--(Marketwire - Jul 12, 2011) - Bank of America has been named as a defendant in a class action lawsuit filed in Los Angeles Superior Court, Central District, on behalf of hundreds of LA homeowners and investors who lost millions of dollars in a highly complex Ponzi scheme run by one of Los Angeles' most notorious fraud operators, Juan Rangel.

The lawsuit, filed on behalf of the mostly Latino plaintiffs by the law firms of Pearson, Simon, Warshaw & Penny, LLP; Capretz & Associates; and Girardi & Keese, alleges that Bank of America employees as well as bank management were aware or should have been aware of the Ponzi scheme and despite such knowledge provided banking services to Juan Rangel and his associates. Notably, Dony Gonzalez, a former Bank of America branch manager was indicted and pled guilty to receipt of bribes by Juan Rangel.

The lawsuit alleges that from about November 2007 to July 2008, Rangel used his firm, Financial Plus Investments, as well as other financial companies he owned, to defraud middle-class working families through investment, mortgage and foreclosure rescue schemes that netted Rangel about $30 million. Rangel's firms shut down in July 2008 and Rangel was arrested by federal agents in August 2008.

Rangel and his Ponzi scheme were also targets of the U.S. Attorney General's Operation Broken Trust, a nationwide operation organized by the Financial Fraud Enforcement Task Force to target investment fraud against hard working families. The operation, which involved several other federal agencies including the FBI and SEC, was the first national operation of its kind to target a broad array of investment fraud schemes that directly prey upon the investing public.

Rangel pleaded guilty in October 2010 to one count of mail fraud and one count of money laundering. In February 2011, he was sentenced to 22 years in federal prison for the Ponzi scheme and in April 2011 to seven years and three months for bribery of a bank official and money laundering to run concurrently with the previous sentence. Also named as a defendant in the class action lawsuit is Pablo Araque, who provided accounting services to Financial Plus. Araque has been indicted and is currently scheduled to go to trial February 2012.

"We are hopeful that Bank of America will weigh its role in this Ponzi catastrophe, do the right thing and take responsibility for the malfeasance alleged in the complaint filed this morning," said James T. Capretz of Capretz & Associates, one of the three law firms representing the Plaintiffs. "The relevant banking laws are in place to provide security for our country and our residents. They must be complied with completely and consistently."

The Rangel affair is not the first time Bank of America has had a run-in with federal regulators over money laundering, according to the law suit. In 2010, the Senate Homeland Security Subcommittee on Investigations concluded that Bank of America had ignored money laundering controls. In testimony before the panel, a Bank of America executive conceded that the bank had allowed an Algerian to maintain numerous accounts from 1989 to 2007 despite media accounts that he was a billionaire arms dealer under criminal prosecution in France since 2000. Federal agents also caught people who work for Mexican cartels depositing illicit funds in Bank of America accounts in Atlanta, Chicago and Brownsville, Texas from 2002 to 2009.

In 2006, Bank of America acknowledged that its lax operations allowed South American money launders to illegally move $3 billion through a single Midtown Manhattan branch. On information and belief, Bank of America paid $10.5 million to the Manhattan District Attorney's Office and to the National Association of Securities Dealers to settle allegations it violated anti-money-laundering rules.


Beginning in or about April 2006, and continuing through at least in or about July 2008, Rangel and his associates, including his son, Harold Rangel (who is a fugitive still being sought by federal authorities) executed a scheme to defraud homeowners and mortgage lenders to obtain money and property from those homeowners and mortgage lenders "by means of material false and fraudulent pretenses, representations, and promises, and the concealment of material facts."

According to the lawsuit, Rangel preyed on Spanish-speaking, working class families in his own community. He used common ties to get them to invest money that they could not afford to lose. Rangel and fellow defendants told investors that their money would be used to buy and sell properties and make high interest loans to distressed homeowners. Rangel guaranteed returns as high as 60 percent each year, and told them that their investments were safe because they were guaranteed by titles to real property.

In return for the funds invested with Financial Plus, Rangel and others acting at his direction provided investors with promissory notes that guaranteed a high rate of return, typically five percent each month, as well as the return of their invested principal. But, according to the lawsuit, only a small fraction of the money that Financial Plus received from investors was used to invest in real estate or to make loans to distressed homeowners. Instead, Rangel and Financial Plus used the money from other investors, or the investors' own principal, to make payments to investors each month that Rangel falsely characterized as investment profits. Moreover, Rangel diverted a significant portion of the invested funds for his own personal use.

According to the lawsuit, Rangel not only took investor monies, he also operated a mortgage fraud scheme that targeted distressed homeowners who had equity in their homes but were behind on mortgage payments. Rangel offered these homeowners assistance in bringing their loans current and saving their properties. As part of these transactions, however, the homeowners' equity in their properties was invested with Financial Plus and, in some cases, Rangel also took title to their properties.

The Class Action Complaint, case number BC464530 is filed with the Los Angeles Superior Court, Central Civil West, located at 600 S. Commonwealth Ave., Los Angeles, CA 90005, and is assigned to Judge Emilie H. Elias, Dept. CCW-324. A copy of the Complaint is available at

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    Mr. Capretz will arrange plaintiff interviews requested by the media