Rivas expected to plead guilty in scam

The pending guilty plea of a local foreign currencies trader who allegedly swindled at least $31 million out of investors all over the country could make it easier to recover their money, a bankruptcy official said.

Former FBI agent Grey Steed, of Knoxville, has been in charge of the involuntary civil bankruptcy case against Luis H. Rivas for more than a year, but he said he hasn't been able to access important financial records that could lead to the recovery of more money because of the secretive nature of the criminal case against the businessman in U.S. District Court.

"(His guilty plea in the criminal case) should make more of the collection efforts easier" because he'll be able to inspect certain financial records once the criminal case against Mr. Rivas is resolved, Mr. Steed said Thursday.

The guilty plea also should make Mr. Rivas more receptive simply to sharing the whereabouts of any money not yet found, Mr. Steed said. Part of that could come as the result of loosened constraints by his defense attorney, who in the past has advised Mr. Rivas not to talk, Mr. Steed speculated.

Court documents show Mr. Rivas, who fled Chattanooga in May 2008 and later was caught in Topeka, Kan., carrying about $100,000 in cash, will attend a "change of plea" hearing Wednesday in U.S. District Court in Chattanooga.

Such hearings typically involve defendants pleading guilty to some or all of the charges against them.

In early July, Mr. Rivas' federal defender asked the court for "at least four (more) months" to prepare the "complex" criminal case, a move that seemed to indicate the possibility that he would defend himself at trial.

Mr. Rivas is charged with four counts of wire fraud, five counts of the promotion of money laundering, five counts of criminally derived monetary transactions and five counts of bankruptcy fraud, but it was not clear Thursday what kind of deal he might have struck with the government to get some of those charges reduced or possibly dropped in exchange for pleading guilty.

"All the information I had gotten to this point was that he wasn't cooperating with the authorities or admitting to any of the charges," North Georgia farmer Ron Wyatt, who lost $100,000 to Mr. Rivas, said Thursday. "This is actually good news, because he is guilty."

If Mr. Rivas pleads guilty to all charges, he faces up to 255 years in prison for masterminding a classic Ponzi scheme that authorities say led to the loss of many people's life savings.

A majority of Mr. Rivas' approximately 500 victims were from Chattanooga, authorities said. Many took out mortgages on their houses and borrowed from retirement accounts on the promise that the businessman could deliver returns as high as 96 percent a year.

Among the victims was Chattanooga resident Shawn Casadevall, who helped produce video seminars for Mr. Rivas' business, then convinced his ex-fiance's grandparents to take out a $60,000 loan on their house to invest. Local restaurant owner LeMont Johnson invested $15,000 from his retirement savings.

But investigators say Mr. Rivas never put their money, or the other millions of dollars he took in for a year and a half before being caught, in the foreign currencies market. Instead, he used it to finance a lavish lifestyle and lure about 200 employees in five locations across the Southeast with promises of fat paychecks.

He paid returns to some investors, authorities said, but with money supplied by subsequent investors, the main aspect of a Ponzi scheme.

"I had to threaten a lawsuit to get just one payment," Mr. Wyatt said.

Angry and vocal when the scam was exposed in 2008, other victims who've spoken to the Chattanooga Times Free Press in the past did not returns calls Thursday seeking comment.

Mr. Johnson, who spoke last year, said Thursday he has been "trying to forget" Mr. Rivas ever existed.