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Staff Photo by Dan Henry Luis Rivas, right, leaves a Silverdale transport vehicle and is escorted into the federal courthouse to be sentenced on Thursday morning.
Though a Chattanooga man will spend almost 25 years in federal prison for running one of the largest consumer fraud cases in Tennessee’s history, many of those conned still believe in his ability to return their money.
Such sentiments came in the form of numerous letters written to U.S. District Judge Curtis L. Collier, who sentenced Luis Rivas on Thursday to the maximum of 293 months — about 24.4 years — following his guilty plea in July.
In the plea, Mr. Rivas, a foreign currencies trader, admitted to bilking clients out of at least $18 million with a classic Ponzi scheme.
“Even today,” Judge Collier told the defendant in disbelief, “some (victims) still believe you have the ability to turn lead into gold. They still believe that only you know the secret path to the rainbow.”
Mr. Rivas, 56, apologized Thursday, telling the court he was doing “everything in his power” to help bankruptcy trustee Grey Steed recoup lost funds for the victims.
Several letter writers indicated they never would have lost their money had it not been for the “unintentional poor mismanagement,” as one letter put it, of Mr. Rivas’ five regional offices, the main one headquartered in Chattanooga.
From those offices, the guru would seduce clients with promises of 180 percent returns on their money in just three years.
“That’s impossible,” Internal Revenue Service special agent Scott Kennedy said Thursday at the sentencing hearing in Chattanooga’s U.S. District Court. “I’ve never seen that done in the history of mankind.”
Others suggested through letters that all Mr. Rivas deserved as punishment was community service. They blamed the government for taking away Mr. Rivas’ freedom. If he were out of prison, they suggested, he’d be able to win back the money in the foreign currencies market that he had touted as a sure bet.
Mr. Rivas’ former Chattanooga office manager, Angie Jefferson, said Thursday after the hearing that all it would take is “$250 and an Internet connection” for Mr. Rivas to generate the $18 million in restitution he has been ordered to pay.
Investigators estimated Mr. Rivas invested only about one-fifth of the money he took in over a two-year period from about 500 people scattered across the country. A majority of the victims hailed from Chattanooga and North Georgia and often invested entire life savings, records show.
The $18 million taken in the scam once was pegged by prosecutors at closer to $33 million. Claims in the involuntary bankruptcy action currently pending against Mr. Rivas hover much closer to the higher amount, bankruptcy trustee Grey Steed confirmed Thursday.
Suspicious clients in South Carolina initiated that bankruptcy action against the businessman in May 2008, triggering his disappearance from Chattanooga. Federal authorities arrested him in Topeka, Kan., about two months later, charging him with various fraud and money-laundering crimes.
A presentence report filed about a month ago revealed that Mr. Rivas spent about 12 years in the 1980s in state prisons in Arizona and Florida for similar frauds. That fact was used by Assistant U.S Attorney Gary Humble to shoot down claims from the defense that Mr. Rivas did not deserve a long sentence and was not likely to commit other crimes when he is released.
“This isn’t his first rodeo,” Mr. Humble said angrily. “Quite frankly, (Mr. Rivas) is nothing but a con. He looked his victims in the eye and cheated them out of their life savings.”
Mr. Rivas’ latest scheme out of Chattanooga “substantially endangered the solvency or financial security of at least 100 people,” the pre-sentence report stated.
Grey Steed, the trustee for the Rivas bankruptcy has just come out with third billings.
Trustee has recovered $3,567,074.57
There is only $2,686,184.32 of that left.
$880,890.25 in expenses of which $801,859.63 has gone to the Trustee and the lawyers and investigators he’s hired. Not one case has even gone to trial yet, but when they do the lawyer fees will really go up. Then you're paying thousands per day per lawyer, expert witnesses, etc.
If all Steed did was clear out Rivas's accounts, sell Rivas's stuff, take in all the money and gifts that people, like me, just handed over in June and July 08 (totals from later date auctions were added because the items were ceded immediately and sold later) then sat back and collected interest he would have recovered $3,073,391.49!
1,879,455.01 In Rivas accounts and sale of his possessions + 1,185,274.58 Money and gifts voluntarily ceded + 8,661.90 Interest since 6/08 =$3,073,391.49 Total
They have charged $801,859.63 to recover only $493,683.08 more than what was there in July 2008!
This is all in court documents that you can look at and confirm yourselves.
Why should Steed care if two dollars are spent for every one dollar added to the total amount recovered? He gets paid his percentage off that top number, the total amount recovered, before any costs are deducted.
Seriously Monica, let's get your information correct. You have stretched the truth immensely and misquoted me over and over in the past and the present. It's no wonder no one wants to talk to you. First of all I clearly told you I was not in a management position long enough to even gain access to enough information to know what was going on. Yet you make it appear I was the one managing the Chattanooga office. I told you there were at least 9 or 10 people in that position in one year's time. He moved everybody constantly for various reasons. I did not say he could turn $250 into $18 million. What I told you was they should give him a $250 account and access to the internet and he could prove to everyone he could make profit in trading currencies. I also told you after having seen hard copies of his trading account history I saw where he did make $1.8 million in profit in one month. Yes he could make the $18 million back and more but I did not say from $250. Those were two very separate comments. Just print the truth Monica. The truth will sell newspapers; there is no need for you to embellish stories.
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