SEC Files Charges in Ponzi Scheme Targeting Hispanic Community
Edward Espinal and Cash Flow Partners LLC are charged with operating a $5 million Ponzi scheme targeting at least 90 Hispanic investors by falsely promising 1.25%–4% monthly returns on fake real estate flips, using new investor funds to pay earlier investors and finance personal expenses, while also running a separate loan fraud scheme, leading to SEC civil charges and parallel criminal prosecution.
Edward Espinal and Cash Flow Partners LLC are accused of defrauding at least 90 investors, mostly from the Hispanic community, of $5 million by falsely claiming funds would be used to purchase and flip residential properties with guaranteed monthly returns of 1.25% to 4%. In reality, the company owned only two unsold properties, and investor money was used to pay earlier investors, fund Espinal’s personal lifestyle, and sustain a separate fraudulent bank loan scheme. The SEC has charged them with violating federal antifraud securities laws, seeking injunctions, disgorgement with interest, and civil penalties, while the U.S. Attorney’s Office has filed parallel criminal charges.
Edward Espinal and his company, Cash Flow Partners LLC, are accused of operating a $5 million Ponzi scheme that targeted at least 90 investors, many of whom were members of the Hispanic community, by falsely representing that their investments would fund a pooled real estate fund to purchase and flip homes for profit. Espinal allegedly guaranteed investors monthly returns of 1.25% to 4%, but in reality, the company owned only two residential properties, neither of which were ever sold. Instead, investor funds were used to pay earlier investors as purported returns, finance Espinal’s personal living expenses, and support a separate fraudulent bank loan scheme. The SEC’s complaint alleges violations of federal antifraud securities laws and seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties. In a parallel action, the U.S. Attorney’s Office for the District of New Jersey has filed criminal charges against Espinal. The investigation, initiated in part by an SEC compliance examination and aided by the FBI and FDIC, highlighted how Espinal exploited his shared ethnic background to gain trust—a classic case of affinity fraud. The SEC has since issued Spanish-language investor alerts and encouraged the public to use Investor.gov/espanol to recognize red flags like guaranteed returns and unregistered investments.
Exhibits & Attached Documents (2)
Extracted insights
- $5.00M $5 million $1M–$10M
- person christopher dunnigan
- company edward espinal and cash flow partners llc
- company espinal and cash flow partners
- person marc p. berger
- agency Securities and Exchange Commission
- agency the sec’s complaint
- agency the sec’s litigation
- agency the securities and exchange commission
- The Securities and Exchange Commission Announced Charges Edward Espinal and Cash Flow Partners LLC
- The SEC’s complaint Alleges Espinal and Cash Flow Partners deceived investors
- Espinal and Cash Flow Partners Guaranteed Investors rates of return between 1.25% and 4% per month
- The complaint Alleges Cash Flow Partners’ purported real estate fund owned only two residential properties
- Espinal Used money from new investors To pay monthly returns to other investors, bankroll personal living expenses, and sustain his separate fraudulent bank loan scheme
- Marc P. Berger Said Espinal exploited his shared ethnic background to entice members of the Hispanic community to invest more than $5 million with Cash Flow Partners
- The Commission’s Office of Investor Education and Advocacy and the Division of Enforcement’s Retail Strategy Task Force Encourage Investors to review the Investor Alerts on affinity fraud
- The SEC’s complaint Charges Espinal and Cash Flow Partners with violating the antifraud provisions of the federal securities laws
- The SEC’s litigation Is being led Christopher Dunnigan
- The SEC Appreciates the assistance The U.S. Attorney’s Office for the District of New Jersey, the Federal Bureau of Investigation, and the Federal Deposit Insurance Corporation
The Securities and Exchange Commission today announced charges against Edward Espinal, of Wayne, New Jersey, and his company, Cash Flow Partners LLC, in connection with an alleged $5 million Ponzi scheme that defrauded at least 90 investors, many of whom were members of the Hispanic community. The SEC’s complaint alleges that from at least July 2016, Espinal and Cash Flow Partners deceived investors into believing that they were investing in a pooled fund that would purchase and renovate houses, and then flip the houses for profit. Espinal and Cash Flow Partners allegedly guaranteed investors rates of return between 1.25% and 4% per month. The complaint alleges that, in reality, Cash Flow Partners’ purported real estate “fund” owned only two residential properties, neither of which were ever sold. Instead, Espinal allegedly used money from new investors to pay monthly “returns” to other investors, to bankroll his personal living expenses, and to sustain his separate fraudulent bank loan scheme. “As alleged in our complaint, Espinal exploited his shared ethnic background to entice members of the Hispanic community to invest more than $5 million with Cash Flow Partners,” said Marc P. Berger, Director of the SEC’s New York Regional Office. “Protecting retail investors is a Commission priority, and we encourage investors to use the resources available on the Commission’s website to help identify risks and red flags, such as promises of guaranteed returns.” The Commission’s Office of Investor Education and Advocacy and the Division of Enforcement’s Retail Strategy Task Force encourage investors to review the Investor Alerts on affinity fraud, Have Something in Common with Someone Selling an Investment? It May Make You a Target for Fraud and Avoiding Investment Fraud in Your Faith-Based Community, and to access the investor protection resources at Investor.gov. Spanish language Investor Alerts on affinity fraud are available at: Alerta a los inversores: Fraude de afinidades and Cómo detener el fraude de afinidad en su comunidad. General investor protection resources for Spanish-speaking investors are available at: Investor.gov/espanol. The SEC’s complaint, filed in the U.S. District Court for the District of New Jersey, charges Espinal and Cash Flow Partners with violating the antifraud provisions of the federal securities laws and seeks permanent injunctions, disgorgement of allegedly ill-gotten gains with prejudgment interest, and civil penalties. In a parallel action, the U.S. Attorney’s Office for the District of New Jersey today announced criminal charges against Espinal. The SEC’s investigation was conducted by Kim Han, Brenda Wai Ming Chang, Thomas Feretic, Christopher Dunnigan, and Judith Weinstock, with assistance from Yvette Fuentes, and under the supervision of Lara Shalov Mehraban. An SEC compliance examination that contributed to the investigation was conducted by Stephen Debella and Matthew Chan and supervised by Michael McAuliffe and Ronald Krietzman. The SEC’s litigation is being led by Christopher Dunnigan. The SEC appreciates the assistance of the U.S. Attorney’s Office for the District of New Jersey, the Federal Bureau of Investigation, and the Federal Deposit Insurance Corporation.
The Securities and Exchange Commission today announced charges against Edward Espinal, of Wayne, New Jersey, and his company, Cash Flow Partners LLC, in connection with an alleged $5 million Ponzi scheme that defrauded at least 90 investors, many of whom were members of the Hispanic community. The SEC’s complaint alleges that from at least July 2016, Espinal and Cash Flow Partners deceived investors into believing that they were investing in a pooled fund that would purchase and renovate houses, and then flip the houses for profit. Espinal and Cash Flow Partners allegedly guaranteed investors rates of return between 1.25% and 4% per month. The complaint alleges that, in reality, Cash Flow Partners’ purported real estate “fund” owned only two residential properties, neither of which were ever sold. Instead, Espinal allegedly used money from new investors to pay monthly “returns” to other investors, to bankroll his personal living expenses, and to sustain his separate fraudulent bank loan scheme. “As alleged in our complaint, Espinal exploited his shared ethnic background to entice members of the Hispanic community to invest more than $5 million with Cash Flow Partners,” said Marc P. Berger, Director of the SEC’s New York Regional Office. “Protecting retail investors is a Commission priority, and we encourage investors to use the resources available on the Commission’s website to help identify risks and red flags, such as promises of guaranteed returns.” The Commission’s Office of Investor Education and Advocacy and the Division of Enforcement’s Retail Strategy Task Force encourage investors to review the Investor Alerts on affinity fraud, Have Something in Common with Someone Selling an Investment? It May Make You a Target for Fraud and Avoiding Investment Fraud in Your Faith-Based Community, and to access the investor protection resources at Investor.gov. Spanish language Investor Alerts on affinity fraud are available at: Alerta a los inversores: Fraude de afinidades and Cómo detener el fraude de afinidad en su comunidad. General investor protection resources for Spanish-speaking investors are available at: Investor.gov/espanol. The SEC’s complaint, filed in the U.S. District Court for the District of New Jersey, charges Espinal and Cash Flow Partners with violating the antifraud provisions of the federal securities laws and seeks permanent injunctions, disgorgement of allegedly ill-gotten gains with prejudgment interest, and civil penalties. In a parallel action, the U.S. Attorney’s Office for the District of New Jersey today announced criminal charges against Espinal. The SEC’s investigation was conducted by Kim Han, Brenda Wai Ming Chang, Thomas Feretic, Christopher Dunnigan, and Judith Weinstock, with assistance from Yvette Fuentes, and under the supervision of Lara Shalov Mehraban. An SEC compliance examination that contributed to the investigation was conducted by Stephen Debella and Matthew Chan and supervised by Michael McAuliffe and Ronald Krietzman. The SEC’s litigation is being led by Christopher Dunnigan. The SEC appreciates the assistance of the U.S. Attorney’s Office for the District of New Jersey, the Federal Bureau of Investigation, and the Federal Deposit Insurance Corporation.