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Edward Espinal, 44, of Wayne, who pleaded guilty videoconference to securities fraud and conspiracy in exchange for leniency at sentencing, is “the quintessential con artist,” Acting FBI Special Agent in Charge Douglas Korneski said.
“He played a shell game with other people’s hard-earned money, making promises he never intended to keep, and walking away with ill-gotten gains while leaving them high and dry,” Korneski said.
Espinal had advertised his Cash Flow company on YouTube, other social media and Spanish-language TV, sometimes using the Venezuelan telenovela actor Víctor Cámara.
Espinal, who was the Saddle Brook company’s founder and CEO, ran a couple of scams beginning four years ago and ending with his arrest by federal agents last December, U.S. Attorney Craig Carpenito said.
Espinal “coordinated a vast fraud scheme that lured people into taking out fraudulent loans that his company helped obtain and, in many cases, put that borrowed money into sham investments he also controlled,” Carpenito said. “His complex scam tricked numerous investors out of a substantial amount of money.”
In one scheme, Cash Flow produced Internet advertisements and held seminars offering to assist customers with low-paying salaries in obtaining loans,” the U.S. attorney said.
Employees in the sales department encouraged customers attracted by the ads to sign up for various Cash Flow loan programs, he said.
Those who did were told they could keep a portion of the loan proceeds and must provide the rest to Cash Flow, which promised to pay off the loans for them, Carpenito said.
Cash Flow then doctored documents for the many who didn’t qualify and “posed as the customers in communications with the banks,” the U.S. attorney said.
In the other scam, Espinal solicited investments from prospective customers using a marketing campaign on Spanish-language television channels and the internet, the “Cash Flow TV” YouTube page, and live presentations in Cash Flow’s offices and elsewhere, Carpenito said.
He also recruited customers who’d signed up in the bank fraud conspiracy by encouraging them to invest their loan proceeds, he said.
Nearly five dozen people who signed up received “promissory notes” from Espinal that “guaranteed monthly investment returns between 1.25 percent and 4 percent” within a year – or 60 days after investors demanded payment, the U.S. attorney said.
Espinal lied, telling investors that he would “pool their funds with the funds of other investors in investments related to real estate, real estate companies, a gold mine in Ecuador, and construction projects in countries outside of the United States,” Carpenito said.
None of that ever happened, he said.
Instead, Espinal “used investor funds to pay returns to earlier investors, to pay for personal expenses for himself, his family, and another Cash Flow employee, to perpetuate the bank fraud scheme, and to market the bank fraud and investment scheme to future victims," the U.S. attorney said.
U.S. District Judge Kevin McNulty scheduled an Oct. 13 sentencing for Espinal.
Two others, Raymundo Torres and Jennie Frias (also known as Jennie Castillo), have pleaded guilty to their roles in the loan scam and are awaiting sentencing.
The U.S. Securities and Exchange Commission (SEC) also filed a civil complaint against Espinal.
Carpenito credited special agents of the FDIC-Office of the Inspector General (FDIC-OIG), and special agents of the FBI with the investigation leading to the charges. He also thanked the SEC for assistance provided by its Enforcement Division.
Handling the case for the government is Assistant U.S. Attorneys Ari B. Fontecchio of Carpenito’s Economic Crimes Unit, and J. Stephen Ferketic of his Opioid Abuse Prevention and Enforcement Unit in Newark.
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