Woodstock man set to join Gilberts partner in prison
From Staff Reports September 25, 2012 9:30PM
Updated: October 27, 2012 6:14AM
ROCKFORD — A Woodstock man was sentenced Monday in federal court by U.S. District Judge Philip G. Reinhard in Rockford to 136 months in prison for conducting a $7 million fraud scheme.
Francis X. Sanchez, 52, co-owned and operated a business in McHenry County known as InvestForClosures. On May 3, Sanchez pleaded guilty and admitted that he had fraudulently obtained more than $7 million from InvestForClosures’ investors.
Sanchez’s business partner and co-defendant, James D. Bourassa, 55, of Gilberts, pleaded guilty to mail fraud on Feb. 27. On June 11, Bourassa was sentenced to 51 months in federal prison.
According to Sanchez’s plea agreement, InvestForClosures claimed it bought distressed houses, rehabilitated those houses and sold the houses for a profit.
Sanchez admitted in his plea agreement that he solicited people to invest in InvestForClosures by making various misrepresentations, including: 1.) that their investments would be safe because they would be backed by real estate; 2.) that InvestForClosures used the majority of its investors’ funds to purchase real estate; and 3.) that because of the business’s efficient cash flow from buying and selling houses, InvestForClosures had never failed to make an interest payment on time or to return an investor’s principal when requested.
These representations were false, prosecutors said, because: 1.) the business did not own sufficient real estate to secure all of the investments; 2.) the business did not use the majority of investor funds to purchase real estate, but instead used most of the investors’ funds to pay other expenses, including the salaries of the defendants, and to pay Ponzi-type interest to prior investors; and 3.) InvestForClosures was not making enough money from property sales to pay the interest owed to the investors, but was instead using cash received from new investors to pay the prior investors with Ponzi-type payments.
Sanchez further admitted that, in order to conceal from the investors his false promises and misrepresentations and to prevent the investors from demanding the return of their principal, he told the investors he was developing an exclusive, luxury residential community in Mexico known as The Sands of Gold. Sanchez solicited his investors to purchase lots at Sands of Gold and to invest additional money for the Sands of Gold project.
Sanchez admitted that he made several misrepresentations to his investors regarding Sands of Gold, including: 1.) that the government of Mexico had promised to invest millions of dollars in infrastructure necessary for the development of the Sands of Gold; 2.) that efforts to obtain financing for the project were going well and a financing deal was imminent; 3.) that he was finishing negotiations with a major hotel chain for the construction of a hotel at Sands of Gold; and 4.) that a major accounting firm had agreed to do the accounting work necessary so that the business could go public.
During the course of the scheme, prosecutors said, Sanchez fraudulently obtained more than $9 million from the investors. Of this amount, approximately $1,711,711.18 was paid back to the investors through Ponzi-type payments.
In addition to sentencing Sanchez to prison, the court also ordered him to pay more than $7.8 million in restitution to the victims of his crime.