Former CEO Louis Lluberes And CFO Of Temporary Staffing Company Charged
Former CEO Louis Lluberes And CFO Of Temporary Staffing Company Charged In Manhattan Federal Court With Scheme To Defraud Bank And Investors Of More Than $500 Million By Fraudulently Boosting Revenues
Audrey Strauss, the Acting United States Attorney for the
Southern District of New York, and William F. Sweeney Jr., the Assistant
Director-in-Charge of the New York Office of the Federal Bureau of
Investigation (“FBI”), announced today the unsealing of an Indictment in
Manhattan federal court charging LOUIS LLUBERES, a/k/a “Luis Lluberes,” MOISES
LLUBERES, MARIA AGUILAR, a/k/a “Maria Hewitt,” and MARIA LOPEZ with conspiracy
to commit wire and bank fraud, wire fraud, bank fraud, and conspiracy to commit
money laundering stemming from their years-long scheme to fraudulently boost
the revenues of their temporary staffing company (“Company-1”) and launder
funds through a series of shell companies before mischaracterizing the money as
collections from customers. The scheme
allowed Company-1 to fraudulently obtain more than $500 million on its line of
credit from a U.S. bank (“Bank-1”) and supported the sale of Company-1 to a
group of investors (the “Investor Group”) at a grossly inflated price. LOUIS
LLUBERES, MOISES LLUBERES, AGUILAR, and LOPEZ were arrested this morning in the
Middle District of Florida, and will be presented this afternoon in that
district. The case is assigned to U.S.
District Judge Vernon S. Broderick.
Acting U.S. Attorney Audrey Strauss said: “Louis Lluberes,
founder and former CEO of a temporary staffing company, and his three
co-defendants, allegedly schemed to inflate the company’s receivables, thereby
making the company appear far more profitable than it was. As alleged, they were thus able to
fraudulently exceed their bank’s credit limit, borrowing over $500 million, and
ultimately sold the company at a vastly inflated price. Thanks to the assistance of the FBI, Lluberes
and his co-defendants now face multiple federal fraud charges.”
FBI Assistant Director William F. Sweeney Jr. said: “Today’s
indictment details an alleged multimillion-dollar scheme in which the
defendants fraudulently borrowed money from a major financial institution,
funneled the money from a revolving line of credit through a series of shell companies,
and dumped it back into the company, falsely representing those funds as
business proceeds. They later
manipulated the books by creating fraudulent invoices to boost the perceived
value of the company before its sale to a private equity firm. These charges serve to remind everyone that
illegal business dealings will be faced with intense scrutiny.”
According to the Indictment unsealed today in Manhattan
federal court:[1]
LOUIS LLUBERES founded Company-1 in 1995 and served as
Company-1’s chief executive officer until March 2020. Company-1 served as a staffing company,
supplying other businesses with temporary and permanent labor. MOISES LLUBERES, LOUIS LLUBERES’s brother,
served as Company-1’s chief financial officer.
AGUILAR, MOISES LLUBERES’s romantic partner, and LOPEZ, LOUIS LLUBERES’s
daughter, served in Company-1’s accounting department.
Company-1 had established a revolving line of credit with
Bank-1. Under the terms of the line of
credit, Company-1 could only borrow up to a designated ratio of Company-1’s
eligible accounts receivable (the “Borrowing Base”). By its terms, invoices that had gone more
than 90 or 120 days without being paid were no longer eligible to be considered
as part of Company-1’s Borrowing Base.
Officials at Company-1, including MOISES LLUBERES and LOPEZ, were
required to submit weekly financial reports to Bank-1, which included
information on Company-1’s sales and collections, among other items, that
allowed Bank-1 representatives to calculate Company-1’s Borrowing Base.
Beginning in or about 2017, after losing significant
business from major clients, the defendants began creating fraudulent invoices
(the “Fictitious Receivables”). The
Fictitious Receivables, which were recorded on Company-1’s books, created the appearance
that Company-1 was engaged in more business and would be receiving more client
payments than was the reality. All told,
the defendants created more than 2,000 Fictitious Receivables. LOPEZ was responsible for recording the vast
majority of Fictitious Receivables onto Company-1’s books.
Thus, by inflating Company-1’s Borrowing Base through the
creation of Fictitious Receivables, Company-1 and the defendants were able to
borrow more than $520 million from Bank-1.
Company-1 was not actually entitled to borrow these funds.
In order to perpetuate their fraud, the defendants utilized
two shell companies (“Shell-1”) and (“Shell-2”) to launder Company-1 funds
before transferring those funds back to Company-1 and mischaracterizing those
funds as client collection payments.
Between in or about September 2017 and in or about March
2020, Company-1 accounts transferred approximately $120 million in funds
obtained from Company-1’s line of credit with Bank-1 to Shell-1’s bank
account. During the same time period,
Shell-1 transferred approximately $119 million to Shell-2, constituting
approximately 90% of all funds received by Shell-2. And, during the same time frame, Shell-2
transferred approximately $129 million to Company-1’s collections account,
where the defendants disguised the funds as client payments on outstanding
invoices.
Once the misappropriated funds had been returned to
Company-1’s collections account, LOPEZ and others applied those funds against
aging accounts receivable, including the Fictitious Receivables. This allowed Company-1 to maintain its
Borrowing Base and continue borrowing from Bank-1.
Beginning in or about 2017, the Investor Group initiated
negotiations to acquire Company-1, and the Investor Group executed an agreement
to purchase Company-1 (the “Purchase Agreement”) in May 2018. In connection with the Purchase Agreement,
LOUIS LLUBERES certified that financial records relied upon by the Investor
Group and incorporated into the Purchase Agreement, including Company-1’s
accounts receivable, were accurate and legitimate. In reality, as reviewed by forensic
accountants retained by Company-1, these records included approximately $56
million in Fictitious Receivables, which resulted in the Investor Group
overvaluing Company-1’s enterprise value by approximately 430%.
LOUIS LLUBERES was paid approximately $11.3 million on the
day the Investor Group acquired Company-1.
LOUIS LLUBERES also received an additional approximately $6.2 million
based, in part, on fraudulent representations to the Investor Group and
Company-1. In total, LOUIS LLUBERES made at least $17.5 million from the sale
of Company-1 (the “Acquisition Payments”).
LOUIS LLUBERES transferred at least approximately $716,000
in the Acquisition Payments to MOISES LLUBERES and at least approximately
$45,000 in the Acquisition Payments to LOPEZ.
The defendants further used the Acquisition Payments to acquire homes in
Florida, Punta Cana in the Dominican Republic, precious metals, and other
personal items. LOUIS LLUBERES also
transferred Acquisition Payments funds to a Tex-Mex restaurant operated by
LOUIS LLUBERES and MOISES LLUBERES in the Dominican Republic.
In or about March 2020, Company-1 learned of LOUIS LLUBERES
and MOISES LLUBERES’s fraud when an attorney retained by the brothers wrote a
letter, dated March 30, 2020, disclosing “excessive billing” to Company-1’s
customers in order to increase Company-1’s sales and allow Company-1 to draw
more from its line of credit than Company-1 would otherwise be entitled to.
AGUILAR closed Shell-2’s bank account the same day that the LLUBERES brothers’
attorney submitted the letter to Company-1. Company-1 fired the defendants
after it was alerted to the fraudulent scheme.
LOUIS LLUBERES, 58, of Windermere, Florida; MOISES LLUBERES,
56, of Winter Grove, Florida; AGUILAR, 37, of Winter Grove, Florida; and LOPEZ,
37, of Orlando, Florida, are charged with (1) conspiring to commit wire and
bank fraud, which carries a maximum sentence of 30 years in prison; (2) wire
fraud, which carries a maximum sentence of 30 years in prison; (3) bank fraud,
which carries a maximum sentence of 30 years in prison; and (4) conspiracy to
commit money laundering, which carries a maximum sentence of 20 years in
prison. The maximum potential sentences
in this case are prescribed by Congress and is provided here for informational
purposes only, as any sentencing of the defendants will be determined by the
judge.
Ms. Strauss praised the investigative work of the FBI.
This case is being handled by the Office’s Complex Frauds
and Cybercrime Unit. Assistant U.S.
Attorneys Nicholas W. Chiuchiolo and Daniel G. Nessim are in charge of the
prosecution.
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