Pyramid Scheme—Guilty Plea

Edmundo Rubi, a former Chula Vista, California resident, has pleaded guilty to operating a pyramid scheme that stole $35 million from roughly 425 people.^[1] Mr. Rubi’s company, which was the front for the scheme, promised returns of 6 percent monthly to veterans, nurses, and Filipinos.^[2] However, most of the victims saw no gains on their investments, and in fact most ended up losing up to 70 percent of their money.^[3]

Mr. Rubi pleaded guilty to money laundering and conspiracy to commit mail fraud. He was originally charged with other charges of conspiracy, mail fraud, and filing a false tax return, but those charges were dropped in exchange for his plea.^[4]

Money Laundering
We have previously discussed money laundering here.

Conspiracy to Commit Mail Fraud
Under 18 U.S.C. § 1349, any person who conspires to commit mail fraud—or some other type of fraud—will be punished as if he actually committed the fraud. No overt act is required for this type of conspiracy.

Mail fraud is covered by 18 U.S.C. § 1341, which makes it a crime to devise an artifice or scheme to defraud and then use the nation’s mails to carry out that scheme. The punishment for a violation of section 1341 is a fine, imprisonment for up to 20 years, or both.

We have previously discussed pyramid schemes, also called Ponzi schemes, here.

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[1] Man Pleads Guilty to $25M Pyramid Scheme, Associated Press, Nov. 15, 2005, available here.
[2] Id.
[3] Id.
[4] Id.