Fallsnewspress.com - Investor charged in $29.7 million defraud scheme

by Steve Wiandt

Reporter

Enrique F. Villalba, 47, of Cuyahoga Falls, was charged with one count of wire fraud for executing a scheme that allegedly defrauded 26 investors of $29.7 million, according to a U.S. attorney for the Northern District of Ohio.

"Mr. Villalba takes full responsibility for his actions," his attorney, J. Timothy Bender, said, "and wishes to express how deeply sorry he is for the harm he has caused his clients."

An "information" was filed against Villalba, Steven M. Dettelbach announced March 29. He said an information is a charge, not evidence of guilt.

Villalba operated numerous businesses, the release said, including Money Market Alternative, LP, his investment business, and Rico Latte, formerly of Hudson of Stow, which allegedly were funded through millions of dollars of investors' money.

An "information" indicates the defendant waived his right to have his case presented to the federal grand jury, causing it to proceed as if it were an indictment, said William Edwards of the U.S. Department of Justice, Northern District.

"Mr. Villalba contacted the U.S. Attorney's Office last August, voluntarily bringing this matter to their attention," Bender said in a statement e-mailed to the Falls News-Press. "Since then, he has been cooperating with the authorities and has been providing information to the SEC, the U.S. Attorney's Office and the FBI.

"Any resolution of the case will undoubtedly include an order for restitution and Mr. Villalba is resolved to do everything possible to make his clients whole."

The information alleges that Villalba held himself out as an "investment manager" who, by employing his "Money Market Plus" investment methodology to the futures market, could realize long-term gains of 8 percent to 12 percent for investors.

Villalba allegedly represented that his knowledge of physics, when combined with his application of a unique "momentum filter," allowed him to predict with "an uncanny degree of certainty" how the futures market would trend at various times during a given month, allowing him to purchase and sell future contracts to maximize gains.

To reduce the risk inherent in the futures market and protect investors' principal investments, the information alleges that Villalba represented that he would put stop orders in place to sell the futures contracts if it appeared that the investors were beginning to lose too much money.

But Villalba did not put the stop orders in place, the information alleges, and as a result, he lost millions of dollars of investors' money. The information also alleges that Villalba converted millions of dollars of investor money for his own purposes, which included: funding his Rico Latte coffee shops in Hudson and Stow; purchasing property in Vermillion, and; making "Ponzi-type payments" to some of his investors.

Bender said that in the course of operating his money management firm, Villalba experienced large investment losses and significant amounts of his clients' funds were lost. "He attempted to recoup these losses through the use of increased leverage, but those attempts not only failed but generated significant additional losses," Bender said. "Mr. Villalba did not disclose these losses to his clients."

If convicted, Villalba's sentence will be determined by the court after a review of factors.

Villalba will be arraigned April 7 before Judge James Gwin in the U.S. District Court for the Northern District of Ohio in Cleveland.

E-mail: swiandt@recordpub.com

Phone: 330-688-0088 ext. 3141