May 16, 2006 9:24 pm US/Pacific
Two Men Nabbed For $68 Million Alleged Ponzi Scam
WESTLAKE VILLAGE, Calif. (CBS) ―
Two Westlake Village men were arrested Tuesday on charges they conned about 70 investors out of more than $68 million in a classic Ponzi scam.
Robert Alvin Coberly Jr. and Curtis Devin Somoza, both 38, are accused in a criminal complaint of misleading investors into believing their money was going to be used to buy pools of life insurance policies that would eventually
yield a five-to-one return -- supposedly with no risk.
Prosecutors say investors were told the life insurance pools were being bought on behalf of the Personal Involvement Center, a church-based group in South Los Angeles.
In reality, just $4.7 million of the more than $68 million the two men allegedly took in was invested in life insurance policy pools, prosecutors contend.
Coberly and Somoza allegedly spent the rest on themselves, buying houses, clothes, boats and jewelry, including a $447,000 watch, four luxury cars and a $290,000 racing boat.
The men were also living in lavish homes, according to the government.
Coberly's $4 million house was purchased in part with funds from investors in an earlier con that was broken up by the Securities and Exchange Commission, and Somoza's 27,000-square-foot residence is on 16 acres purchased
with investor funds, prosecutors allege.
Somoza's house is currently on the market for $30 million, according to the U.S. Attorney's Office.
Coberly and Somoza are accused in the criminal complaint of running a Ponzi scheme, in which money from newer investors is used to pay earlier victims.
Previously, the Securities and Exchange Commission sued Coberly and Somoza over another alleged Ponzi scheme authorities contend they ran through two companies, RC Investment and Pinnacle Investment.
In that alleged scam, the two men offered and sold about $6.7 million worth of "prime bank" note investments to about 50 investors nationwide, but only used $3.1 million of investor funds to pay returns to existing investors.
To settle the suit, the two men repaid the investors, plus interest, but an investigation determined that the money actually came from an investor in a supposed bond-trading program, whose money was never used for such trading,
authorities allege.
(© 2006 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
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