Ah, there is nothing quite like a scam perpetrated in Miami. Just about any racket can thrive in this sunny place for shady people. All it takes is a little moxie and a whole lot of deviousness. The latest example involves four locals who suckered 11 banks and two credit unions, including Miami-based institutions such as Ocean Bank and Community Bank of Florida, into giving them approximately $2 million in loans to finance the purchase of 19 phantom boats between 2008 and 2012.
Late last week, a Miami federal grand jury indicted Alexander Orriols, Jose Arias, Eduardo Hernandez Jr., and his wife, Milena Hernandez, on bank fraud and money-laundering charges after a three-year investigation by the U.S. Department of Homeland Security discovered the quartet was using straw buyers to obtain bank loans using fake personal financial information.
The loans were supposed to finance the purchases of boats from companies owned by the four suspects, who paid a kickback to the straw buyers and then pocketed most of the loan proceeds. The boats were either partially built or not built at all, existing only on paper.
The scam was uncovered by Strawbuyer blogger Mike Hatami, who says he went to several law enforcement agencies before Homeland Security decided to take a crack at the case. "These delinquents single-handedly destroyed financial lending for local mom-and-pop boat builders," Hatami says.
He caught wind of the fraud while researching a man who falsely accused his wife of committing mortgage fraud and identity theft three years ago. The man allegedly purchased a boat from Orriols -- who has a previous conviction for grand theft and credit card fraud -- in 2010. Turns out the vessel never existed.
Here's how the racket allegedly worked: Orriols, Arias, and the Hernandez couple owned various companies with names such as Avanti Marine USA, BlueFin Marine, and Ocean Waves Power Boats that were located in several warehouses in Hialeah. They recruited people who agreed to submit loan applications that contained false financial information and documentation, such as claiming to make down payments that were never made and submitting fake IRS W-2 forms, bank statements, and tax returns to make it appear the buyers could afford to buy a boat with a five-to-six-figure price tag. Based on those false documents and misrepresentations, the financial institutions unwittingly approved and issued loans to the straw buyers.
For instance, on January 16, 2008, Wachovia issued a $95,000 loan to an individual with the initials R.R.B to purchase a 33-foot boat from Avanti Marine, according to the indictment. On April 14, 2010, SunTrust issued a $164,896 loan to an individual with the initials Y.G. to purchase a 36-foot boat from Ocean Waves. The feds claim the four suspects obtained loans for 17 other vessels between 2008 and 2012 that totaled $1.9 million.
According to the indictment, the boats existed onlyon paper. The defendants drew up fraudulent bills of sale and boat titles and other documentation to fool bank loan officers into believing the vessels were real.
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As part of the indictment, the feds want to seize $1.5 million in bank accounts held by Orriols, Arias, and the Hernandezes.
Follow Francisco Alvarado on Twitter: @thefrankness.