(MIAMI, FLORIDA) -- A Miami firm promoting Florida real estate investments was actually running a $135 million Ponzi scheme, the Securities and Exchange Commission charged this week.
Gaston Cantens and his wife, Teresita, founders of Royal West Properties, promised investors returns between 9 and 16 percent a year on property in southwest Florida markets like Cape Coral, Port Charlotte and Lehigh Acres. But when the bottom fell out of the market the Cantens began using new investor money to pay off earlier investors, the SEC alleges in its civil complaint.
"The Cantens also misappropriated more than $20 million from investors to fund unrelated personal business ventures, pay themselves high salaries, and divert money to their children and grandchildren," the SEC charged.
Most of the alleged victims were elderly members of the Cuban-American community, where the Cantens are well known, the Miami Herald reports.
In a statement released to the press through a public relations firm, the Cantens denied the charges.
"It is regrettable that the SEC would so grossly mischaracterize the business difficulties of Gaston and Teresita Cantens and Royal West Properties," the statement said. "The use of a term like `Ponzi scheme' is a gross mischaracterization and is seemingly being used solely for its headline-grabbing value."
The Cantens are "honorable business owners," who were "caught in the undertow of a massive collapse of the national real estate market owing to forces that were generally unforeseen by the real estate industry, the financial markets or responsible government agencies."
The Ft. Myers-Cape Coral market "leads the country in foreclosures and property devaluation" and the couple "did everything they could to save Royal West from bankruptcy including the investment of all of their available cash resources in the company."
According to the company's Web site, the firm filed for bankruptcy protection last August, citing "problems with the economy." The firm said it was "continuing to collect on those mortgages that it has financed throughout the years to clients both in the United States, as well as in other countries."