Financial advisor makes $31 million disappear
by Lauren Reynolds ~ July 3rd, 2008. Filed under: Uncategorized.This story is a sad example of what happens when trusting people turn over large sums of money to obscure hedge funds. Matthew “Beau” La Madrid, a 41 year old married father from Jamul, is accussed of bilking 300 San Diegans out of a total of $31 million through Plus Money, Inc. His clients are middle class people who worked hard and saved hard, then trusted La Madrid with an average of $100,000 per investor.
La Madrid’s assets are now frozen, but with only a few million dollars left, investors will only get pennies on the dollar back. The S.E.C. has filed a complaint SEC COMPLAINT alledging that Plus money Inc. was an “investment advisor fraud.” The complaint details that La Madrid shuffled funds to other accounts and to various entities, including $500, 000 to himself, $185, 000 for cars, and $1.8 million dollars to various real estate title companies. La Madrid and his attorneys declined to comment.
This case prompted me to learn more about hedge funds, and I’m suprised by how little they are regulated. Basically, a hedge fund is a private investment pool, so the S.E.C has little authority over them, except to prosecute fraud after the fact. Managers of hedge funds with less than $25 million dollars of client money do not even need to be registered with the S.E.C. Hedge funds do not have to provide statements, or profit and loss reports, or an accounting of the risk level.
According to a spokesperson for the S.E.C, managers of hedge funds below that $25 million dollar mark are suppossed to register with a state agency. In the case of California, it’s the Department of Corporations. Matthew La Madrid was not registered as a securities broker through the Dept. of Corporations. The only license he holds is a california real estate salesperson license, with no registered Broker listed. (One client actually called the S.E.C. before investing with Plus Money, Inc., and was told there were no complaints against him and he seemed to be operating within the rules because at that time he was handling only $12 million dollars of client money.)
Hedge fund managers do have a fiduciary duty to their clients, but if the person is operating more of a fraud than an investment, an expectation of the highest trust-worthiness is basically worthless.
To read more about SEC RULES about Hedge Funds click here
There are good, reputable hedge funds out there, so I’m not trying to cast a wide net. The lesson, simply, is to really do your homework before investing in one. Hedge funds are not suppossed to advertise, according to the S.E.C, so they basically run on “word of mouth.” In the case of Matthew La Madrid and Plus Money, friends with the best of intentions brought other friends into the fund. Several Federal firefighters from East San Diego county jumped in, based on the fact that they saw their colleagues getting checks in the mail from Plus Money, Inc. every month.
One person who invested $50,000 said he was only earning $150 a month interest by leaving that money in a bank account. So he transferred the $50,000 to La Madrid, who paid him $1,325.00 per month in “investment return.” That was looking so good, this same investor eventually dumped $500,000 into the fund. He expected a windfall, what he got instead was a shock. His $500,000 is gone. The S.E.C. says it’s unclear if Plus Money Inc. or Matthew La Madrid ever made any profit.
This investor says he watched a friend receive checks for 2 full years before jumping in to Plus Money Inc, even though his first insticts told him to watch out. Now he wishes he had trusted his gut. His biggest regret is convincing others to join him, friends who now share his sleepless nights.
(By the way, La Madrid has filed his own lawsuit claiming that he’s the victim of other companies to which he transferred Plus Money Inc. funds. Again, his attorneys did not respond to our request for comment.)
July 3rd, 2008 at 11:30 pm
They guys are going to jail. For forty-years. It is a sad day when people out right steal your hard earn money. All I can say don’t trust your friends, family, co-workers with your money. You will get screwed in the end.
July 4th, 2008 at 5:44 pm
That was chump change!
July 10th, 2008 at 6:55 pm
Its a sad day when a brother firefighter who claims to be your friend does something like this. Using that friendship to coerse you into dipping into your retirement, equity and your entire families future. Then lying about it and saying that your not involved as you drive up to your 1.5 million dollar home in your luxury sports car. You know who you are and know what you did, and so do the authorities,so enjoy it while you can.
July 17th, 2008 at 3:45 pm
I hope he goes to jail for a LOOOOONG time! greed will get you nowhere. Maybe then he can think about all the grief and heartache he has caused for a lot of people.
July 25th, 2008 at 1:50 pm
was that lance and matt la madrid from st. augustine high school?
amazing! never thought those two had an evil bone in their bodies. apparently several other guys from saints were in on it as well.
over the decades, hedg****, inzunza’s, sosa, what is it about my old school and felons…..?
August 1st, 2008 at 8:13 pm
my father took the equity out of his home and invested with beau, whom also helped him to refinance the loan, my father trusted him! Living on a fixed income beau promised a monthly return and it helped for two years. My father passed away march 8, 2008 thinking that his wife of 50 years would be ok!! Then no check came in April then may, then the news of fraud hit us like a ton of bricks! After my father passed, we also found out that the loan beau got for him was an ARM , beau new my father was dying, and yet not once did he come by to see my father before he passed!!… Beau in my opinion your a coward ! You deserve to sit in jail for a long time, and think about all the peoples lives you have ruined!!!!
August 22nd, 2008 at 12:38 pm
Hi.
I am a grad student who is doing a dissertation on frauds like this. As part of my study I want to talk to people who have been victims in these scams. Since some of you probably don’t want to start chatting with someone you don’t know via a website, I could attempt to contact you through your receiver. (Maybe they could provide you with my contact information.) If I did that, do you think that you would be willing to speak with me? Thank you and sorry for what happened to you.
August 25th, 2008 at 5:11 pm
What a joke that he filed his own lawsuit like he’s the victim! It was greed pure and simple and sorry to say that no one will be seeing any of that money again. It’s’ gone just like Beau when they throw the book at him
August 26th, 2008 at 8:21 am
Heads up for victims of Mr. La Madrid.
Reporter Lauren Reynolds has an update coming soon on what is going on behind closed doors
JW @ 10News
September 15th, 2008 at 4:44 pm
Just let me know when he’s behind bars for all the pain and aggravation he’s caused. Greedy bastard!
September 16th, 2008 at 2:13 pm
My family and I invested the minimum amount required which was $25K. All looked fine and dandy, we were receiving checks for over 3 years – fluctuated between $625-$650 which was not a lot but it definitely helped. At first I was a little skeptical but a good friend of mine was in the fund prior to me joining and I saw the checks he was getting each month and felt like it must be a good thing. That’s the really messed up part, is like the article says they don’t advertise but instead do a “word of mouth” so of course you would trust people you know. But, sad thing is ALL of us got robbed in the end. That thief was so sneaky in the way he got his clients in, and a coward for taking our money and running!
I have a buddy who joined and got his parents in too, they lost almost everything.
My family and I are so devastated knowing that money could’ve been invested more wisely and now it’s gone!
-E
October 8th, 2008 at 3:21 pm
I have been searching for info on any new developments with this. I hear some of the other cronies involved are facing some big time. 10News guy if you read this can you give us an update?
February 27th, 2009 at 3:27 pm
If you knew me, the last thing you would ever think was that I was gullible. I’ve owned a very successful computer consulting and training company for 20 years, worked for a law firm, and come from a family whose philosophy is, ‘Believe half of what you see and none of what you hear.”
I’m tenacious, do tons of research and have endless questions that I’m not shy about asking. So how did my husband and I get ourselves into trouble when we built a home in Mexico? Simple, we did not make sure that we had the right agent. Fortunately, it’s not to find the right agent as hard as it was 4 years ago when we moved to Mexico.
Rule #1: Find an agent that is a member of a reputable real estate organization. In our area of Rosarito and Ensenada that would be AMPI or APIR. It’s a small community and everyone knows who to work with.
If you are already working with an agent, ask them about their membership in one of these organizations. If they tell you they don’t belong because membership doesn’t mean anything, run, and run very fast. There is a reason why they are not members of any of the local Associations and you don’t want to be the person who finds out why.
June 15th, 2009 at 5:24 pm
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July 8th, 2009 at 4:46 pm
Thanks for the new cell mate.
July 10th, 2009 at 1:38 pm
Between Matthew la Madrid & Moises Pacheco they victimized over 500 Family, Friends, Lower Middle Class Income people to Low Income people. Reports say Pacheco was generating trade profits ranging from 30 to 48 percent per year. He was telling investors like me he was getting between 5% – 6% per month at the most but most of the time it was much less. My investment was $100K. My monthly check was usually $1,600.00. if not less. I’ve known this guy for a long time but I too hope he gets the book thrown at him. bx.businessweek.com is calling him “Minnie Madoff Moises Pacheco”. What does that tell you about the guy? If you follow news like this you’ll know who Matthew “Beau” La Madrid is. He was just arrested for the same scam. What people don’t know is that before he started his Ponzi Scheme, he and Pacheco were business partners. Go back to 2005. Their offices were in Mission Valley. They both started the same Ponzi-Like Scheme at the same time but the difference was that La Madrid went after the rich a dumb & Pacheco victimized the middle class & poor. Now that Madoff & “Beau” La Madrid are locked up please help to lock up Moises Pacheco & his Brother Edgar. Yeah – it’s a family thing. They are both up to their elbows in it.
August 3rd, 2009 at 4:07 pm
It is really sad to think that over 500 investors/people LOST money to TWO scum bags like these. How can LaMadrid and Pacheco, both whom are fathers and husbands, whom have wife and kids be so deceitful? How could they sleep at night knowing they were STEALING money away from American’s who worked hard for their money and trusted them with their savings? How could these two idiots think they could get away with a scam that was sure to fail and be found out by the SEC and IRS and Feds? I’m just astonished at how cowardice these TWO criminals are. I hope justice will be served, that they get the jail sentencing they deserve. No one won in this situation…the investors lost all their money and the families of these two white collared criminals are also suffering from their actions.
November 23rd, 2009 at 9:46 pm
Just a word of mouth is not enough, to believe someone while investing. By investing in foreclosure homes in Canada, one can be benefited.
January 2nd, 2010 at 1:48 am
Its very sad to read this article, How they done fraud with those people who do hard work and saving money, and investing to secure and safe their money, But this kind of people are they don’t feel shame while doing this kind of thing, really they have to put in jail forever…!
Mike ,
Financial Advisor
TheMoneyLadder.com
January 22nd, 2010 at 6:06 pm
I lost 125k to this and my house. What have they done to the rest
of the liars that were in the El Cajon office. Like James Hyatt? Haven’t heard his name mentioned anywhere.