New Mexico Regulation and Licensing Department …...Jaramillo, (“Jaramillo”) a security, to...

Susana Martinez GOVERNOR

J. Dee Dennis, Jr.

SUPERINTENDENT

Mary Kay Root DEPUTY

SUPERINTENDENT

Daniel S. Tanaka DIRECTOR

Alcohol and Gaming Division

(505) 476-4875

Boards and Commissions Division (505) 476-4600

Construction Industries Division

(505) 476-4700

Financial Institutions Division (505) 476-4885

Manufactured Housing Division

(505) 476-4770

Securities Division (505) 476-4580

Administrative Services Division

(505) 476-4800

New Mexico Regulation and Licensing Department SECURITIES DIVISION

Toney Anaya Bui lding ▪ 2550 Cerr i l los Road ▪ Santa Fe, New Mexico 87505 (505) 476-4580 ▪ Fax (505) 984 -0617 ▪ Tol l f ree in NM (800) 704 -5533

www.r ld.state.nm.us/sec

For Immediate Release Media Contact

November 29, 2012 Bernice Geiger 505-228-8505

ALBUQUERQUE BUSINESSMAN CHARGED WITH

SECURITIES FRAUD AND RACKETEERING

The Bernalillo County Grand Jury returned an indictment on Wednesday,

November 28, 2012 against Alfred D. Sanchez II, charging him with 19 felony

counts, including securities fraud, money laundering, racketeering and other

securities violations.

The investigation revealed that from November 2002 to September 2008,

Alfred D. Sanchez II allegedly solicited investment funds totaling over

$1,000,000 from nine former clients, purportedly to finance the construction of

a commercial building and other real estate projects. Sanchez allegedly sold or

offered to sell securities by means of a “Promissory Note” to the nine identified

victims. Sanchez, formerly licensed to sell securities, was operating a number

of businesses from a single office located at 3809 Atrisco Dr. NW in

Albuquerque, New Mexico.

When making these sales, Sanchez allegedly lied about the financial health of

ADS Financial Services, Sterling Homes, his other associated businesses, and

his personal finances to induce the victims to invest in his scheme. None of the

victims received any benefit and all lost their entire investments with Sanchez,

the indictment alleged.

New Mexico Regulation and Licensing Superintendent, J. Dee Dennis said,

“We are committed to holding this kind of behavior accountable as a violation

of our securities act, in order to make New Mexico a safe and secure

environment for investment.”

The indictment alleged that although Sanchez had previously been licensed

through the Securities Division, he was not licensed at the time of the offers

and/or sales and the securities he sold were never registered, as required by

New Mexico state law.

“The apprehension and prosecution of predatory securities violators is one of

the highest priorities for the Securities Division. Our Enforcement Bureau will

continue to aggressively pursue those who would callously defraud the citizens

of New Mexico,” said Daniel S. Tanaka, Director of the Securities Division.

New Mexico Regulation and Licensing Department SECURITIES DIVISION

of 2

The investigation was conducted by Senior Special Agent Carolyn Miller and Forensic

Analyst Anne Layne, CPA and is being prosecuted by Special Assistant District Attorney

Patrick McNertney.

The Regulation and Licensing Department’s Securities Division protects New Mexicans

from fraud and financial abuse by licensing investment professionals, registering securities

offering made in the state, offering anti-fraud and educational programs to the public, and

investigating fraud and other violations of the state securities laws. To learn more about

investment fraud, visit the division’s website at www.RedFlagsNM.com.

###

ENDORSEDFILED IN MY OFFICE THIS

NOV 292012

STATE OF NEW MEXICO

C) COUNTY OF BERNALILLO CLERK tGT OUlTSECOND JUDICIAL DISTRICT COURT

‘12005699NM SEC 10-005

STATE OF NEW MEXICO,

Plaintiff.

vs.

ALFRED D. SANCHEZ, II

Defendant.

CRIMES CHARGED

GRAND iURY INDICTMENT

THE GRAND JURY CHARGES:

COUNT 1: FRAUDULENT SALE OF A SECURITY (Securities Fraud)

On or about January 24, 2008, in Bernalillo County, State of New Mexico, the above named

defendant did commit the crime of securities fraud. The defendant offered to sell and sold to Cecilia

Armijo, (“Armijo”) a security, to wit: that on or about January 24, 2008 Armijo gave Alfred D. Sanchez, II

$50,000.00 in exchange for a Promissory Note, promising a return of 35% for a term of one year, for

Armijo’s investment in a commercial real estate project.

In connection with this offer to sell and sale, or offer to purchase or purchase of a security,

directly or indirectly, the defendant:

A. Employed a device, scheme or artifice to defraud; and/or

B. Made an untrue statement of material fact; or failed to state a necessary material fact

where such omission would be misleading; and/or

C. Engaged in an act practice or course of business which operates or would operate as a

fraud or deceit upon a person;

The fraudulent practices, material misrepresentations and material omissions by defendant

include, but are not limited to:

1. Alfred D. Sanchez, II failed to disclose that he had several civil judgments, either

filed or in process of being filed, against him;

2. Alfred D. Sanchez, II failed to disclose that he did not possess a securities license as a

broker-dealer and/or a sales representative;

3. Alfred D. Sanchez, II failed to disclose that he was both in debt and behind in his

mortgage payments with Citibank/NA and that his house located at 6301 Coors

Blvd., NW was in foreclosure on or about September 24, 2008;

4. Alfred D. Sanchez, II failed to disclose that a Judgment was obtained against him by

Global Collections Corporation for $121,196.35 on April 11, 2007; contrary to NMSA

1978 § 58-13B-30, and 39 (as amended).

COUNT 2: SALE OR OFFER TO SELL AN UNREGISTERED SECURITY

On or about January 24, 2008, in Bernalillo County, State of New Mexico, the above name

defendant offered to sale and sold to Cecilia Armijo an investment for $50,000.00 and gave her a

promissory note, promising an interest rate of 35% for a term of twelve months, that was required to be

registered with the New Mexico Securities Division pursuant to the New Mexico Securities Act of 1986;

contrary to NMSA 1978 § 58-13B-20, and 39 (as amended).

2

COUNT 3: SALE OR OFFER TO SELL A SECURITY BY UNUCENSED BROKER-DEALER OR

SALES REPRESENTATIVE

On or about January 24, 2008 in Bernalillo County, State of New Mexico, the above named

defendant committed the crime of engaging in the business of effecting transactions in securities

without a license as required by the Securities Act; contrary to NMSA 1978 § 58-13B-3 and 39 (as

amended).

COUNT 4: FRAUD OVER $2OOOO.OO


defendant did intentionally misappropriate, or take money, which had a market value of over

$20,000.00 belonging to Cecilia Armijo; contrary to NMSA 1978 § 30-16-6 (as amended).


On or about April 25, 2008, in Bernalillo County, State of New Mexico, the above named

defendant did commit the crime of securities fraud. The defendant offered to sell and sold to Daniel

and Laura Barrett, (“Barrett”) a security, to wit: that on or about April 25, 2008 Daniel and Laura Barrett

gave Alfred D. Sanchez, II $100,000.00 in exchange for a Promissory Note, promising a return of 35% for

a term of one year, for Armijo’s investment in a commercial real estate project.






3









3. Alfred D. Sanchez, II failed to disclose that he was both in debt and behind in his





1978 § 58-138-30, and 39 (as amended).


On or about April 25, 2008, in Bernalillo County, State of New Mexico, the above name

defendant offered to sale and sold to Daniel and Laura Barrett an investment for $100,000.00 and gave

her a promissory note, promising an interest rate of 35% for a term of twelve months, that was required

to be registered with the New Mexico Securities Division pursuant to the New Mexico Securities Act of

1986; contrary to NMSA 1978 § 58-138-20, and 39 (as amended).

4

COUNT 7: SALE OR OFFER TO SELL A SECURITY BY UNUCENSED BROKER-DEALER OR


On or about April 25, 2008 in Bernalillo County, State of New Mexico, the above named



amended).

COUNT 8: FRAUD OVER $20,000.00



$20,000.00 belonging to Daniel and Laura Barrett; contrary to NMSA 1978 § 30-16-6 (as amended).


On or about June 3, 2008, in Bernalillo County, State of New Mexico, the above named

defendant did commit the crime of securities fraud. The defendant offered to sell and sold to Cecilia

Jaramillo, (“Jaramillo”) a security, to wit: that on or about June 3, 2008 Jaramillo gave Alfred D. Sanchez,

II $30,000.00 in exchange for a Promissory Note, promising a return of 35% for a term of one year, for

rnij investment in a commercial real estate project.



D. Employed a device, scheme or artifice to defraud; and/or

E. Made an untrue statement of material fact; or failed to state a necessary material fact


5

F. Engaged in an act practice or course of business which operates or would operate as a








3. Alfred D. Sanchez, Il failed to disclose that he was both in debt and behind in his





1978 § 58-13B-30, and 39 (as amended).


On or about June 3, 2008, in Bernalillo County, State of New Mexico, the above name defendant

offered to sale and sold to Cecilia Jaramillo an investment for $30,000.00 and gave her a promissory

note, promising an interest rate of 35% for a term of twelve months, that was required to be registered

with the New Mexico Securities Division pursuant to the New Mexico Securities Act of 1986; contrary to

NMSA 1978 § 58-136-20, and 39 (as amended).

6

COUNT 11: SALE OR OFFER TO SELL A SECURITY BY UNLICENSED BROKER-DEALER OR


On or about June 3, 2008 in Bernalillo County, State of New Mexico, the above named


without a license as required by the Securities Act; contrary to NMSA 1978 § 58-138-3 and 39 (as

amended).


On or about June 3, 2008, in Bernalillo County, State of New Mexico, the above named


$20,000.00 belonging to Cecilia Jaramillo; contrary to NMSA 1978 § 30-16-6 (as amended).

COUNT 13: FRAUDULENT SALE OF A SECURITY (Securities Fraud) possess

On or about September 20, 2008, in Bernalillo County, State of New Mexico, the above named

defendant did commit the crime of securities fraud. The defendant offered to sell and sold to Colette

De Marrias, (“De Marrias”) a security, to wit: that on or about September 20, 2008 De Marrias gave

Alfred D. Sanchez, II $25,000.00 in exchange for a Promissory Note, promising a return of 12% for a term

of one year, for DeMarrias’investment in a commercial real estate project.






7





1. Alfred D. Sanchez, Il failed to disclose that he had several civil judgments, either




3. Alfred 0. Sanchez, II failed to disclose that he was both in debt and behind in his

mortgage payments with CITI Bank, NA and that his house located at 6301 Coors


4. Alfred 0. Sanchez, II failed to disclose that a Judgment was obtained against him by


1978 § 58-13B-30, and 39 (as amended).


On or about September 20, 2008, in Bernalillo County, State of New Mexico, the above name

defendant offered to sale and sold to Colette De Marrias an investment for $25,000.00 and gave her a

promissory note, promising an interest rate of 35% for a term of twelve months, that was required to be

registered with the New Mexico Securities Division pursuant to the New Mexico Securities Act of 1986;

contrary to NMSA 1978 § 58-13B-20, and 39 (as amended).

8

COUNT 15: SALE OR OFFER TO SELL A SECURITY BY UNLICENSED BROKER-DEALER OR


On or about September 2008 in Bernalillo County, State of New Mexico, the above named



amended).


On or about September 20, 2008, in Bernalillo County, State of New Mexico, the above named

defendant did intentionally misappropriate, or take money, which had a market value of $20,000.00

belonging to Colette De Marrias; contrary to NMSA 1978 § 30-16-6 (as amended).

COUNT 17: MONEY LAUNDERING (OVER $50,000.00)


defendant did knowingly conduct, structure, engage in or participate in a financial transaction, to wit: by

taking $100,000.00 from Daniel and Laura Barrett, for investment purposes in a commercial office

building and by depositing Daniel and Laura Barrett’s check into his account named ADS Financial

Services, Inc., with Wells Fargo Bank which funds involved the proceeds of a specified unlawful activity,

that is fraud (over $20,000.00) and/or securities fraud, which was designed, in whole or in part, to

conceal or disguise the nature, location, source, ownership or control of the proceeds of said specified

unlawful activity and that the property involved in the financial transaction had a value of over

$50,000.00; contrary to NMSA 1978 § 30-51-1 to § 30-51-4 (as amended).

9

COUNT 18: MONEY LAUNDERING (OVER $10,000.00)


defendant did knowingly conduct, structure, engage in or participate in a financial transaction, to wit: by

taking $50,000.00 from Cecilia Armijo, for an investment in a commercial office building, and by

depositing Cecilia Armijo check into one of his accounts, namely ADS Financial Services, Inc., which

funds involved the proceeds of a specified unlawful activity, that is, fraud (over $20,000.00) and/or

securities fraud, which was designed, in whole or in part, to conceal or disguise the nature, location,

source, ownership or control of the proceeds of said specified unlawful activity and that the property

involved in the financial transaction had a value of over $20,000.00; contrary to NMSA 1978 § 30-51-1 to

§ 30-51-4 (as amended).

COUNT 19: RACKETEERING

On or between January 1, 2008 and December 1, 2008 in Bernalillo County, State of New

Mexico, the above name defendant committee the crime to Racketeering.

While associated with enterprises, namely Sterling Homes, Sterling Industries, ADS Mortgage

Corporation, and ADS Financial Services, Inc., the above named defendant operated as an owner, and/or

as a corporate officer and/or a manager with these named entities in the purported operation of real

estate projects and/or commercial development projects in Bernalillo County, New Mexico.

The defendant conducted the affairs of the enterprises by intentionally engaging in a pattern of

racketeering activity. The pattern of racketeering activity included two or more crimes of:

A. Securities Fraud as charged in Counts 1, 5, 9 and 13, to wit: investments in a

commercial office building and issuing to investors promissory notes in violation of

the New Mexico Securities Act of 1986; and

B. Fraud as charged in Counts 4, 8, 12 and 16; and

C. Money Laundering (Over $50,000.00 and Over $10,000.00) as charged in Counts 17

10

and 18; contrary to NMSA 1978 § 30-42-1 to § 30-42-5 (as amended).

The names of the witnesses upon whose testimony this Indictment is based are as follows:

Carolyn MillerAnne LayneDaniel S. Tanaka

I hereby certify that the foregoing Indictment is ai/No True Bill.

\\ ‘kcAflDate Foreperson

APPROVED AS TO FORM:

/%4i

_

Patrick McNertney DateSpecial Assistant District Attorney

CASE INFORMATION

11

NO.

NAME: ALFRED D. SANCHEZ, II

DOB: 08/05/1950

SSN: XXX-XX-3372

Address: 9905 BUCKEYE STREET, NW

ALBUQUERQUE, NM 87114

BOOKING/ARREST DATE:BOOKING/ARREST#:DEF. ATTY:

PHYSICAL DESCRIPTION OF DEFENDANT:

Height: 5’ 10”Weight: 240Race: WhiteEye Color: BROWNHair Color: BROWNOther:

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PEN ALTI ES

COUNT: 4, 8, 12, 16, 17, and 19, 2N Degree Felony

COUNTS: 1, 2, 3, 5, 6, 7. 9, 10, 11, 13, 14, and 15, 3 Degree Felony

COUNTS: 18, 4TH Degree Felony

4th Degree Felony: Basic sentence of 18 months imprisonment and not more than $5,000 fine.3rd Degree Felony: Basic sentence of 3 years imprisonment and not more than $5,000 fine.2nd Degree Felony: Basic sentence of 9 years imprisonment and not more than $10,000 fine.1st Degree Felony: Basic sentence of 18 months imprisonment and not more than $5,000 tine.USE OF FIREARM ALTERATION TO BASIC SENTENCE (FE): Basic sentence of imprisonment increased by 1year for first offense in which a firearm is used and 3 years for subsequent offenses in which afirearm is used.USE OF HATE CRIME ENHANCEMENT: Basic sentence of imprisonment is increased by one (1) year,unless second offense, then the basic sentence is increased by two (2) years..

Special Penalty: (Receiving or Transferring a Stolen Vehicle (Possession) only) Basic sentence ofone year and/or $5,000 fine.Misdemeanor: Less than 1 year in the County Jail and/or not more than $1,000 fine.Petty Misdemeanor: Not more than 6 months in the County Jail and/or not more than $500 fine.

Penalty for Driving While Under the Influence, Felony Offense:(4th or Subsequent Offense): Basicsentence of 18 months and not more than $5,000 fine, including a mandatory jail term of not lessthan 6 months.Penalty for Driving While Under the Influence - Misdemeanor: If 1st Offense, basic sentence ismaximum 90 days jail and $500 fine, and if aggravated an additional 48 hours jail time; if 2ndOffense, basic sentence is mandatory 72 hours in jail and $500 fine to maximum of 364 daysand$1,000 fine, and if aggravated an additional 96 hours jail time; if 3rd Offense, basic sentence is amandatory 30 days in jail and $750 fine to maximum of 364 days and $1,000 fine, and ifaggravated an additional mandatory 60 days jail time.Penalty for Driving While License Suspended or Revoked: Traffic Code Misdemeanor, SpecialPenalty: not less than 4 days nor more than 364 days and fine up to $1,000 (non-DWI relatedsuspension/revocation); or not less than 7 consecutive days imprisonment and mandatory finenot less than $300 nor more than $1,000 (DWI revocation).Penalty for Reckless Driving: Upon first conviction, basic sentence of 5 days to 90 daysimprisonment, and/or $25 to $100 fine. Upon a second or subsequent conviction, basic sentenceof10 days to 6 months imprisonment, and/or $50 to $1,000 fine.Penalty for Traffic Code Misdemeanor: fine of not more than $300 or imprisonment for not morethan 90 days or both.Penalty Assessment Misdemeanor: See Schedule in Traffic Code, Section 66-8-116.

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1st Degree Felony for Child Abuse (Intentionally Caused) (Resulting in Death) (Child Under 12):Life imprisonment.2nd Degree Felony Resulting in the Death of a Human Being: Basic sentence of 15 years but notless than 10 years nor more than 20 years imprisonment and not more than $12,500 fine.3rd Degree Felony Resulting in the Death of a Human Being: Basic sentence of 6 years but not lessthan 4 years nor more than 8 years imprisonment and not more than $15,000 fine.2nd Degree Felony, Sexual Offense Against A Child: Basic sentence of 15 years imprisonment andnot more than $12,500 fine.3rd Degree Felony, Sexual Offense Against A Child: Basic sentence of 6 years imprisonment and notmore than $5,000 fine.

OPEN CHARGE OF MURDERPenaltyfor FIRST DEGREE MURDER (Willful and Deliberate) or (Depraved Mind)

CAPITAL FELONY: Life ImprisonmentSECOND DEGREE MURDER: Basic sentence of 15 years imprisonment and not more than $12,500fine.VOLUNTARY MANSLAUGHTER: Basic sentence of 6 years imprisonment and not more than$15,000fine.INVOLUNTARY MANSLAUGHTER: 4th Degree Felony: Basic sentence of 18 months imprisonmentandnot more than $5,000 fine.

Penalty for FIRST DEGREE MURDER (Felony Murder):CAPITAL FELONY: Life Imprisonment

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STATEMENT OF TRUE BILL

True Bill NO True BillCount 1Count 2Count 3Count 4Count 5Count 6 xCount 7Count 8Count 9Count 10Count_11 ICount_12Count 13Count 14Count 15Count 16Count 17Count 18

Date Foreperson

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