ROCKFORD – A Woodstock man was sentenced Monday to more than 11 years in federal prison for his role in a Ponzi scheme that bilked investors out of at least $7 million.
Francis X. Sanchez, 52, co-owned InvestForClosures and told investors he bought distressed houses, rehabilitated them, and sold them for a profit. He pleaded guilty to fraud in May.
Sanchez admitted in his plea agreement that he and business partner James D. Bourassa told potential investors their money would be safe because it was backed by real estate.
But the business did not own enough real estate to secure all of the investments and instead of the money buying real estate, most of it was used to pay other expenses.
InvestForClosures was using money from new investors to pay prior investors because the company was not making enough money from property sales to pay the interest owed, according to the government’s case.
Of more than $7.2 million fraudulently obtained, about $1.7 million was paid back through Ponzi-type payments.
In order to conceal false promises and prevent investors from demanding the return of their principal, Sanchez told them that he was developing an exclusive, luxury residential community in Mexico with the backing of government and private money, which was not true, according to federal prosecutors.
The court ordered Sanchez to pay back more than $7.8 million in restitution.
Bourassa, 55, of Gilberts, pleaded guilty in February and was sentenced in June to 4 years and 3 months in prison.
Both men were charged in November 2010 on 20 counts of fraud.