An Arizona-based man allegedly purported to be an investment advisor and raised nearly $20 million from clients, spending more than $13 million of those funds on buying gold, silver and other metals instead of investing, according to charges from the Department of Justice (DOJ).
John Lopez lives in Flagstaff, but was arraigned this week on a 27-count indictment in New Mexico federal court, including 16 counts of wire fraud and 11 counts of mail fraud, according to the Justice Department. He was indicted on Dec. 20.
According to the indictment, Lopez was the founder and president of Personal Money Management Company (PMMCO) and had no employees. Beginning in 2014, Lopez began touting himself as an investment advisor “with considerable expertise who could consistently and substantially beat the market average on return of investments” through primarily selling stocks and bonds.
Between February 2014 and November 2021, Lopez received about $19.4 million in assets from clients, many of whom were retired or were nearing retirement. According to the indictment, Lopez promised guaranteed annual returns of 10% (regardless of market volatility), and that he’d get an annualized 19.2% return on a retirement investment.
“Lopez falsely told various clients and prospective clients that he had developed a computer program or algorithm that resulted in consistent and substantial above-average market returns on investments,” the indictment read.
However, instead of investing the assets into the promised stocks and bonds, Lopez bought $13.3 million in “precious metals,” including gold and silver, while disbursing about $6.1 million from the assets to clients, which he falsely said were “investment gains,” according to the DOJ.
After telling clients that he’d place their funds in individual Charles Schwab brokerage accounts he would manage, Lopez also lied about the performance of the funds, falsely representing the value of their investments in monthly or quarterly documents done up as account statements, according to the Justice Department.
In one instance, a client got an account statement showing that his $200,000 investment had supposedly grown to more than $3.289 million, a 1,544% increase over five years. In the same time period, an investment in the S&P 500 would have jumped by only about 104%, according to the DOJ.
Ahmad Assed, Joel R. Meyers and Shaheen Torgoley, attorneys representing Lopez, disputed the allegations, with his counsel noting Lopez was in his 70s and had never been arrested, let alone charged with a crime.
"He looks forward to an opportunity to clear his name in court, not defend himself against selective leaks from the government agents in the court of public opinion," they said in a statement to WealthManagement.com. "Mr. Lopez maintains that his priority has always been and will continue to be the financial well-being of his clientele."
The account statements placed PMMCO’s total client account values at about $39 million in October 2021, but on Nov. 9 and 10 of that year, government agents seized the company’s assets, finding mostly metals with a value below $15 million. But Lopez continued to create false account statements even after PMMCO’s assets were seized, representing client account values at about $49 million in May 2022, according to the DOJ.
Lopez faces as much as 20 years in prison if convicted.