International Fugitive Extradited To U.S. To Face Charges Over Investment Fraud Scheme

By Newsroom America Staff at 7 Sep 2016

(Newsroom America) -- A former Monterey-area man, Manoel Antonio Errico, has been extradited to the United States from Argentina to face fraud charges brought against him in September 2009.

In a federal indictment returned on September 8, 2009, Errico, 62, is accused of defrauding investors in Cedar Funding, a Monterey-based “hard money” lender.

Errico allegedly induced victims to invest in loans purportedly secured by deeds of trust and in a fund that invested in those same loans. According to the thirty-one count indictment, Cedar Funding had more than 1,000 investors while in existence.

The indictment describes various ways in which Errico allegedly defrauded investors by inducing them to purchase fractional interests in loans secured by deeds of trusts, and shares of Cedar Funding Mortgage Fund, LLC.

According to the indictment, Errico engaged in a scheme, plan and artifice to defraud his targets, failed to disclose material facts, and made materially false statements. Specifically, the indictment alleges that, among other things, by using documents provided to investors, advertisements, interest payments and verbal communications, Errico participated in creating the false and misleading appearance that the investors’ funds were invested in sound, secured real estate loans, which offered high returns and safety of principal.

In truth, by in or about 2004 and increasingly thereafter, most of the loans were not performing, and the investors’ funds were not secure.

Moreover, as borrowers increasingly failed to pay off loans, Errico, without the investors’ prior knowledge or consent, allegedly participated in extending the loan maturity dates and advanced more investor funds, which caused the loan balances to balloon beyond the initial loan amounts, diluted the investors’ fractional interests in the loans and increased the likelihood that they would lose some or all of their principal.

The indictment also alleges that, unknown to investors, the source of a substantial part of the interest that Errico caused Cedar Funding to pay to existing investors came from new investors’ funds rather than from performing borrowers.

Errico was arrested in April 2016 when he traveled from his home country of Brazil to Argentina. He was arrested by Argentine authorities based on an Interpol “Red Notice” that had been submitted by the United States.

The United States thereafter made a formal extradition request to Argentina, and on August 1, 2016, the Argentine authorities ordered Errico extradited to the United States.

Errico is named in each of the thirty-one counts alleged in the indictment.

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