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Chattanooga: Investors told it could take years to get their money back

By: Monica Mercer
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Grey Steed

Local investors who lost thousands of dollars to an accused Chattanooga con man have been told it could take years before they recover their money — if at all.

“So (Luis Rivas) could get 10 years in prison, and we’ll still be fighting this while he’s out partying,” speculated local restaurant owner LeMont Johnson, who lost $15,000 and sat with others at a creditors meeting Thursday in U.S. Bankruptcy Court in Chattanooga.

Mr. Johnson, who owns Cafe LeMont on Dodds Avenue, and about 40 others who attended the meeting are part of a large group — 523 people across 23 states — who were bilked out of an estimated $31 million by the time federal authorities charged Mr. Rivas in late June with wire, mail and securities fraud.

An involuntary bankruptcy proceeding seeks to recover Mr. Rivas’ assets and evenly distribute the money to all investors, but those involved in the financial investigation cautioned it won’t be over anytime soon.

“The final conclusion could be years down the road,” said U.S. Bankruptcy Trustee Bill Sonnenburg.

Mr. Sonnenburg also said it is unlikely that all the money and assets will be recovered, although officials hope to make some “interim” distribution payments to creditors within the next year.

Mr. Rivas operated investment offices in Chattanooga and five other cities over the past year, promising clients he could make them rich by investing their money in the foreign currencies market. Authorities say he actually ran a “classic Ponzi scheme” in which he paid out false returns to investors as high as 10 percent a month with money he solicited from others.

Ron Wyatt, a farmer from Chickamauga, Ga., invested $100,000 in March and said he received only one return on his investment.

“I had to fight to get it,” Mr. Wyatt said.

Mr. Wyatt may have been one of the lucky ones. In many instances, authorities claim, people received no returns on their investments, even as Mr. Rivas lived a lavish lifestyle complete with expensive cars, expensive real estate and a propensity for handing out gifts such as precious jewelry and furs.

Forced into involuntary bankruptcy in May amid fears he was in the process of liquidating his accounts and trying to leave the country, Mr. Rivas was compelled by court order in the civil matter to appear Thursday and answer creditors’ questions about what he did with their money.

Some in attendance, however, were shocked to learn Mr. Rivas recently was arrested in Kansas and is awaiting extradition to Greenville, S.C., where criminal charges are pending in U.S. District Court.

Not surprisingly, Mr. Rivas isn’t cooperating with the bankruptcy investigation to recover his assets, said U.S. Bankruptcy Trustee Grey Steed, making it that much more difficult to get relief for creditors.

“What do we have to do?” asked one angry investor who said he did not want his name printed. “Cut his fingers off? Waterboard him? How do we get him to talk?”

Mr. Steed explained to the crowd that the criminal charges Mr. Rivas faces are separate from the bankruptcy proceeding. Mr. Rivas is under no obligation, Mr. Steed said, to possibly incriminate himself by cooperating with the investigation into his finances.

Mr. Steed, who is in charge of recovering Mr. Rivas’ assets, told investors he so far has seized about $2 million in cash and $1 million in assets such as cars and real estate.

He said he and his investigators continue to find assets every day and are in the process of compelling those who received gifts or substantial monetary returns from Mr. Rivas — to the detriment of all investors — to hand over those assets, as well.

Mr. Sonnenburg cautioned that litigation could be on the horizon if people do not hand over the assets willingly, another factor that could contribute to a prolonged legal battle.

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