ARTICLE TOOLS

E-mail story

Comments

Printer friendly version

iPod friendly version

Share This

Text Size: A A A A

Chattanooga: Rivas investors sued over profits

By: Monica Mercer
(Contact)

Included in this article

Cara Alday

Some Tennesseans gained big from a former Chattanooga foreign currencies trader accused of stealing more than $30 million from people all over the nation — and they’re refusing to hand over the money.

Among them are four doctors in Knoxville who invested $1.1 million with Luis H. Rivas in February, court documents show. But while Mr. Rivas returned their initial investment just four months later — plus an astonishing $600,000 profit — about 500 other investors lost millions to the businessman who promised sky-high returns to gain people’s trust.

Chattanooga attorney Cara Alday and U.S. Bankruptcy Trustee Grey Steed, who are hustling to find Mr. Rivas’ remaining assets, have filed four lawsuits seeking to recover money transferred to the doctors and three other individuals who apparently profited from the fruits of Mr. Rivas’ scam after he had been declared involuntarily bankrupt on May 15.

According to the complaint against the doctors, they and five others named on the same lawsuit received returns on their pooled investment despite the fact that Mr. Rivas “was actually losing money and not earning sufficient income to pay his debts at the time the payments were made.” The group collectively called themselves the Knox Forex Group LLC, according to the complaint.

If such “preferential payments” are made within 90 days of a bankruptcy, according to U.S. bankruptcy law, the money must be forfeited.

“It will be interesting to see how these doctors defend this action because to me, it’s very clear cut,” Ms. Alday said Thursday. “What you have is some people recovering their money, and others receiving nothing.”

The attorney representing the Knox Forex Group declined comment on the case Thursday.

More lawsuits are coming, Mr. Steed said Thursday, but future defendants are expected to vigorously oppose giving up their money since they recouped much smaller amounts.

“I’m confident the law is on our side,” Mr. Steed said. “It doesn’t differentiate between one creditor and another just because someone might have lost less money.”

Mr. Rivas went missing about the same time he paid the Knox Forex Group, shuttering his Chattanooga office amid cries from other angry clients who already had caught on to what authorities called a “classic Ponzi scheme.” Those clients initiated the bankruptcy proceeding in May in an effort to prevent further financial damage.

The FBI eventually caught Mr. Rivas in Topeka, Kan., in June, traveling with $100,000 in cash. He was transferred to a jail in Anderson, S.C., where he remains incarcerated on charges of wire, mail and securities fraud, according to two federal indictments in South Carolina and Tennessee.

Mr. Steed said the prisoner will arrive in Chattanooga next week, and Mr. Rivas is expected to plead not guilty to the charges contained in the indictment filed in U.S. District Court here.

Three other people in Mr. Rivas’ personal life received cash and lavish gifts from him, according to the additional lawsuits. They have not handed over the goods despite repeated demands, Ms. Alday said. The assets are considered to have been bought with investors’ money and therefore must be forfeited, the lawsuits state.

A lawsuit filed against Pamela Green says she received an $82,000 Volkswagen Touareg in December and a check for $225,000 three days after the federal government declared Mr. Rivas bankrupt. Ms. Alday said the defendant used the money to buy a house in Chattanooga but has refused to turn over the property.

Ms. Green’s mother, Angela Jefferson, who worked for Mr. Rivas in Chattanooga, received about $184,000 in cash payments after the bankruptcy proceeding, according to the lawsuit against her. She also received weekly payroll checks up to $2,500 each from October through April, as well as a $57,000 Ford Rousch Mustang, the lawsuit states.

Joy Terry, who worked with Mr. Rivas at one of his trading centers in Spartanburg, S.C., is said to have been “an insider” in Mr. Rivas’ scheme, the lawsuit against her states, receiving thousands of dollars in cash, cars and furs while Mr. Rivas is said to have been insolvent.

Calls seeking comment from attorneys representing the three individual defendants were not returned Thursday.

Comments