CHICKENS COME HOME TO ROOST: PONZI SCHEME VICTIMS SUE

By Juan Montoya
A victim in a $3 million, "Ponzi scheme" has charged in a lawsuit that he and other victims were never paid restitution on properties that were bought with their money and later sold  by then-Cameron County District Attorney Armando Villalobos.
Named as defendants in the lawsuit filed by Mike Irby, of Mercedes, are Cameron County, County Judge Carlos Cascos, DA Luis Saenz, former Asst. DA David Gonzales, and Brownsville attorney Fabian Limas who was the receiver for the victims of the scheme.
Irby says that some of the defendants reside in Cameron County and that the properties confiscated, forfeited, and sold are located in Cameron County.
According to the lawsuit, Richard Ferguson, the propagator of the Ponzi scheme, came to visit him at his home in Mercedes on January 2005 offering him the chance to invest money with an expectation of realizing a profit. Ferguson told Irby that he could secure government grants for a fee and a percentage of the grants he received. He told Irby that he was licensed to apply for the state grants and could therefore charge a fee for his services. He also told Irby and other investors that he had successfully secured grants for different business and individuals in the past.
Irby also charges that Ferguson told him that he could secure environmental feasibility studies for a fee that the state would then purchase for a significant profit.
Based on these representation, Irby said he invested $16,000 with Ferguson to acquire the grants and environmental studies. To date, Irby said, none of the grants or feasibility studies have been accepted or funded. He charges that Ferguson took the money for his own personal gain never intending to invest it.
In fct, in an exhibit he provided with his lawsuit, Irby shows that some 150 investors were biked by Ferguuson with sums ranging from as little as $710 to $325,000. The bilked cover everything from professionals to small businessmen and investment firms. The total amount documented by investigators indicated that Ferguson had induced them to invest $3,065,037.
Then, on February 2007, Ferguson was indicted for theft by deception also known as a "ponzi" scheme.
On March 2009, Ferguson pleaded guilty to theft by deception and was sentenced to 12 years in the Texas Department of Corrections and ordered to pay the $3 million in restitution to his victims, including Irby.
Between February 2007 and March 2011, Ferguson – as part of his restitution agreement – transferred title to numerous properties partly purchased with his $10,000 investment and transferred at least $1.8 million to the named defendants Cameron County, et al.
Irby further states that at least one of the forfeited properties was sold for $159, 000 to Orville and Cecilia Jackson, of San Benito by then-Asst. D.A. David Gonzales. Gonzales is now judge of the Cameron County Court-at-Law #3. Irby claims the property sale was improper because any sale of property that belongs to the county can only be transferred by the county judge after approval by the commissioners court and after placing the property for sale at public auction.
In all, Irby lists that the county sold at least 14 properties (including that sold to the Jacksons) for about $1,204,650. Some sold for more than $300,000 and the lowest paid the county $18,000.
Then, on September 2011, Ferguson – represented by attorney Gilberto Hinojosa – came before Judge Arturo Nelson for a habeas corpus seeking relief from his prison sentence and told the court that he had paid "full restitution" to the victims of his scheme. Representing the county was Rene Gonzalez.
The court found that Ferguson had "made full restitution" as previously ordered in the judgment and reduced his sentence to eight years on December 2011. During all this time, Irby claims, "Villalobos acted directly in these transactions and received personal benefits to which (he and others are) now liable."

This allowed Ferguson to be released on parole and he was released.
Irby claims that the defendants should have known that none of the $1.8 million gained by the DA and the county with the sale of the properties that were purchased with the victims of Ferguson's "ponzi" scheme was never paid as restitution to him or the other victims. He charges the defendants with fraudulent misappropriation of funds.
Irby also charges that the defendants negligently misrepresented to the court that they would distribute all monies recuperated from Ferguson to the victims. Irby also charges that the defendants acted with gross negligence and conspired civilly to deprive him an other victims of the restitution ordered by the court. These actions constituted fraud and constructive fraud, Irby charges.
As receiver of the victims' restitution, Irby charges in his lawsuit that attorney Fabian Limas had a fiduciary duty to act on their behalf and did not. He charges that up to now Limas has not taken any action to recover their losses. He asks the court to order Limas to perform his duties and, if he fails to do so, to disqualify him and replace him. Irby claims he suffered actual damages not to exceed $50 million and seeks exemplary damages to be determined by a jury.