Money hazards: Man runs $56M real estate Ponzi scheme from prison with wife fronting the scam

A real estate investment scam raked in $56 million from 600 investors while the perpetrator served a prison sentence and his wife fronted the South Florida scheme.

Neither was registered or licensed to sell investments. 

The West Palm Beach Ponzi-style investment scheme was headed by what was called the Sanders Family Office LLC, run by Margaret Sanders, 44 and Francisco J. Herrera, 55.

Sanders headed the operation and personally pocketed $2.97 million in illicit, transaction-based commissions. Herrera exploited his radio program and the internet to aggressively market fraudulent promissory notes. He siphoned $10 million from 190 victims and raked in $488,244 in commissions. 

The investment, Wells Real Estate Investment, LLC, funneled a staggering $40 million from roughly 600 investors into the Ponzi machine. While the defendants did not admit to the allegations, they have buckled under regulatory pressure and consented to severe financial penalties. The Sanders Family Office and Margaret Sanders must return $2,977,099.53 in ill-gotten gains. They face an additional $506,228.74 in prejudgment interest. Margaret Sanders was hit with a $100,000 civil penalty, and Herrera was ordered to comply with a permanent injunction, with exact clawbacks and civil fines to be determined by the court. 

Investigators said the couple launched the scheme in 2017. Still, beginning in 2019, the couple concealed Joseph's involvement in the business after he was convicted of a felony and was serving a prison sentence in an unrelated wire fraud case.

The couple used funds from newer investors to make more than $8 million in Ponzi-style payments to earlier investors, without disclosing the source of those payments. They also used more than $2 million in investor funds for personal expenses, including a down payment on a $1.95 million home they made their primary residence.

A substantial portion of the victims lost retirement savings from the scam, investigators said.