Miami police officer Dermis Hernandez was arrested by federal agents on Monday for his alleged connection to a Ponzi scheme that guaranteed investors huge returns on loans to property owners in Costa Rica.
Hernandez, 41, faces charges for conspiracy to commit wire fraud. He appeared in federal court on Tuesday and is scheduled to have a bond hearing Friday. It is unclear if he has hired a defense attorney.
According to the criminal complaint, Hernandez ran a Costa Rican loan company that promised investors returns of over 20%. He had reportedly been touting his company to fellow officers for several years, but the enterprise was a sham. Hernandez used the money to enrich himself and pay back early investors, the complaint said.
Hernandez allegedly ran the scam from 2011 and 2015 using a company called DD&M Investments. He offered clients low-risk investment and said he was giving loans with high interest rates to Costa Rican property owners. The people who took the loans used their properties as collateral, he reportedly claimed. None of it was true, according to the FBI.
Hernandez and unnamed co-conspirators reportedly targeted police offers and used fake documents to show the company had rights to property in Costa Rica.
“In truth, Hernandez and his co-conspirators used the investor funds for personal enrichment and to pay returns of other investors,” the criminal complaint said.
It is unclear how much Hernandez got through the alleged Ponzi scheme, but investigators believe at least one victim invested $10,000 from their retirement fund. Hernandez reportedly provided him with instructions on how to withdraw the funds. The victim agreed because he thought he would receive a 20% return on the investment every year.
Another victim told investigators he invested $125,000, believing that he would receive a 24% return on the investment. He only got $17,000 in interest payments.
Hernandez was arrested after investigators discovered he was planning to fly to Costa Rica to take care of an “emergency.” Fearing he wouldn’t return to the U.S. because his wife is Costa Rican, FBI agents arrested him at Fort Lauderdale-Hollywood International Airport.
“Obviously, it’s not a good day when the mayor or the chief have to bring to light and to the press the arrest of one of its officers,” Miami Mayor Francis Suarez said at a press conference with Police Chief Jorge Colina.
“It has been our history that this represents a very, very small percentage of our officers. In fact, even the two arrests this month represent less than one tenth of one percent of our officers [who] are conducting themselves lawfully and with integrity,” the mayor said.
Hernandez was the second Miami police officer arrested in January. Earlier in the month, police officer Adrian Santos was charged with possession of cocaine after he was allegedly caught using the substance at a Miami nightclub in November last year. Santos was off duty at the time.
Investigators said witnesses saw Santos snorting cocaine on the evening of November 17. The nightclub’s surveillance video reportedly confirms his actions. It is unclear if he has acquired an attorney.