Oscar Villarreal Swindled Cleveland's Rich Out of Millions... and Then He Disappeared

A theory: There are two kinds of philanthropists, and Cleveland's got the bad kind. Cleveland's got the cloak-and-dagger trustees and the hoarders of recognition.

Good philanthropists, according to custom, generally try to promote the welfare of humankind. They write checks, sure, but also policies. Sometimes they're "venture philanthropists" who treat their gifts like for-profit investments. Sometimes they're passionate about a political issue, a disenfranchised group, or an historic institution. Most times, they participate in their giving. They value and help accomplish the stated goals of the recipient.

Bad ones, according to cynical locals and the assorted white, powerful men who've run afoul of Cleveland elites, give largely (or in many cases only) because of the status it confers upon themselves. They give for the naming rights and the parties. They care a lot more about the perception and the prestige of their organizations than they do about their activities. They sit on boards, in the words of the late left-wing billionaire Peter B. Lewis, "because it's socially the thing to do."

For Oscar Villarreal, philanthropy was just another disguise. Villarreal was the ambitious young Mexican swindler who seduced 51 of Cleveland's most powerful corporate leaders into forking over $18 million between 2009 and 2013. In order to get their money, he had to ingratiate himself among them, had to build his brand in a way that local elites couldn't resist. And that meant playing at giving back.

In July 2010, at the tender age of 26, Villarreal was elected to the Cleveland Institute of Music's board of trustees. But when his term expired three years later, the leadership chose not to ask him back. It turned out he wasn't what they were looking for. He never showed up to meetings, for example. He wasn't engaged. He didn't, admitted one CIM staffer, "seem to care all that much" about the organization.

Was Villarreal, the alleged piano enthusiast, not quite hip to the social sanctity of board membership in Cleveland? Was he not mindful of the rarity, as a twentysomething and a foreigner, of his own? For a man who worked so tirelessly to curate his image after the fashion of the wealthy investors he lured to his phony funds, the oversight was a substantial one.

But can the young man be blamed? How could Oscar Villarreal, Cleveland's own wunderkind Ponzi-Schemer, have been expected to learn and ape the proper ways to give money when he was so focused, from 2009 to 2013, on taking it away?

And how could the cream of Cleveland's philanthropic crop — "We're talking [Sherwin-Williams chairman and CEO] Chris Connor. There was nothing higher on the food chain," says one former Villarreal associate — have been taken for such a ride?

Just so we're not all on pins and needles, Villarreal is currently "at large" in Mexico. That's what the authorities are saying anyway. He's been living there since late 2013, when he scurried south to escape the heat of a Securities and Exchange Commission (SEC) investigation and the looming ire of antsy investors who were beginning to wonder where their money had gone. The various chairmen and managing partners suddenly seemed to take exception to the fact that, for the duration of their investments with Villarreal, they hadn't been afforded the courtesy of regular paperwork.

Said one early investor to an FBI investigator: Villarreal was "the poorest provider of information you will ever meet."

The nimble spokesman for the Department of Justice wouldn't specify just how "at large" Villarreal remains, when Scene pressed earlier this month. He told us that "law enforcement" was "actively looking" for Villarreal back in March, a month after he'd no-showed his arraignment here in Cuyahoga County and a second warrant had been issued for his arrest. A couple weeks ago, the same beleaguered spokesman said only that Villarreal remained at large, and apologized that he couldn't say more.

When or if he's found, Villarreal will be extradited to the United States to stand trial for his misdeeds. Though his Tucker Ellis attorney, John McCaffrey, has tried to soften the blow by reminding reporters that Villarreal paid back investors $12-plus million, his client is nonetheless wanted on 21 Federal counts, 19 of which explore the gaudiest frontiers of frauds and swindles. In January of this year, the latest indictment pinged Villarreal for two additional tax falsification charges. We'll include the details mostly for comedic value: In 2009, Villarreal reported about $200,000 of income even though he made close to $5 million. In 2010, he said he made $316,000 when he actually hauled in nearly $3.5 million.

Despite the alleged manhunt in Mexico, Villarreal's online presence remains as active and as self-aggrandizing as ever. Two primitive websites and a sporadically updated Twitter feed continue to churn out (by bot or human hand unknown) the same self-reflexive web of lies and misrepresentations he spun for potential investors six years ago:

"Oscar Villarreal has an enviable history of international business success," his account, @OscarVillarre1, tweeted in March.

"Oscar Villarreal is on the cutting edge of high tech oil and drilling services," the same account tweeted some weeks earlier.

"Oscar Villarreal is a graduate of the Harvard Business School in a specialized business program. #OscarVillarreal #Education," was Oscar's nugget of publicity on March 31.

The most recent entry on his Wordpress vanity site — "Oscar Villarreal--International Business Beat" — dated March 26, 2015, kicks off with this logjam: "Oscar Villarreal is an international business expert. He is a master of the international business scene. He has that special mix of the right background and specific acumen that produces success. He has had great success in the arena of international business over the year and at this time, he operates in a number of industries ... ."

The only industry in which he appears to be operating, though, apart from search engine optimization, is con artistry.

By all accounts, and certainly by his own, Oscar Villarreal arrived in Cleveland from Mexico as an exchange student in 2002. Baldwin-Wallace University, where Villarreal told Cleveland Magazine he was enrolled in a 3-2 program through Columbia University, first has a record of his attendance in Fall 2003. According to BW at that time, he transferred credits from Tri-C, Cleveland State and Kent State. Though Cleveland Mag reported that Villarreal had been accepted at "several" Ivy League colleges (information presumably furnished by Villarreal himself), we've been unable to confirm.

"He even go (sic) the opportunity to study engineering at the University of Geneva in Switzerland," says one of Villarreal's entries on his Wordpress site. "From there, he began his education in pursuit of advanced studies at the Harvard University Business School and specialized in a concentrated program on geopolitical studies and energy development."

BW wouldn't say whether or not Villarreal participated in the Switzerland program — FERPA regulations forbid them from releasing academic records without a student's express written consent. But it did concede that such a program existed. It is coordinated, as it happens, by Kent State.

The media and alumni relations folks at Harvard Business School, however, were definitive. Oscar Villarreal was not an alumni of their institution. It's possible he may have taken a "custom program" in their executive education curriculum, one spokesperson said. But if the course were longer than eight weeks, his name would have been entered in the alumni directory, where it was nowhere to be found.

In an early rhapsodic write-up of Villarreal in Crain's Cleveland Business — he was one of 2006's "Twenty in Their 20s" — Villarreal claimed to have begun interning with the consulting firm Tech-Start LLC in 2003. It was the first "small firm" he'd ever worked at, he'd told Cleveland Magazine in 2005, having already worked at Fortune 500 companies (plural) in previous years. Villarreal was also taken at his word when he professed to speak four languages fluently and to have played piano competitively in Madrid. Crain's even erroneously wrote "his native Spain," when discussing other nations' words for "prodigy."

A brief aside, here, because this "competitive piano" situation has been frustrating.

No one, obviously, has been able to get in touch with Oscar Villarreal for the purposes of reporting this wild tale. No one's got direct quotes. Plus, very few people who interacted with Villarreal are forthcoming with reporters, on or off the record. The fact that most of his investors are represented by extremely powerful attorneys or are themselves extremely powerful attorneys is another can of worms. And it redounds to their advantage in terms of secrecy. They are precluded from commenting, they say, at the insistence of counsel.

Anyway, if we know anything about Oscar by now, it's that the veracity of everything he says requires pretty rigorous scrutiny to substantiate. But we've all decided, nonetheless, to call him a pianist. In every recent story about him, by yours truly or the Northeast Ohio Media Group's Mark Naymik, who has been watching the relevant financial developments not unlike a barn owl watches voles, Villarreal is just off-handedly identified as such. "A young entrepreneur and pianist," the Plain Dealer's Michelle Jarboe McFee tagged him, in an unrelated piece. It's become an inextricable piece of his myth.

To be fair, the evidence certainly suggests he was a pianist. He was living in a Gates Mills mansion from 2008 through 2013 — the $6.5 million Greenwich, Connecticut-style estate was built for Realty One founder Vincent Aveni — which featured, among other lavish interior novelties, a built-in pipe organ. One of the oft-noted outrageous purchases he made with ill-gotten investor capital was a $100,000 Steinway grand piano. He was a board member at the Cleveland Institute of Music, for Pete's sake. This guy was definitely a pianist, right?

Well, not necessarily. No one Scene spoke with had ever actually seen or heard him play. Joe Aveni, who negotiated the lease-purchase arrangement with Villarreal and who, from Florida, acknowledged that he'd had face-to-face interactions with him, called his tenant "an accomplished musician." He wouldn't say, however, how he came by that information, deferring to his lawyer (politely, I might add). Gates Mills police chief Gregg Minichello, who said he remembered nothing unusual, nothing untoward, during Oscar's stay in Gates Mills, never heard the haunting pipes of the organ nor the crashing chords of the Steinway as he made his evening rounds. The CIM marketing and communications director Susan Iler admitted that "enthusiasm for music" was one of the reasons why the board thought Villarreal would be a good fit for them in the first place, but she'd never heard him play either.

Still, it can't be denied that he was involved in the music community. Much was made about Villarreal's hosting an event for the Cleveland International Piano Competition at his home in 2011. This was presented as evidence of his deep embeddedness within the wealthy eastside civic-leader sanctum. 'He joined their clubs, hosted galas,' etc. But Della Homenik, the CIPC's director of communications, who attended that event, said Villarreal certainly didn't perform for guests. In fact, Homenik said, Villarreal only "hosted" in the sense that he opened his doors. He wasn't involved in the planning of (or the paying for) anything.

Scene brings this up only because the evidence also suggests that Villarreal was a deft and somewhat whimsical autobiographer. We know he played fast and loose with the truth in the case of his fabricated Mexican funds. "In letters and reports and in meeting with investors," the SEC wrote in its August 2014 filing, "virtually everything Villarreal told investors was a lie." As such, Scene submits that his personal details may have been equally bogus.

His zany, promotional web presence is just the latest entry in the Villarreal fiction. Each site bears a unique introduction to Oscar: (alleged) supporter of the Cleveland Zoological Society, (supposed) friend of Rivergate Park and the Cleveland Rowing Foundation, a "mentor, role model and leader that is the kind of guy that is an obvious winner."

The kind of guy who writes that he is an obvious winner; who writes, "He studied as a performance pianist for 17 years and competed in Mexico and Spain," as a precursor to, "His community service did not end there;" the kind of guy who claimed Harvard alumni status as quickly as he touted a $100,000 contribution to Tri-C for an endowed scholarship in his mother's name, (completely invented, it would seem: Villarreal's tax filings indicate a single $1,000 contribution to Tri-C in 2012, but the Tri-C recruitment and development folks had never heard of the "Virginia Martinez Scholarship"); the kind of guy who purported to have worked exclusively at Fortune 500 companies during his teenage years; the kind of guy who has lately said that Baldwin Wallace University is located in Berea, Connecticut. It's not unreasonable to suspect that that kind of guy may have bought a $100,000 Steinway to keep a ruse alive.

By 2006, Villarreal was Tech-Start's "Director of International Business" an important title earned almost entirely on the strength of a single megadeal, reported at $70-plus million, that he orchestrated with a Mexican steelmaking company headquartered in his hometown of Monclova.

Villarreal's employer at the time told Scene in a skittish phone conversation that he didn't remember the specifics of the deal — "It was a long time ago" — or much of anything Oscar did during the internship, but he did say that he had "credible connections" in Mexico.

"They were big players of substance, people you could find online," he said. "The question everyone asks now is 'How did [the investors] fall for it?' but there were things he had that were tangible."

The question we're asking now, Scene rejoined, is how Villarreal managed to ingratiate himself in the first place.

"The power brokers of Cleveland were the ones who introduced me to him," the former employer said. "So he'd already embedded himself. He mixed in their circles. He name-dropped like crazy. 'I had lunch with so-and-so,' or, 'So-and-so is hooking me up with this opportunity." He would give lectures at their business councils and lunches and things ... "

The employer paused and reiterated his insistence on anonymity in light of the ongoing investigation, but said finally: "I don't think there's anybody in the history of modern Cleveland who had the shot he had, and he blew it."

April 2006.

Crain's: If you could change one thing about Cleveland, what would it be?

Oscar Villarreal: I would get rid of a bunch of the parking lots we have downtown and build the biggest twin towers in America, get a crazy deal from the city (tax, financing, etc.) and host 10 Fortune 500 companies there, then call it something like: "The Cleveland Centre for World-Wide Business."

Crain's: What differences exist between your generation and older people in your workplace?

Oscar Villarreal: Wanting to take risk, hands down.

Crain's: What is the last book you read?

Oscar Villarreal: Leading from the Heart, Jack Kahl.

Ah, Jack Kahl. Just Jack Kahl, founder of Duck Tape©, longtime owner and CEO of Avon Lake's Manco Inc., bosom buddy of Wal-Mart's Sam Walton, 1993's Most Admired CEO in America, and 1996's and 2000's Best Boss in Town. "He now sits on multiple boards," says Kahl's book jacket bio, "and splits his time between writing, speaking and consulting." Kahl, who didn't respond to multiple requests for comment, was also an early champion of Villarreal's. A former co-trustee said Kahl once started talking about the young charismatic Mexican with some exciting investment opportunities at a board meeting, "almost literally apropos of nothing."

According to an FBI affidavit and the SEC filing, that appears generally to be how Villarreal's investment opportunities were promoted: by and among the business leaders he had already wooed. You know: "board banter," "investment lunches," "Baker & Hostetler recommendations."

Neither the FBI nor the SEC specify how Villarreal initially made contact with the business elite — "While a college student, Villarreal met many prominent members of Cleveland's business and civic communities" — but it's possible (i)Cleveland, an internship program designed to "attract and retain the next generation of Cleveland leaders," in which Oscar participated in 2005, back when it was sponsored by the Greater Cleveland Partnership, helped facilitate important connections. Patrick Manfroni, who ran (i)Cleveland in those days and now does "partner development" for OnShift, was repeatedly unavailable for comment.

By early 2008, Villarreal had formed the first of three fraudulent funds, complete with a legit-sounding name: WW Capital Partners LLC. He'd persuaded six investors — via purported connections to Mexican business interests and "claims of an elite pedigree" — to shell out $550,000 for the purchase, he said, of surplus metal products in Mexico that he would then resell at a profit. Though Villarreal did no such thing, he did dip into his personal line of credit and "unrelated income" to send the initial batch of investors $715,000, a 30-percent return.

That's all it took to ensnare them for good, and to get them singing Oscar's praises at the Union Club and the Pepper Pike Country Club. Later in 2009, when Villarreal offered limited partnership (LP) units in another fraudulent fund — WW Capital III, aimed primarily at petroleum, steel and infrastructure industries in Mexico, Villarreal said — all six of the initial investors jumped back on board.

"Fooled into believing that [the first fund] had been a success," wrote the SEC, "several of those investors enthusiastically endorsed Villarreal to their friends." Through 2009 and 2010, Villarreal raised $9.2 million from 46 investors.

Having made bank, Villarreal then lulled his investors into a false sense of security by inventing connections with a Mexican construction conglomerate, fabricating an imminent pipeline repair contract with Pemex, the state-owned oil and gas company, and producing occasional reports which charted the increasing value of the WW Capital III LP units. As of June 2012, Villarreal told investors that each LP unit, initially valued at $250,000, was worth $442,000. (In reality, after March 2011, the WW Capital III bank account never held more than $1,800.)

As has been reported before, Villarreal merely took investors' money and played around on the stock market. This is especially amusing, in the FBI affidavit, when it's revealed that Villarreal was literally just on E-trade. And though he availed himself of additional management and brokerage fees, he used investor capital to finance his Gates Mills lifestyle, complete with sports car and mortgage. At this time, he was operating a web of companies, including the Oscar Villarreal & Family Foundation, out of a Pepper Pike office on Chagrin Boulevard. Most of these outfits seemed to have been designed to create the illusion of activity — classic (and very basic) shell companies.

His online trading, as expected, was a massive failure. This was expertly concealed from investors, in part, through a lengthy, 100-percent fictitious court battle in Mexico relating to the 100-percent fictitious, $100 million pipeline contract.

Still, in mid-2010, Villarreal went ahead — why not? — and invented a third fraudulent fund, which he called the Standard Asset Management (SAM) fund, the scratch for which, Villarreal claimed, would be pooled and then traded in securities of companies listed on the Mexican stock exchange. That fund attracted $3.7 million from nine investors between 2010 and 2011, over and above the $9.2 originally invested in WW Capital III.

Also during that time, Villarreal acquired two high-rolling "Advisory Clients" (one of whom, though not officially named, the NEOMG's Mark Naymik suspected was former Cavs president James Boland) who wanted to invest in the SAM fund, but didn't want their money pooled with the others. They gave Villarreal $5.5 million to invest, plus additional compensation for managing their money.

Villarreal lost 83 percent of the SAM investments by May 2012, the SEC reported.

In his correspondence with investors, he deployed some of the business community's favorite buzzwords: He spoke of the "strategic partnerships" his shell companies were forming with energy and infrastructure concerns in Mexico. He spoke of the "corporate face lift" inherent in a new business plan for the company he claimed his investors partially owned. Twice, he even accompanied investors to Mexico to make them feel comfortable about their investments: once in 2007 and again (when red flags had been raised) in 2013. On the first trip, Villarreal put on a terrific show, guiding his targets around in armored SUVs and leading them to a steel company with "significant inventory."

Perception was everything, he'd clearly learned, and until August 27, 2013, when an armada of Cleveland's elite held a meeting at the Union Club to get some answers, the perception was rosy. At that meeting though, "at the advice of his lawyer," Villarreal refused to answer almost everything his investors asked of him. "He made no substantive comments."

By early 2014, Villarreal's attorney John McCaffrey wrote to the NEOMG, Villarreal had repaid all monies invested in both WW Capital III and SAM, in excess of $12 million.

"At that time," wrote McCaffrey, "Mr. Villarreal and the investors resolved any issues to their mutual satisfaction and the terms of that settlement are confidential."

"Exclusivity. Legal latitude. Greed." That's how one observer from the local business community diagnosed investor motives. "The Cleveland elite love the idea of being elite," he said. "And the idea of being part of a very exclusive investor group was attractive to them, absolutely. Also, these investments were in Mexico, where regulations were perceived to be more lax."

But both of those motives may have paled in comparison to the enticement of a 30-percent return on investment within 12 months. "I don't think there was anything noble about it," he said.

And that's likely another reason why this community of lawyers and CEOs, traditionally behind-the-scenes types anyway, would prefer to keep all this as confidential as possible. It's not only that they look like fools; they look like greedy fools.

Still, at least one former Villarreal associate told Scene that the investors didn't deserve the runaround to which they'd been subjected.

"I know these people are rich and there's some schadenfreude going around," he said. "But they're also good people. They're the real philanthropists of this community. I hated to see it."

Dan Meyer, an attorney based in Columbus who specializes in investment fraud, said that smart, wealthy people aren't immune to this sort of Ponzi scheme just because they're smart and wealthy, "particularly when an outgoing, bright con artist who is effective at promotion is able to break into an inner circle and convince a core group of members to invest with him/her. It's a classic affinity fraud," Meyer said. "It's easy for targeted victims to let the research slide when they hear the recommendation from someone they trust."

Meyer also appended the fact that though the victims may have been "Cleveland business leaders," that doesn't, self-evidently, mean that they know how investments work or how to properly research an investment opportunity. Indeed, with the exception of the handful who allowed themselves to be conned by a fully realized performance in Mexico, most of Villarreal's investors had been convinced of Villarreal's merits without much research at all.

Interpret as you will, but one emergent takeaway is that, at least in Cleveland, "business leader" is not necessarily coterminous with "savvy businessman."

A theory: When Villarreal was being hailed as a rising star in 2005 and 2006, one personal characteristic which was hyped as much as his business IQ was his obsession with Cleveland.

When asked by Crain's his favorite place to go around town, he described driving down to Edgewater, "looking at downtown for a few minutes ... just thinking about how ridiculous Chicago is going to look before I'm 30." (The implication was that within a decade, Cleveland would have surpassed Chicago in "coolness" or some such.)

In his "Twenty in Their 20s" write-up, Villarreal claimed to want to "recruit" entrepreneurs to Cleveland.

"That's been one of my biggest accomplishments so far ... " said the then 21-year-old. He was, at that precise moment, describing a fake company he said he'd started and the fake employees he said he'd hired, "...stealing someone from Chicago."

It's that very same aggressive (almost militant) Cleveland boosterism over which the corporate community tends to salivate. They've been preoccupied with the perception of Cleveland, in many cases to the exclusion of the improvement of Cleveland, for decades. And this is still very much the case: Have a look at the 2014 Young Professional Senate, when Destination Cleveland gathered "bright young minds" to brainstorm creative ways to promote the city. Have a look at how giddy Joe Roman and the Greater Cleveland Partnership or Terry Egger and the RNC Host Committee get when they talk about the expected media frenzy at the RNC, at the opportunity to influence the perception of Cleveland nationwide and around the globe. Have a look at political leaders holding aloft, in official remarks, Fodor's and the Boston Globe (though not for long), and Business Insider for labeling Cleveland a "best place to visit" or a "most romantic town." The corporate community calls all this "changing the narrative."

This is age-old, and it's the story of Cleveland narrated through corporate marketing campaigns, adopted to varying degrees by locals and the national press: The Comeback City! The New American City! #ThisIsCLE! It's all about perception.

Which is why, in many ways, Oscar Villarreal was Cleveland's most perfect and poetic criminal. All he was guilty of, at root, was following the very same instructions he'd witnessed by those in power, by those who, energized by his Red-Bullish regional optimism, had deigned or decided to become his mentors.

Perhaps he'd heard them say that if people perceive Cleveland to be a cool place to live and work, then the poverty and the police and the population loss won't matter. And then perhaps he extrapolated: If Oscar Villarreal (because he seems to operate exclusively in third person) is perceived to be a charismatic business expert with international bona fides, then the fact that he is stealing powerful people's money and shuffling it around E-trade might not be important to them. Maybe, in their eyes, the fact of the scheming won't matter at all.

About The Author

Sam Allard

Sam Allard is the Senior Writer at Scene, in which capacity he covers politics and power and writes about movies when time permits. He's a graduate of the Medill School of Journalism at Northwestern University and the NEOMFA at Cleveland State. Prior to joining Scene, he was encamped in Sarajevo, Bosnia, on an...
Scroll to read more Ohio News articles
Join the Cleveland Scene Press Club

Local journalism is information. Information is power. And we believe everyone deserves access to accurate independent coverage of their community and state.
Help us keep this coverage going with a one-time donation or an ongoing membership pledge.


Join Cleveland Scene Newsletters

Subscribe now to get the latest news delivered right to your inbox.