Ruiz-Mateos family used investors’ funds to pay off their home loans

The investigation into the financial collapse of Nueva Rumasa, the business group run by the well-known businessman José María Ruiz-Mateos, concluded that the company money was being used, among other things, to pay the home mortgages of his six sons. (Ruiz-Mateos also has seven daughters.)

The money came partly from some of the more than 100 companies that made up the business group, and partly from the private contributions of small investors who were lured by splashy ads promising high interest rates on their investment.

Nueva Rumasa attracted new investors in order to pay off old ones in a pyramid scheme that failed in January 2011, when the government ruled that the conglomerate would no longer be permitted to issue promissory notes, thus cutting off a major source of income.

In 2011, Nueva Rumasa owed 700 million euros to 23 private and public lenders. In June of that year, the High Court accepted a suit by a group of investors who were never paid back. Charges have been pressed against José María Ruiz-Mateos, his wife Teresa Rivero, seven of their children and six other people on several counts of fraud, insolvency and document forgery.

Court documents show that 78 million euros are still unaccounted for, and that many of the holding’s companies were set up in Belize, the Dutch Antilles, the Virgin Islands, Panama, Switzerland, the United States, Andorra and Chile.

“The vast majority of the companies that make up Nueva Rumasa are owned by commercial firms domiciled in the tax haven Belice,” according to a report by the financial crimes division of the police. The report says the funds were also used to “maintain the high standard of living” of the family.

The promissory notes were issued to 4,110 investors, and brought in 337.3 million euros. However, police suspect that there were other investors who did not declare their holdings to the tax authorities.

Nueva Rumasa was meant to represent the comeback of Ruiz-Mateos, a popular if controversial figure who established an earlier business empire in the 1960s called Rumasa.

That holding, which comprised over 700 companies — including several banks — was expropriated by the Socialist government of Felipe González in 1983. The reasons on that occasion were allegations of continued tax fraud in the order of millions of euros and the risk of collapse of its banks, used to finance other branches of the business and which Ruiz-Mateos systematically refused the auditors access to.

The businessman, who sued unsuccessfully over the expropriation, did jail time for embezzlement, fraud and tax evasion. He later went on to own the Madrid soccer club Rayo Vallecano, and created his own political party, getting elected to the European Parliament in 1989.