Would You Recommend Karen Canzoneri as an Investment Advisor?

Facts: Karen Canzoneri entered into two agreements with Howard Pinchuck. Under the first agreement, Canzoneri advanced $50,000 to be repaid at 12 percent per month for 12 consecutive months as an investment profit. The second agreement required $36,000 to be repaid on or before 6/1/01 with an investment profit of $36,000, total being $72,000. The annualized rate of return for the first transaction was 144 percent and for the second transaction was 608 percent. The civil penalty for violating the states maximum interest rate of 25 percent per annum is forfeiture of the entire principal amount. Canzoneri contends that the transactions were investments not subject to the usury law.

Decision: Judgment for Pinchuck. The four elements of a usurious transaction are present:

• (1)

  the transaction was a loan,

• (2)

  the money loaned required that it be returned,

• (3)

  an interest rate higher than allowed by law was required, and

• (4)

  a corrupt intention to take more than the legal rate for the use of the money loaned exists.

Even though the terms called for profit, not interest, the courts looked to the substance, not the form of the transaction.

[Pinchuck v. Canzoneri, 920 So. 2d 713 (Fla. App. 2006)]