The owner of a Huntington Park real estate and mortgage lender named Best Diamond Funding was arrested today on federal charges of running a Ponzi scheme that lured more than 2,000 mostly Hispanic victims into investing more than $62 million, according to the U.S. Attorney's Office in Los Angeles.
Milton Retana, a 43-year-old El Salvadoran national living in Newark, was indicted Dec. 12 on seven counts of mail fraud, one count of wire fraud, and one count of making a false statement to federal law enforcement agents. He was scheduled to appear this afternoon in U.S, District Court in Los Angeles. If convicted on all charges, he could face up to 165 years in federal prison.
Best Diamond Funding advertised in Spanish-language magazines and on the Internet and held weekly investment seminars at various Los Angeles locations. Retana began soliciting investors in late 2006 to invest with Best Diamond Funding, telling them that their money would be used to buy and sell real estate, according to the indictment.
Retana allegedly claimed his company's success in flipping properties would enable investors to see returns as high as 7 percent of their invested principal each month, for a total guaranteed return of 84 percent each year. Potential investors were also encouraged to use equity from their homes to invest with the company.
The indictment claims Best Diamond used only a fraction of investor money to purchase and sell real estate and, in classic Ponzi fashion, the initial monthly payments to investors came instead from money of later investors.
Agents of the United States Postal Inspection Service and the Federal Bureau of Investigation raided the company's offices in October, seizing nearly $4 million in cash. The FBI also froze approximately $8 million in bank account funds.
Investors were told Best Diamond Funding employed as many as 60 real estate agents and often purchased as many as 50 to 60 properties at one time. In reality, the indictment said Best Diamond Funding employed fewer than five licensed real estate brokers and purchased fewer than 50 properties between late 2006 and October 2008.
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