Costa Mesa Man Accused in Scheme to Launder Money

A Costa Mesa businessman, suspected of operating a fraudulent multimillion-dollar Ponzi scheme from his Santa Ana office, appeared in federal court in Los Angeles Friday after his arrest on charges of laundering drug money and avoiding financial reporting requirements.

Jose Manuel de la Jara, who as president of American Investment & Finance Group used the alias Jose Ojar Fernandez, is being held at the Metropolitan Detention Center in Los Angeles pending a detention hearing scheduled Tuesday in U.S. District Court.

Assistant U.S. Atty. John Carlton said the money-laundering charges stemmed from an undercover investigation in which “an agent represented to Mr. de la Jara that certain monies were proceeds of narcotics transactions, and (de la Jara) was alleged to have taken those monies and given back to the agent checks drawn on various bank accounts.”

The money-laundering charge carries a maximum penalty of 20 years in prison and a $250,000 fine.

The second charge states that de la Jara illegally structured his financial transactions to avoid federal laws that require the reporting of any transaction of more than $10,000. That charge carries a maximum penalty of five years in prison and a $250,000 fine.

De la Jara is also suspected by federal investigators of running a Ponzi scheme, in which investors are paid off with money provided by an expanding circle of new investors rather than with the proceeds of investments. He is wanted by Interpol, the international police coordinating agency, for alleged criminal activities in Peru, officials said.

Some of the documents relating to the investigation of American Investment remain sealed, and the exact relationship between the alleged Ponzi scheme and the other charges against de la Jara could not be determined.

A series of searches was carried out Thursday by law enforcement officials at several American Investment offices: the old city hall building in Santa Ana; 5201 E. Olympic Blvd. in East Los Angeles; and 11220 Laurel Canyon Blvd. near San Fernando. De la Jara’s residence on Tulare Drive in Costa Mesa was also raided.

One official, who asked not to be identified, said the company advertised heavily in the Spanish language media in search of investors and appeared to have taken in about $8 million in deposits from 800 mostly Latino investors. At its peak, the operation was taking in nearly $2 million a month, he said.

While the company appeared to have real estate holdings worth about $3.5 million, it also had outstanding trust deeds--which were provided to investors as collateral--valued at three times that amount, the official said.

American Investment, whose assets have been placed in receivership by the California Department of Corporations, promised investors returns of 22% on minimum investments of $1,000, and they were provided with trust deeds, semiprecious gems or promissory notes as collateral, the official said.

“All the red flags were there that this was a Ponzi scheme that was about to collapse, so rather than wait, we tried to step in and hopefully protect some of these investors,” he added.