Loan Broker Held on Seven Theft Charges : Scam: Up to $300,000 may have been stolen from Latino homeowners who lent suspect money by borrowing on their home equity, police say.

A Santa Ana loan broker may have stolen up to $300,000 from Latino homeowners in a fraudulent scheme, police said Tuesday.

Jose Sanchez, 42, was arrested Friday and charged with seven counts of grand theft in connection with the alleged scam.

Sanchez, president of Commonwealth Home Finance in Santa Ana, pleaded not guilty and is being held at Orange County Jail in lieu of $500,000 bail.

Police claim that Sanchez persuaded at least seven families to lend him money by borrowing against the equity in their homes. Sanchez allegedly offered to repay the loans by making monthly payments to the families, including 18% interest.

But Sanchez rarely made the monthly payments, police said, and gave his customers worthless trust deeds on his home as collateral.

“They thought if he was willing to put up his house, it must be a good investment,” said Kenneth Smith, a Santa Ana police investigator.

Though Sanchez is only charged with bilking customers out of $150,000, Smith said recent evidence indicates as much as $300,000 is missing.

Smith said Sanchez had 15 employees who were paid to look for customers in the Latino community. His company also advertised in community newspapers and on Spanish-language television, Smith said.

Sanchez’s alleged operation is what investigators refer to as an affinity scam.

The term applies to fraudulent investment and charitable schemes in which con artists belonging to a particular ethnic group prey upon people in their own communities, capitalizing on distrust of the outside world or a natural affinity of people of similar background.

Sanchez, a Mexican immigrant, focused exclusively on Latinos living in Santa Ana and Anaheim, Smith said. Each of the alleged victims lost between $20,000 and $60,000, Smith said.

A 48-year-old Santa Ana man, who asked not to be identified, said he lost $59,160.

“For me, it is a terrible thing,” the man said in an interview Tuesday. “I am not working now and I don’t have much savings. It is a very tough thing.”

Times staff writer Eric Young contributed to this article.