LOS ANGELES, Calif. -- A man living in Norwalk was in jail Wednesday, charged with running a Ponzi scheme involving investments in diamonds that allegedly defrauded more than 2,000 people of at least $62 million.
Milton Retana, 43, was indicted earlier this week by a federal grand jury in Los Angeles. His firm, Best Diamond Funding, targeted Spanish-speaking people through ads in ethnic media, the U.S. Attorney's office said.
"By perpetrating this giant Ponzi scheme, the defendant stole tens of millions of dollars from thousands of innocent investors, depriving them of their hard-earned life savings and financial security," said U.S. Attorney Thomas P. O'Brien.
Prosecutors charged Retana was promising investors a return of 84 percent per year, and was encouraging investors to take out mortgages to raise money to invest in his diamond trade.
Prospective investors were told that Best Diamond Funding used its gemstone profits to purchase and then resell houses, and that the company often purchased 50 to 60 houses at once using its sales force of 60 real estate agents. In reality, the firm only had five licensed agents and purchased fewer than 50 properties.
U.S. Postal Inspection Service inspectors and FBI agents raided Best Diamond Funding and a next-door religious bookstore owned by Rentera's wife last October. Agents said they recovered nearly $4 million in cash in the office and the store, called Libreria del Exito Mundo, on Pacific Boulevard in Huntington Park.
Rentera appeared at a hearing Tuesday in Federal Court in Los Angeles.
He could face 165 years imprisonment if convicted.
A Ponzi scheme, named for a con man who took Bostonians for millions in the 1920s, is a financial ruse in which investors are promised high returns. Early investors are paid unrealistically high returns with money coming from newer investors. But such an operation inevitably collapses, since there never was any investment or earnings.
