Man charged in investor fraud probe

When federal postal inspectors raided a Spanish-language religious bookstore in Huntington Park, they said they found something unusual: envelopes filled with $3 million in cash.

The discovery helped federal prosecutors build a case against Norwalk businessman Milton Retana, a Salvadoran citizen. He was arrested Tuesday after being indicted on charges of fraud and making false statements as part of a scheme that, beginning in 2006, allegedly lured more than 2,000 people into investing an estimated $62 million.

Retana, 43, is in federal custody, and his attorney declined to comment.

Retana owned Best Diamond Funding Corp., a real estate brokerage and mortgage lending company in Huntington Park. In 2006, he started telling his mortgage clients that he could help them invest their money in real estate, according to the indictment.

He started advertising in Spanish-language magazines and on the Internet and held weekly investment seminars, promising returns of 84% a year. The indictment contended that Best Diamond bought very little real estate and instead used the investments from later investors to pay “profits” to earlier investors, a classic Ponzi scheme.

“This is a very large and very serious case in particular for the investors,” Assistant U.S. Atty. James Bowman said. “He encouraged these people to invest the equity in their homes, and a lot of people invested money they couldn’t afford to lose, particularly in hard economic times.”

The California Department of Real Estate is investigating whether Retana did work beyond his company’s real estate license, Bowman said.

When the department searched Retana’s office in August they did not find files linked to investors, but postal inspectors in October found investor files and cash in a bookstore, Libreria del Exito Mundo, which is next door to Best Diamond.

Retana’s wife, Lydia Campos, runs the bookstore, Bowman said.

“It appears that they targeted the Latino community,” he said. “And based on the victim interviews we have done, the investors had no idea how the money was being used. They were asked to bring their friends, neighbors, people they knew from church, into the investments, and many of them did.”

Retana faces a maximum of 165 years in federal prison if convicted on all the charges.

The U.S. Postal Inspection Service is asking for investors who think they may have been defrauded to call (800) 681-5040.

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william.heisel@latimes.com