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Did Mayor Jerry Sanders get his money out of a scandal-ridden private equity group whose chief executive has filed for Chapter 7 liquidation bankruptcy? It’s an intriguing question.

For the past several years, Sanders has listed on his Statement of Economic Interests that he had $10,000 to $100,000 invested in Maxxum Equity Fund, run by insurance salesman Jeffry Wetzel out of his home in Poway.

Wetzel has skeletons aplenty in his closet. In 1994, federal court in southern Nevada found that he “violated and aided and abetted certain of the antifraud and books and records provisions of the federal securities laws,” according to the Securities and Exchange Commission, which had filed suit against him. The court concluded that, while employed at two brokerage firms between 1987 and 1988, Wetzel sold penny stocks to investors without informing them that the shares had been manipulated, that he was receiving excessive commissions on their sales, and that they would be difficult to sell. In addition, the court found that Wetzel “arbitrarily completed an opening account form with information which he had not obtained from the customer,” according to the agency.

As we related in a Reader story of May 29, 2008, Wetzel in 1998 was working as a broker for San Diego’s Centex Securities, one of the most notorious bucket shops in the city’s history. Several of the key officials of Centex went to prison or ran afoul of the Securities and Exchange Commission before the firm was closed down by the National Association of Securities Dealers in 2001.

While at Centex, Wetzel twice lost arbitration cases and was told to pay sizable sums for engaging in rapid-fire buying and selling of cheap, speculative stocks that were inappropriate for his elderly clients.

Wetzel told us in 2008 that Sanders’s Centex account had been reassigned to him after another broker departed. The question has always remained: why did Sanders put his money in a certifiably slimy brokerage house that mainly dabbled in penny stocks? And just how did Sanders’s money get from the Centex account into Wetzel’s Maxxum Equity Fund? Sanders would not speak with us last year. This year, he didn’t respond to a telephone message requesting comment.

Although Wetzel spoke with us in 2008, he clammed up this year and declined to comment. The attorney who filed his Chapter 7 bankruptcy case did not return calls.

Last year, James Meredith, 77, of San Marcos, who has lost $90,000 in Maxxum, sued Wetzel in superior court, charging breach of fiduciary duty and contract, negligent misrepresentation, making untrue statements of materials facts, fraud, and several other offenses.

Wetzel originally hired a defense lawyer. That didn’t last because Wetzel didn’t pay him, says Eric Benink, Meredith’s first attorney. Wetzel “pleaded poverty from the get-go,” says Benink. For a while, Wetzel tried to defend himself, but then he stopped showing up for hearings. “The judge got fed up and allowed us to take default,” says Benink. Then, in September of this year, Wetzel and his wife Kimberly filed for Chapter 7 liquidation bankruptcy.

Meredith says that in the course of negotiations, Wetzel offered to hand over a one-acre lot in Palm Desert that was supposedly worth $60,000 in lieu of satisfying the debt. But Meredith checked out comparables, decided it was worth only $30,000, and rejected the offer. The land actually belonged to one of Wetzel’s investors, according to Meredith. Wetzel “was really squirming,” he says.

Meredith has hired a new attorney, Jonathan Beck of Vista. He has filed an objection to the Wetzels’ bankruptcy wiping away the money owed Meredith. Beck also made fraud charges similar to the ones Benink made in his suit, which was stayed by the bankruptcy. Beck wants to subpoena Wetzel’s bank “to see what went in and what went out. Was [Wetzel] writing checks to himself? I want to know if Sanders got my client’s money,” says Beck. If the mayor got his money within a certain period before the bankruptcy filing, it may be considered a “preferential transfer” and have to be returned to the court.

A North County professional woman, who doesn’t want to be identified, had $135,000 in the pot. Upon reading our 2008 story, “I gagged,” she says. She tried unsuccessfully to get her money out but was told she had to wait in line. She was aware that a Palm Springs friend, whom we couldn’t reach for comment, was getting money back in increments (something Wetzel denied in 2008). Wetzel told her that he had added almost 100 percent of debt to each account. “He had leveraged them by crazy amounts,” she says. At one point, Wetzel told her that her $135,000 was now worth $135, but he would not give her an explanation.

“He [Wetzel]...said my money was guaranteed, insured,” she says. “I have been saying, ‘Jeff, I have nothing; show me where the money went. All I have is your telling me I have nothing.’ He provided no documentation.” Wetzel was not promising outrageous profits, she says: “He told me I was making a steady 5 percent return, so I didn’t think I was doing anything crazy.” However, as we showed in 2008, Wetzel was reporting good returns during vicious bear market periods — just as Bernie Madoff was. The North County woman has not sued or filed as a creditor in the bankruptcy; she was not aware of it.

Wetzel sells insurance for United Healthcare and other firms. His wife is a client service associate at the Rancho Bernardo office of Wall Street’s Morgan Stanley. Together, they gross more than $100,000 a year. After expenses, they bring home $7545 a month but spend $9142, thus falling into the hole $1597 each month, according to the filing. They have heavy debts with credit card companies and also owe a bundle on a student loan. Their Poway home is worth $844,500 and personal property is worth $25,400, but they have $1.1 million in liabilities, including $838,000 owed creditors with secured claims.

Benink is listed as a creditor for $90,000, representing Meredith. But there is no Jerry Sanders listed as a creditor. “I think he [Wetzel] may have paid off Sanders with my money,” says Meredith. “He [Sanders] is an investor. How come he is not listed as a creditor in the bankruptcy?”

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Comments

selfcntred Dec. 9, 2009 @ 4:51 p.m.

That's how Wetzel got more clients. He would mention the Mayor is one of his oldest investors. Very interesting. Hey Jerry, Show Me the Money!

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Don Bauder Dec. 9, 2009 @ 8:50 p.m.

Response to post #1: Yes, as mentioned in the 2008 Reader story, Wetzel would mention the mayor's name. Best, Don Bauder

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carlnishi Dec. 12, 2009 @ 1:21 a.m.

I bought insurance from the crook. Can't wait to cancel my policy.

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Don Bauder Dec. 12, 2009 @ 7:55 a.m.

Response to post #4: Those are some respectable insurance companies using him as a salesman. Best, Don Bauder

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Don Bauder Dec. 12, 2009 @ 3:20 p.m.

Response to post #5: That's a truism. Best, Don Bauder

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selfcntred Dec. 13, 2009 @ 8:22 p.m.

In your Reader story of May 29, 2008 you mentioned Thomas Moore received a "Finders Fee". I wonder if he received a finders fee for the other corrupt company Universal Money Traders?

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Don Bauder Dec. 13, 2009 @ 9:30 p.m.

Response to post #7: Moore worked directly for Universal Money Traders as a salesman. I don't know whether he got finder's fees, but he probably got paid in commission, salary, or perhaps both. Best, Don Bauder

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Anon92107 Dec. 16, 2009 @ 1:11 p.m.

Don, I don't know if anyone may have noticed, but I must admit that my outrage at Republican acts of treason against the U.S. Military and political corruption with the health insurance industry is going ballistic.

I still remember being a dedicated "I Like Ike" Young Republican, but ever since Nixon the party has gone straight to Hell.

Ike was definitely the last of the Great republicans with Honor and Integrity, then Nixon-Agnew through Cheney-Bush destroyed that era completely.

If our Founders could have known that the GOP would destroy the American Democracy they created they wouldn't have bothered risking their lives to create American Democracy in the first place.

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Don Bauder Dec. 16, 2009 @ 6:06 p.m.

Response to post #9: The Democrats are doing a good job messing things up, too. Best, Don Bauder

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Anon92107 Dec. 17, 2009 @ 11:34 a.m.

Response to post #10:

You got that right Don, and you know the most hideous irony will happen next year now that the democrats have allowed themselves to be seen as failing to negate republican acts of treason at federal, state and local levels by losing whatever commanding majorities they may have.

Republicans sure know how to screw the poor, democracy, democrats and America.

And We The People still don't understand that ALL GOP politicians and judges are traitors against American Democracy and the U.S. Military, making all of bin Laden's nightmares for America come true. That's because of the total failures of our educational and religious institutions to teach us to read, think and live by the 10 Commandments.

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Don Bauder Dec. 17, 2009 @ 12:33 p.m.

Response to post #11: Educational institutions should not be teaching people to follow the ten commandments. That's up to religious institutions. Best, Don Bauder

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Anon92107 Dec. 17, 2009 @ 12:57 p.m.

Response to post #12:

I agree 100%

That's why I specifically said "educational and religious institutions" to keep them separate and distinct, unlike radical religious right wing republicans who combine these two institutions and include them in their political institution.

Nevertheless, all religions have failed the tests of morality, integrity, ethics and the 10 Commandments proven by the hideously unacceptable state of the world today that proves all religions have failed.

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Don Bauder Dec. 17, 2009 @ 2:25 p.m.

Response: I agree: religions have done a poor job throughout the world. Best, Don Bauder

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Russ Lewis Dec. 17, 2009 @ 2:31 p.m.

Yes, by not controlling people's behavior. (Fred?)

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Fred Williams Dec. 17, 2009 @ 8:47 p.m.

Politicians use religion to get into office.

They've never been known to practice it once in office.

As to the ten commandments, well we can skip half of them...the ones that natter on about having no other gods or making graven images, for example, are sorta stupid, and have nothing to do with morality.

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David Dodd Dec. 17, 2009 @ 9:52 p.m.

"Politicians use religion to get into office."

Yes, and religion uses politicians once the politicians are elected. But the same can be said about special interest groups. And the military industrial complex. And so on. It's tough to call the kettle black when the blackened pot sits so close to it (note: not a racist reference, a reference to an old addage about not throwing stones in a glass house, which is based on a religous reference about those without guilt casting the first stone... oh, hell, never mind).

Better put, they enable each other.

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Don Bauder Dec. 17, 2009 @ 9:58 p.m.

Response to post #15: Do you think religions should exercise even more social control than they do? Best, Don Bauder

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Don Bauder Dec. 17, 2009 @ 10 p.m.

Response to post #16: I know a lot of politicians who have one other god before them: themselves. Best, Don Bauder

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Don Bauder Dec. 17, 2009 @ 10:02 p.m.

Response to post #17: What interests me is the way born-agains and far right fundamentalists are used by big business and Wall Street. Best, Don Bauder

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David Dodd Dec. 17, 2009 @ 10:40 p.m.

"What interests me is the way born-agains and far right fundamentalists are used by big business and Wall Street. Best, Don Bauder"

Ha! Yes, they're great targets. It's an amazing world, Don. Sometimes I have to wonder if these interests aren't meant for each other. A little cold? Perhaps.

Recent GOP: Target the extreme right. Nominate a man who pretends to be very religious. Once elected, go on rampages supporting their causes while the real money that got the GOP elected fleeces their bank accounts. Plead stupidity when the bubble bursts. Target voters are left with nothing.

Recent DEM: Target the poor, get them to vote. Nominate a very eloquent man who is half-African American. Promise them economic freedom. Once elected, rob the grandchildren of the poor that elected them, give it to the real money that got the DEM elected. Plead stupidity when it doesn't work. Target voters are left with nothing.

And people wonder why I withdrew from any participation from the U.S. political system?

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Anon92107 Dec. 18, 2009 @ 5:05 a.m.

Thanks for another year of excellent investigative reporting Don. Your many exposures of corruption in San Diego keep proving what a senior FBI agent said last week, Corruption threatens "soul and fabric" of U.S.

“Corruption, whether in the form of crooked officials, financial fraudsters or even philandering sports stars, is tearing at the fabric of U.S. society and is the country's No. 1 criminal threat”

As this column and the San Diego economy prove this year, Mayor Sanders, scandal-ridden groups who control him, the San Diego Republican Party, etc. are destroying the soul and fabric of San Diego.

Keep up the great work next year Don, all we can do is hope that San Diegans will read your columns, wake up soon and toss all corrupt local, state and federal republican politicians and judges out of office.

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Don Bauder Dec. 18, 2009 @ 7:18 a.m.

Response to post #21: Of the last two presidents, one came from Texas politics and the other from Chicago politics. Sobering. Best, Don Bauder

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Don Bauder Dec. 18, 2009 @ 7:21 a.m.

Response to post #22: If corruption suddenly disappears in San Diego, I promise to shift my focus elsewhere. Best, Don Bauder

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bartk March 15, 2010 @ 8:22 p.m.

I still don't understand why this Jeffry Wetzel in not in jail. Meanwhile his kids all have paid college tuition at the expense of others in a Ponzi scheme. Where is the justice? I guess crime does pay.

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