On April 27 of this year, craigslist, the online classified advertising behemoth, carried this small notice: “I am requesting information on Jeffry Wetzel from Poway, CA. We invested $135,000 with what he calls a hedge fund. MAXXUM EQUITY FUND LLC is a Nevada corporation. We have been trying to get our money back for over a year now. If anyone knows if he is a crook or a con artist please contact me immediately.” The identity of the person who placed the ad was not given, but he or she could be reached through an email link. The ad has since been taken down.

Gripes by people being fleeced in San Diego are routine, but there are two salient factors about Maxxum Equity Fund. First, Wetzel confirms, there are people who want out of this fund. And second, one investor in the fund is San Diego mayor Jerry Sanders. His statement of economic interest, filed under penalty of perjury with the City of San Diego, reveals that he has $10,000 to $100,000 invested in Maxxum. The mayor’s statements going back to 2005 also list the same investment.

The road by which Sanders got into the fund raises new questions about his ability, or willingness, to do due diligence, the process that a prudent investor undertakes to investigate the operations and management of an institution into which he intends to plunk money.

Sanders did not respond to requests for comment regarding this story, but Jeffry Wetzel, proprietor of Maxxum, did, describing how he met the future mayor and became his broker and subsequently his money manager.

According to Wetzel, before going into Maxxum, Sanders was investing his money through the now-shuttered Centex Securities, one of the smelliest brokerage houses in San Diego history. Wetzel was a stockbroker at Centex in 1998. Sanders’s Centex account “was reassigned to me” after a broker departed, says Wetzel. That’s important, because some of those brokers went to jail. Wetzel says he doesn’t know the name of the person who formerly handled the Sanders account.

It’s almost impossible to conclude that Sanders did his homework on Wetzel and Centex. Court records reveal that Wetzel has an alleged history of doing just what Centex was infamous for: engaging in rapid-fire buying and selling, or churning customers’ accounts to maximize brokerage commissions, and putting elderly people in wholly inappropriate, speculative stocks.

Wetzel claims he knows nothing about the craigslist ad. “I don’t know where they get $135,000,” he says. “Is somebody playing a joke?” But Wetzel admits some investors want to get their money back. “There are people who want to get out — they say, ‘Work us out as the market allows.’ ” He is hoping for a market recovery that will permit him to return the funds to investors without them getting skinned.

The market has been volatile, and Maxxum Equity Fund has suffered some losses, he allows. “I am trying to get people out without having the market take them out. My ultimate goal is not to have any new investors. The goal is that I will trade for only myself and my family.” (In his filing with the City, Sanders calls Maxxum a hedge fund and says he is a “partner” — a curious designation for a limited liability company, or LLC. Wetzel says that Maxxum is really a private equity fund, not a hedge fund, and Sanders is only a passive investor, having no role in ownership or management. The parent company, Maxxum Equity Holdings LLC, is registered in Nevada but is listed by the secretary of state’s office there as being in “default.” However, it does not appear that Maxxum Equity Fund has filed a securities registration in either Nevada or California.)

There may be investors who want to get out, but not at the slow pace Wetzel talks about. Certainly, the person who placed the craigslist ad, if the account is accurate, would be one. Thomas Vincent Moore of La Jolla earlier worked with Wetzel at Centex. Moore knows of someone “who has been trying to get his money out for the good part of six months,” he says. That investor has tried to learn the current status of the fund. (Wetzel wouldn’t tell us how much money is in the fund.) The investor has received some of his money but allegedly not what he requested.

We located the investor, who didn’t want to speak. Another person close to the investor says that Wetzel recruited him to join Wetzel’s insurance business. (Both Wetzel and his wife Kimberly, a stockbroker at Morgan Stanley in Rancho Bernardo, have insurance licenses.) But the insurance deal didn’t pan out.

Sources say that Wetzel told one investor wanting out that he could get his money as soon as more funds came in the front door. Wetzel strongly denies he said that. He also denies that he is paying an out-of-town investor $20,000 a month as a way of easing him out of the Maxxum fund.

According to one source, Wetzel boasted to potential clients that the mayor of San Diego had money in the fund.

Wetzel touts his track record — one at which savvy investors should cock an eyebrow. It shows Wetzel making 10.6 percent on the fund’s money during the last three quarters of 2001, a time of a vicious bear market. The Standard & Poor’s 500 index, the best measurement of the performance of the broad market, plunged 11.89 percent that year, including gains from dividends.

Wetzel claims his fund made 12.11 percent in 2002, a year in which the S&P 500 plus dividends plummeted 22.1 percent. Wetzel asserts he made the money being short — that is, betting that stocks would go down. Shorting stocks, however, is a treacherous business, even in bear markets. Any potential investor should check those 2001 and 2002 trades very closely.

Wetzel says he went to the University of Nevada, Las Vegas, but didn’t graduate. He worked construction jobs for some time, then became a stockbroker with several firms. When he landed at the downtown La Jolla office of Centex in early 1998, he brought some of the accounts he had had while working with other firms.

But he got into trouble pushing cheap, speculative stocks on the elderly. According to allegations made in a San Diego Superior Court lawsuit, Wetzel, while with Torrey Pines Securities, sold conservative bond funds in an 81-year-old woman’s account and put $181,500 in a penny stock. After he took the account to Centex, he sold the penny stock for a $123,000 loss. He loaded her account with an inordinate pile of stock in the former Bank of Commerce of San Diego and rapidly bought and sold stock options. This was generating big commissions for Wetzel but not pleasing the elderly woman, who wrote the firm and instructed it to cease the trading activity.

“Apparently, Wetzel went to this terminally ill lady’s home and had her sign a form letter countermanding the instructions” of her earlier letter, alleged the attorney who pushed the lawsuit. In 2002, an arbitration panel assessed a sum of $110,625 against Torrey Pines and Wetzel and $91,633 against Centex and Wetzel. Torrey Pines and Wetzel paid up. But as late as 2004, Centex, which by that time was closed, had not paid its portion, and neither had Wetzel, according to documents. We have not reached the attorney to determine if the sum was ever paid. Wetzel insists it was.

A similar complaint, filed in San Diego Superior Court in 2004, concerned Philip Boad, who was in his mid-80s when Wetzel took his account to Centex. According to the attorney in the case, Wetzel sold conservative municipal bonds and loaded up Boad’s account with Bank of Commerce stock that eventually was sold for a loss of $212,000. (A former bank official does not remember Wetzel, Centex, or the incident.)

The suit states that Wetzel was engaging in rapid-fire buying and selling of speculative stocks and stock options — hardly appropriate for an elderly gentleman who wanted safety of principal. This old man asked that the trading cease, and Wetzel went to his house and allegedly talked him out of it. An arbitration panel in 2002 told Centex to pay the victim $139,715 plus interest and Centex and Wetzel to pay $163,789 plus interest. In 2004, the money had not been paid. Again, Wetzel says he has settled up, but we haven’t been able to reach the attorney or the old man’s survivors to confirm that.

Centex is a story in itself. Throughout its existence, it had a reputation as a bucket shop. It was shuttered by the National Association of Securities Dealers in 2001 for failing to pay fees from 23 arbitration proceedings. In its 14-year history, there had been 13 regulatory actions against Centex.

Before it was shut, its chief executive, Bruce Biddick, attempted to bribe a mutual fund manager to pay above-market prices for two stocks. The kickback was to be $2 million, and one-fifth of that sum would bounce back to Biddick. The transaction was to be disguised through an entity in that haven of original financial sin, Switzerland. The mutual fund manager, however, turned out to be an undercover Federal Bureau of Investigation agent in a government sting called Bermuda Short. Biddick was sentenced to four months in prison.

Centex had other brokers who ran afoul of the law, including Ron Brouillette, who got nailed for running a pump-and-dump scheme. According to the Securities and Exchange Commission, Brouillette created phony trades to inflate a penny stock, then told lies about the deal to customers. Other Centex brokers were notorious on the San Diego penny stock scene, including Marshall Klein, who pleaded guilty in 2004 to wire, mail, and securities fraud, and Marvin Susemihl, who got into trouble with the Securities and Exchange Commission in a golf promotion.

In 2003 in New York, an associate of the Colombo organized crime family was charged with running a stock scam out of a Centex office.

“Centex was one of those places you try to forget about,” says Wetzel. “I never did deals that Biddick had offered — not one single share. I wouldn’t know Brouillette if I passed him on the street.”

Moore, Wetzel’s former coworker at Centex, has an equally low opinion of the company and its brokers. However, Moore has gone on to financial troubles of his own. He became a salesman for Universal Money Traders, in Solana Beach, which told suckers it could make them huge returns through its trading of foreign currencies. In 2005, the California Department of Corporations slapped an enforcement action on the head of the firm, Mark Todd Hauze, along with Moore and two others. The action “was an error. I was not a principal,” claims Moore.

In 2007, Hauze was indicted on 19 counts of fraud. Moore was not indicted, and the U.S. Attorney’s Office won’t comment on the reason. The U.S. government charged that Hauze was using new money that came in from clients to pay off investors who wanted to withdraw their funds. That is a Ponzi scheme. “I had put my own brother and father into Universal Money Traders,” says Moore. “It turned out it was a very, very poor investment. Myself and my clients lost millions. We had no knowledge of what Mark Hauze was doing.” (The case has not yet been resolved.)

In 2004, Moore went bankrupt with assets of $31,000 and liabilities of $425,000. He owed the Internal Revenue Service, Franchise Tax Board, credit card companies, and collection agencies and had not paid an assessment of $126,000 from a dispute with a customer while he was with Centex.

Wetzel admits that on one occasion, he paid Moore a finder’s fee for steering a client to Maxxum. Old Centex colleagues keep the fires of friendship glowing, it appears.

This isn’t the only time Sanders has been involved with edgy investments. In 2002, after resigning as chief executive officer of United Way of San Diego County, Sanders became president of a company named Virtual Capital of California, set up to exploit high-tech advances. Sanders owned 10 percent. So did William Robert Bradley, cofounder of the scandal-plagued, bankrupt Metabolife, maker of pep/diet pills containing the deadly ephedra.

Bradley had gotten his stake in Virtual Capital by turning over Las Vegas land. The land was accepted in lieu of cash three years after word of the criminal pasts of Metabolife’s founders had hit the news.

When Sanders was a cop, he knew Bradley, who was then a tow-truck operator. Cops and tow-truck operators get very chummy. Bradley’s two Metabolife cofounders, Mike Ellis and Mike Blevins, should have been well known to cops. They got busted in 1988 for making methamphetamine in Rancho Santa Fe. Ellis got probation, and Blevins went to the slammer. Later they founded Metabolife, which prospered handsomely.

But as customers got ill and died from the product, the government stepped in, particularly after Ellis falsely said the company had not received complaints. The company went under as the feds closed in.

In 2002, an affidavit by an Internal Revenue Service agent charged that Bradley, along with his two Metabolife cofounders, was skimming money out of Metabolife and stashing it in offshore tax havens. Bradley pleaded guilty to seven counts of tax evasion in 2005 and the next year was sentenced to six months of confinement.

Virtual Capital never went anywhere, and according to its founder, Coronado investor Tom Stickel, the investors lost their money.

Even though Metabolife’s putrid past had become public long before Bradley was recruited to invest in Virtual Capital of California, Sanders apparently felt no qualms about reuniting with his old tow-truck friend. Are they still chummy? Sanders isn’t talking.