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Mayor Sanders and Jeffry Wetzel
Skeletons aplenty in his closet
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?”
Says Benink, “I would be surprised [if Sanders got paid off], given Wetzel’s posture of poverty. But certainly somebody may have been paid off when there supposedly is not a single penny left. Sanders may have gotten the money, but he also may have been too embarrassed to file [as a creditor].” In any case, Wetzel and his wife may find it difficult to wipe away the Chapter 7 filing because there are fraud charges in Meredith’s suit, says Benink.
At one point, Meredith contacted an insurance company whose policies were being sold by Wetzel. Meredith was told that securities infractions do not count against the record of an insurance salesperson. According to the California Department of Insurance, Wetzel got licenses, effective last year, to sell insurance for Pacificare Life Assurance, Pacificare Life and Health, United Healthcare, United of Omaha Life, United World Life Insurance, Connecticut General Life, American Equity General Life, and Mutual of Omaha.
Here's something you might be interested in.
Mayor Sanders and Jeffry Wetzel
Skeletons aplenty in his closet
Mayor Sanders and Jeffry Wetzel
Skeletons aplenty in his closet
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?”
Says Benink, “I would be surprised [if Sanders got paid off], given Wetzel’s posture of poverty. But certainly somebody may have been paid off when there supposedly is not a single penny left. Sanders may have gotten the money, but he also may have been too embarrassed to file [as a creditor].” In any case, Wetzel and his wife may find it difficult to wipe away the Chapter 7 filing because there are fraud charges in Meredith’s suit, says Benink.
At one point, Meredith contacted an insurance company whose policies were being sold by Wetzel. Meredith was told that securities infractions do not count against the record of an insurance salesperson. According to the California Department of Insurance, Wetzel got licenses, effective last year, to sell insurance for Pacificare Life Assurance, Pacificare Life and Health, United Healthcare, United of Omaha Life, United World Life Insurance, Connecticut General Life, American Equity General Life, and Mutual of Omaha.
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