RIVERSIDE, CA , July 16, 2004 – LAWFUEL – An Inland Empire man has agreed to plead guilty to federal fraud charges for running a “high-yield investment program” that in reality was a Ponzi scheme that collected $25 million from victims around the world.
John C. Jeffers, 63, of Mentone, signed a plea agreement yesterday in which he agreed to plead guilty to three counts of money laundering. The plea agreement was filed this morning. Jeffers is scheduled to appear in federal court before United States District Judge Robert J. Timlin on Monday morning at 9:30 to enter his guilty plea. In the plea agreement, Jeffers acknowledged that he owned and controlled J.C. Jeffers & Company, a Redlands-based operation that was at the center of the Ponzi scheme.
A second defendant in the case, John Minderhout, 56, of Yucaipa, pleaded guilty before Judge Timlin on July 7 to three counts of wire fraud.
Court documents outline a scheme in which Jeffers and Minderhout defrauded investors out of more than $25 million in what they said was a high-yield investment program they called the “Short Term Financing Transaction.” The funds were collected from investors around the world from 1996 through 2000. Some investors were told that proceeds would be used to finance humanitarian projects around the globe, such as low-cost housing for the poor in developing nations.
Jeffers sent letters to some victims that falsely claimed the program had been licensed by the Federal Reserve and had a relationship with the International Monetary Fund and the United States Treasury.
Notwithstanding the claims, Jeffers and Minderhout were making promises about programs that never existed. The representations made by Jeffers and Minderhout were similar to those made by perpetrators of “prime bank” or “roll” programs that were popular scams in the 1990s. The FBI, the Federal Reserve, the International Monetary Fund, the Office of the Comptroller of the Currency and the Treasury Department have all issued advisories and warnings to the public about these “high-yield investment” scams.
While Jeffers and Minderhout promised investors profits of up to 4,000 percent, most of the money collected in the scheme went to Jeffers to pay commissions to salespeople, to make payments to investors to keep the scam alive and to pay his own personal expenses.
The money laundering counts to which Jeffers has agreed to plead guilty carry a maximum possible sentence of 60 years in prison and a potential fine of $1.5 million. It is anticipated that Jeffers will receive a sentence of at least 10 years in prison. Jeffers is also expected to be ordered to pay more than $25 million in restitution to the victims.
Judge Timlin jailed Jeffers on July 7 after finding that Jeffers violated the terms of his release on bond. After a hearing on that date, Judge Timlin determined that Jeffers obstructed justice and tampered with a witness from whom Jeffers received money after he was indicted.
Minderhout is scheduled to be sentenced by Judge Timlin on September 13. Minderhout faces a maximum possible sentence of 15 years in prison, however the plea agreement in his case recommends a sentence of 57 months.
This case is the product of an investigation by the Federal Bureau of Investigation and IRS-Criminal Investigation Division.