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FBI Raids Homes in Fraud Probe

Investigation: Agents seize records from two former officials of bankrupt investment firm DFJ Italia of Irvine.

March 30, 2000|EDMUND SANDERS | TIMES STAFF WRITER

Government agents raided the homes Wednesday of two former executives at DFJ Italia, a bankrupt Orange County investment firm under investigation for allegedly bilking investors out of nearly $35 million.

The early-morning raids marked the first official confirmation that the FBI is probing the Irvine firm, which collapsed earlier this month amid charges of fraud.

FBI agents seized records and evidence from the homes of DFJ founder Luigi DiFonzo, who lives in a gated community in Laguna Niguel, and DFJ Vice President Ken Kuczway of San Juan Capistrano.

The FBI is looking for evidence of money-laundering, wire fraud and mail fraud, according to supervising Special Agent Gary Morley.

No charges have been filed.

Attorneys for DiFonzo and Kuczway did not return telephone calls. Previously, DiFonzo has attempted to distance himself from the problems at DFJ, claiming he left the company 18 months ago.

Investors in DFJ forced the company into bankruptcy last week, and a Santa Ana judge subsequently appointed an independent trustee to take control of the assets.

As many as 700 investors pumped nearly $35 million into DFJ, believing their money would be used for currency trading and investing in precious metals. So far, none of the investor money has been recovered.

Attorneys for investors allege the company operated as a Ponzi scheme, in which money from new investors was used to repay previous investors.

Steven Katzman, a Costa Mesa lawyer for the court-appointed trustee and a handful of investors, said Wednesday that he plans to take depositions next week of three former DFJ managers, including Kuczway.

"The goal is to try and find out what happened to the assets," Katzman said.

No deposition has been scheduled for DiFonzo or for another key DFJ official, Angelo Ales, who is in prison for an unrelated crime.

Times staff writer Edmund Sanders can be reached at edmund.sanders@latimes.com.

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