Jan.12, 2010, 5:11pm PST

A federal grand jury on Monday returned an indictment on Folsom money manager Luis Fernandez charging him with money laundering and wire fraud.

The indictment alleges Fernandez collected $7.4 million from investors by promising them 3 percent monthly returns. That rate of return compounded would be more than 42 percent returns annually.

Fernandez was the owner and president of Fernandez Financial Inc, and his actions under the indictment are alleged between September 2004 and March 2009.

Fernandez invested about $4.6 million of the contributed money in the stock market, and he sustained losses in five of six years he invested.

The indictment alleges he caused losses to investors of about $2.1 million.

To lure new investors, Fernandez allegedly represented to his customers that his company was profitable when it was not by providing bogus documents tracking market gains. He also allegedly used a check from his business to buy a house in Folsom.