Jan.06, 2010, 8:04 PM

Federal agents today arrested a Hinsdale man on an indictment alleging he and a partner operated a Ponzi scheme involving their San Jose, Calif.-based investment company, Vesta Strategies.

John D. Terzakis of Hinsdale and Robert E. Estupinian of San Jose, Calif., were arraigned today in federal court on 12 felony counts of wire fraud, money laundering, and conspiracy to commit wire fraud and money laundering, according to a news release from the U.S. Attorney's Office from the Northern District of California.

The government also seeks forfeiture of almost $25 million from the two defendants,  United States Attorney Joseph P. Russoniello announced.

A federal grand jury in San Jose indicted Terzakis and Estupinian on Dec. 30, 2009. According to the indictment, Terzakis, 52, was the majority owner of Vesta and controlled its business activities, while Estupinian, 47, was the former Chief Executive Officer and minority owner until about December, 2007.

Vesta told investors it could allow them to avoid paying capital gains taxes because of real estate exchanges, but the two defendants stole client funds for their own use, and also used new client deposits to pay money owed to earlier clients, the indictment alleges.

The U.S. Attorney's release said shortly before the collapse of the scheme in July 2008, Terzakis and Estupinian sued each other in federal court in San Jose, blaming one another for misappropriating Vesta client deposits.

Terzakis was arrested in Hinsdale today and made his initial appearance in federal court in Chicago. He is in home confinement with electronic monitoring. His next scheduled appearances are on Jan. 13 in Chicago for further bail proceedings, and on Jan. 28 in San Jose federal court for further case proceedings before Magistrate Judge Patricia V. Trumbull, according to the release.

Estupinian was arrested in San Jose today and was put on home confinement with electronic monitoring, secured by a $1 million bond. His next scheduled appearance is at 10 a.m. on Jan. 20 before Trumbull.

Upon conviction, each defendent could face more than 20 years in prison, officials said.