If I sound ecstatic it’s because the biggest fraudsters in our area have finally been charged! These three, Montecastro, Duncan and McLeod started their mortgage fraud scheme in Murrieta in 2004. Our association and our chief counsel started documenting the problem late that year. We took it to the District Attorney, the FBI, the Dept. of Real Estate, the Attorney General, local law enforcement, lenders, etc. – and nobody NOBODY would give us the time of day.
This scam was the incentive for our Association (SRCAR) to join our neighboring Association (IVAR) in a joint fraud task force with the Giardinelli Law Group. This effort has now expanded to include Ventura County, who had started their own, and Orange and San Diego County associations. We are trying to get our state association to at least give us a forum to educate other Realtors, lenders and the public about real estate fraud.
As Attorney Richard Ackerman puts it – ‘earlier intervention would have prevented a lot of damage to both investors and the community.’ These people operated unimpeded for at least three years, involving hundreds of homes throughout our valley. This spawned numerous copycats who saw that there was money to be made and no apparent consequences.
Their early scheme involved the over-bidding by $50,000 – $100,000 on homes, bringing in fraudulent appraisals, taking the excess at COE and then sticking the unwary buyers with the result. Often they preyed on the unsophisticated and found a trusting audience in their fellow Filipino community. Many Buyers purchased multiple homes with the understanding the Stonewood would help them make the over-payments until they could refinance in the rising market. Yeah, like that actually happened.
These severely overburdened homes started the collapse in our community in late 2006 yet the fraud continued. As the economy headed south virtually every one of the hundreds of homes they had caused to be purchased went into foreclosure. As they had focused on certain neighborhoods,it was not unusual to see 8 out of 10 homes on a single street vacant and blighted as a result.
5 years later, fraud is still with us and has morphed into other avenues to follow the trail of opportunity. But at long last there may be justice for these early perpetrators who played a large role in the early demise of our market.
Here’s to justice finally served. Helooooo Bubba !
For the complete article, please go to: Charges Filed in Major Fraud Case.
Criminal charges have been filed against James B. Duncan, Hendrix Moreno Montecastro and Maurice McLeod, three Riverside County businessmen who allegedly orchestrated a major securities and mortgage fraud that drove many investors to financial ruin in California and Arizona.
The defendants allegedly created a complex network of companies, the chief of which were Pacific Wealth Management (which has no relationship to the company of the same name in San Diego), Stonewood Consulting and Total Return Fund.
He said while the District Attorney’s complaint concentrates on securities fraud, the U.S. Attorney will file a separate criminal complaint accusing the defendants of mortgage fraud.
Richard Ackerman, an attorney representing 85 alleged victims in a civil lawsuit against the defendants, said “It’s about time” the DA and U.S. Attorney made the move.
“What my clients wanted from day one is exactly what’s happening today. They wanted to create enough pressure on law enforcement so these people would be prosecuted and put away for a long time for destroying people’s lives,” Ackerman said.
The defendants allegedly persuaded investors to buy multiple homes and then broke their promise to continue paying the mortgage payments and allowed the properties to go to foreclosure. Ackerman contends that this scenario involved at least 250 houses in southwest Riverside County and contributed t the tremendous loss of home values in the region.
Ackerman said he believes earlier intervention would have prevented a lot of the damage to both investors and the larger community.