Chris Bagley at the Californian forwarded this great article. Some of you have been following our saga with these gentlemen for the past few years. This was the original group in our area to pull off the old $150,000 overpay scheme. That and some investment ‘vehicles’ that the SEC cracked down on last year. Our Real Estate Fraud Task Force, which we formed nearly five years ago with the Inland Valley Association, was initially in response to this group. They operated under the umbrella of Stonewood Financial and a variety of aliases. Chris at the Californian, Leslie Berkman at the PE and others invested a lot of research and ink in this effort as well.
As a result of this case we have developed a very good working relationship with our District Attorney’s Office and have initiated a statewide effort with CAR to add real estate fraud to our statewide agenda. We have also given numerous Fraud Prevention presentations to City Councils, County groups and civic organization as part of the program you’ve seen as my tagline in the Mortgage Fraud Group.
Realtors. We’re part of the solution – not part of the problem.
While the amount awarded doesn’t represent the total damages these individuals wreaked on our community, it’s a good start.
HOUSING: Judge puts $59M price tag on fraud allegations
By CHRIS BAGLEY – [email protected]
RIVERSIDE —- A federal judge ruled that two Murrieta-area men defrauded dozens of investors and ordered them on Monday to repay a total of $58.6 million.
The order followed a civil lawsuit in which the U.S. Securities and Exchange Commission accused James Duncan and Hendrix Montecastro of selling unregistered securities and defrauding investors through fabricated investments. Judge Virginia Phillips agreed with the bulk of the agency’s claims and noted that Duncan and Montecastro had invoked their Fifth Amendment rights not to offer testimony that could be used in a subsequent criminal prosecution. An attorney for one of the men cited an FBI raid of their homes in February 2008 for the refusal to testify.
In a separate lawsuit, former clients allege that Duncan and Montecastro roped them into a real estate investment arrangement that pushed about 100 homes, most of them in Murrieta, into foreclosure in 2006 and 2007.
Phillips ordered Duncan to repay $30.3 million and Montecastro to repay $28.3 million, amounts that include interest. Maurice McLeod, a co-defendant who settled some claims with the SEC last year, was ordered to repay $483,000. Phillips ordered fines of $130,000 for each of the men and ordered them barred from offering investments in the future.
“The wrongful conduct continued over the course of at least three years and defendants evolved their conduct to evade detection as well as to continue to separate investors from their money,” Phillips wrote. “Defendants have not recognized the wrongful nature of their conduct and have not given any indication that they will not engage in su