RIVERSIDE, CALIF. (CN) – Three Murrieta-based men targeted military families in a $10 million real-estate Ponzi scheme that forced people into bankruptcy and cost them their homes, the SEC claims in Federal Court.
James B. Duncan, Hendrix M. Montecastro and Maurice E. McLeod recruited at least 75 victims through bogus “investment seminars” run by their companies, Pacific Wealth Management and Stonewood Consulting, the SEC says.
The alleged Ponzi scheme is known as an “affinity scam,” as its operators target victims in like-minded groups and encourage them to recruit others. The defendants are accused of getting their hands on their victims’ money by selling them securities in the form of real estate contracts and promising the money earned would go toward mortgage payments on investment homes bought on the victims’ behalf. But it was a simple Ponzi scheme, in which new money paid off old debts until it collapsed, the SEC says.
In a separate but related case in Los Angeles, the SEC says that Duncan, a securities recidivist, raised $1.2 million from 20 victims in a separate offering of “preferred membership units” in Total Return Fund LLC, a similar scam.
The Commission says the men charged exorbitant fees, submitted false loan applications and failed to disclose Duncan’s history of securities violations. They allegedly promised that 95 percent of the money invested would be used to buy real estate, but actually used it to pay off old investors.
The complaint names Christopher J. Oetting, Anthony M. Contreras and the Biocybernaut Institute as relief defendants, saying they received ill-gotten gains from the frauds.