SHERMAN, Texas (CN) - The SEC obtained an emergency order freezing the assets of a Plano man whose business, the Stewardship Fund, took in $35 million by "falsely telling investors he was using their money to buy and restructure pools of non-performing home mortgages," the SEC said Tuesday.
The SEC obtained the emergency order in Federal Court against James G. Temme, 42, and his company.
"Over at least the past three years, Temme has raised at least $35 million from investors seeking to purchase distressed residential mortgage loans so that those loans can be restructured in order to become performing loans," the SEC said in its 23-page complaint. "To lure those investors, Temme developed relationships with what potential investors understood to be legitimate persons and entities that 'vouched' for Temme, including an investment adviser representative with a major investment bank's private wealth management group (the 'IAR') and a Texas-based public company that provides services related to efforts to restructure residential mortgages. ...
"In the course of his offerings, Temme and Stewardship have made multiple material misrepresentations and have misappropriated investor funds. Their actions have resulted in a web of deceit. For example, Temme and, through him, Stewardship, have: falsely represented that investor funds would be used to purchase certain mortgages or property when in fact the investor funds were used to pay off other investors; falsely claimed to own mortgages or other loans they did not; and falsely promised different investor groups that he had purchased the same loans on their behalf.
"It appears this situation has only been inflamed by efforts by several investor groups to hold Temme and Stewardship accountable through private litigation. Rather than curbing Temme's fraud, this piecemeal litigation has only led Temme to fleece new investors. On at least one occasion when he was sued by a concerned group of investors, Temme lured new investors to obtain money to resolve the litigation, despite the fact that a Texas state court had issued an order freezing accounts over which Temme had control or signatory authority.
Through this conduct, Temme and Stewardship have violated, and, unless
enjoined, will likely continue to violate, antifraud provisions of the federal securities laws ... ."
The director of the SEC's Worth regional office said in a statement: "Temme took advantage of investors who believed their investments were helping homeowners restructure their mortgages. In many instances, it appears Temme was just pocketing the investments and using the proceeds for his own illicit purposes."
U.S. District Judge Michael Schneider set an Oct. 27 date to hear the SEC's request for appointment of a receiver and a preliminary injunction.
The SEC also seeks disgorgement and civil penalties.
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