SEC Moves Against Real Estate Group

The Californian 2/28/08

MURRIETA -A federal agency alleged Wednesday that three Murrieta-area men sucked $11 million from 75 amateur investors they recruited through networks of church friends and military comrades and then left a trail of more than 100 foreclosed houses in their wake.

The complaint, filed in U.S. District Court in Riverside by the U.S. Securities and Exchange Commission, seeks a federal court order barring James Duncan, Hendrix Montecastro and Maurice McLeod from continuing to offer the sort of investments that it alleges to be fraud.

The agency generally doesn't file criminal charges, but an attorney for one of the men said the allegations left little doubt that other federal agencies would follow up with prosecutions.

The securities commission Wednesday also demanded in the complaint that the three men repay an unspecified sum to their investors and potentially to lenders, who were left holding $120 million in bad mortgages. Some of Murrieta's most upscale neighborhoods, including Bear Creek, Copper Canyon and Greer Ranch, are dotted with foreclosed homes that the three men and their clients bought and later abandoned.

Finally - some response from a law enforcement agency. Frequent readers of my blogs and local columns have been aware of this mortgage fraud scam as early as 2005. Our Association and our attorney documented 64 cases in 2005 but have not been able to get our DA, AG or the FBI to act.

Finally last year the Dept. of Real Estate pulled the Brokers license, but only after the documented case load had expanded to 128 properties and numerous copy-cat's had pushed that number far higher. The impact this has had on our community has been enormous, helping propel our market into the the #1 or #2 spot among California cities for foreclosures. Our cities and county are being presented with critical revenue decisions because they based budgets on inflated property values which have now declined by as much as 40% during the past 18 months.

Our Association, the Southwest Riverside County Association, has joined with the Inland Valley Association (City of Riverside) to form a Fraud Task Force representing over 10,000 Realtors in an effort to:

1. educate our citizens to beware of these mortgage fraud scam
2. head off new scams aimed at foreclosure fraud and reverse mortgage elder abuse
3. work with our city governments to provide citizens an avenue of recourse
4. pressure law enforcement to get involved

We want our customers and our elected city and county leaders to know that Realtors are part of the solution - not part of the problem. Hopefully this action will send a message to perpetrators that this activity will no longer get a free pass in our community. We have worked very closely with our two daily newspapers to shine a light on this problem and we appreciate the cooperation we have received from the local media in our efforts.