The Murrieta (CA) Real Estate Scam

The accused: James B. Duncan, Hendrix Montecastro (a real estate broker), Maurice E. McLeod

Offense: violated Federal Securities Laws – seeking restitution for “ill-gotten gains”

Also Named: Pacific Wealth Management, Stonewood Consulting Inc and Total Return Fund LLC

The opportunity: Investors in Southern California, Arizona and elsewhere were invited to participate (invest) in the California Real Estate Boom.

The recruits: Military Personal, Filipino families and church members

The Scheme: The investors (recruits) were directed to purchase more than $118 million worth of homes (many in Murrieta).

The Fraud: Falsified loan applications allowed the investors to purchase multiple properties; inflated appraisals allowed excess mortgage proceeds to go to Duncan, Montecastro and / or McLeod.  Those excess fees was more then $100,000 on some transactions.  Investors were told the excess fees would be invested – and those investments would cover the mortgage payments on the properties the investors purchased in their own names, not covered by the rental income.

“Stonewood typically paid $50,000 to $100,000 more than the listed sales price for a house.  Sellers received their asking price and the remaining money went to Stonewood agents in the form of commissions.  The prices investors paid for the houses were justified by appraisals that Stonewood ordered.”

The Harm Done: Because the investors (recruits) often borrowed money from lines of credit, credit cards and retirement funds – in the end the money was gone the properties foreclosed and their credit ruined.  Lenders who made the loans based on false income and appraisals ended up with loans exceeding value and eventual foreclosures (any deception to a Federal Lending Institution is a Federal Offence).  And the perpetrators pocketed tons of cash (Montecastro was estimated to have pocketed millions).

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