SEC Charges Three Promoters for Victimizing military families in real estate investment scheme

SEC, Mar 03, 2008

The Securities and Exchange Commission today charged three promoters who targeted military families in a multi-million dollar investment scheme that forced victims into personal bankruptcy and their homes into foreclosure. The scam also targeted other affinity groups, including the Southern California Filipino community and fellow church members.

The SEC's complaint names James B. Duncan and two others — Hendrix M. Montecastro and Maurice E. McLeod — who solicited investors in Southern California, Arizona, and elsewhere using sham investment seminars and "referral partners" including a member of the Air Force who solicited his fellow servicemen. The complaint alleges they gained control over investors' finances by offering them securities in the form of real estate investment contracts, and purporting that the money investors earned would help make mortgage payments on investment homes purchased on their behalf. Instead of investing client funds as promised, they operated a Ponzi-like scheme by using money from new investors to make mortgage payments on previously purchased investment homes. When the scheme unraveled, it cost more than 75 investors an estimated $10 million.

During the Military Saves Week public service initiative taking place from February 24 to March 2 to highlight the Department of Defense's ongoing financial readiness campaign, the SEC is reminding military personnel and other investors to beware of affinity frauds.

"The SEC will do everything in our power to pursue con artists that aim to cheat the honorable men and women who serve our nation and risk their lives to protect our freedom. We owe it to our military personnel to ensure that their personal finances are guarded from fraudsters that prey upon their trust," said SEC Commissioner Paul Atkins, who will speak to military personnel at Naval Station Norfolk during Military Saves Week and has helped educate military families on investing during his visits to military bases around the country and abroad.