Criminal charges filed in massive Temecula and Murrieta real estate fraud case

Posted By jose.arballo On November 19, 2009 @ 3:53 pm In Business, Courts, Crime, Local News, News | No Comments

The head of an investment company described by authorities as a “con man” who bilked victims out of millions of dollars, much of it coming from real estate fraud in Murrieta and Temecula, has been charged with nearly 250 criminal counts, prosecutors announced Thursday.

James Benjamin Duncan, 38, known in some circles as “James the Cash King,” has been charged with 249 felonies, including conspiracy, elder abuse, grand theft, securities fraud and identity theft, Riverside County District Attorney Rod Pacheco announced at an afternoon news conference Thursday.

Others involved in the case have also been charged, including Hendrix Moreno Montecastro, 37; Helen Moreno Pedrino, 47; Maurice McLeod, 37; Charlie Sung Muk Choi, 34; Cindi Gayle Kelly, 33; and Thuan Nhan Du, 33.

Pedrino, Montecastro’s mother, was the one remaining suspect outstanding at the time of today’s announcement. However, Pedrino was located and arrested without incident around 6:20 p.m. at a Torrance fast-food restaurant, authorities said.

Pacheco said Duncan will likely be arraigned Friday. The defendants are being held in lieu of millions of dollars in bail. Before they can be released, Pacheco said, the defendants must prove their bail money was obtained legally.

According to a news release, the crimes include the selling of fraudulent securities leading to a loss of more than $17 million, as well as mortgage fraud leading to a loss of $124.5 million throughout Riverside County. The defendants carried out similar schemes in other areas of California and Arizona, authorities said.

“This is a con man,” Pacheco said during the news conference, which featured the playing of a on-line video of Duncan promoting his money-making ventures. There were also representatives from several federal agencies, including the U.S. Attorney’s office and Inspector General, because there were also federal charges involved in the case.

Acting U.S. Attorney General George S. Cardona said the case was complex and the cooperation between federal and state officials was essential to deal with the “shocking level of greed.”

The defendants created several false companies, including Pacific Wealth Management and Stonewood Investments, advertising a quick return of monetary investments through Internet advertising, large investment seminars and word of mouth by victims and the defendants, according to a news release.

Pacheco said Duncan would host seminars, including some in Temecula and Murrieta, where potential investors were promised huge returns, as high as 19 percent, with no risk. The defendants used these investment schemes to help pay for other schemes, like those involving real estate and homes that would end up in foreclosure, or keep it for themselves.

Duncan in a series of online videos, would promise high yield for his victim’s investments while he pocketed $19 million for himself by failing to provide his promised returns. Duncan operated similar investment scams in Iowa, Wisconsin and Washington. As a result, all three states issued cease and desist orders and he was forced to leave.

Duncan has a “long and undistinguished history,” Pacheco said.

“He left those state, but unfortunately he came to California,” Pacheco said.

The United States Securities and Exchange Commission (SEC) provided assistance in the criminal investigation, according to the news release. In 2008, the SEC filed a civil enforcement action against Duncan, McLeod and Montecastro, and entities they controlled.

Earlier this year, a federal judge in Riverside ruled in favor of the SEC by entering permanent injunctions against the defendants, ordering each of them to pay $130,000 in civil penalties, and ordering disgorgement of more than $30 million of ill-gotten gains.

The victims of the schemes included individuals and financial institutions, authorities said.

There were also those impacted by the scam beyond those who invested money with Duncan and his team, Pacheco said.

He said residents within neighborhoods where homes were left in foreclosure lost value in their property. He estimated there were 249 homes impacted in Riverside County, with the majority in Murrieta (150) and Temecula (47). Those losses cannot be measured, he said.

In some cases, Cardona said, the phony businesses had numerous phone lines assigned to the shell companies and the schemers misled banks into believing that prospective borrowers had significant assets when, in fact, the schemers were engaging in a mortgage fraud shell game built on lies to both their investors and the banks.

In plea agreements also filed today in United States District Court in Los Angeles, Christopher J. Oetting, 47, of Palm Desert; Linda Brooks, 54, of Murrieta; and Steven Kayden, 51, of Cathedral City; all have agreed to plead guilty to federal charges related to their roles in one or more investment schemes.

According to the news release, Oetting has agreed to plead guilty to money laundering and four counts of filing false tax returns, admitting that he played a key role in fraudulent enterprises that included the Total Return Fund investment fraud, the Stonewood Consulting mortgage fraud, and the fraudulent solicitation of investments in overpriced Iraqi dinars. Brooks and Kayden have each agreed to plead guilty to a single count of conspiracy, both admitting that they participated in the Stonewood Consulting mortgage fraud.

Pacheco said the group may have targeted Riverside County because of the housing boom that took place years ago. He also suggested that some victims may have been looking to make a quick dollar.

Pacheco and Cardona both warned that promises of riches with little risk should be looked at carefully, saying that if something sounds too good to be true, then it probably is.