MORTGAGE: A Temecula woman says hundreds of property investors faced foreclosures and more.
10:00 PM PST on Friday, January 12, 2007
By LESLIE BERKMAN
The Press-Enterprise
At least 400 investors, many of them part of Southwest Riverside County’s Filipino community, are said to be victims of a mortgage-fraud scheme detailed in a lawsuit amendment filed Friday in Riverside Superior Court
The anonymous plaintiff in the original Jan. 5 filing was identified Friday as Vicky Reiss, a 40-year-old nurse from Temecula. The complaint also extended the list of defendants to include, among others, Stonewood Consulting Inc., Pacific Wealth Management and its operators, James Duncan and Maurice McLeod.
Pacific Wealth Management, a Nevada company named as a defendant, is not affiliated with the San Diego investment company of the same name, according to the suit.
In addition, the Riverside County district attorney is investigating the same investment group for possible violations of the law, said Deputy District Attorney Raymond Ramirez.
Friday afternoon, William H. Sauls, attorney for Stonewood Consulting, and Stonewood President Hendrix Montecastro, were not available for comment. Montecastro is named in the lawsuit as “the principal operator of the entire scheme,” and the contact between the investors and the other defendants.
James Duncan, who is an Orange County resident associated with Jovane Investments, named as a defendant in the original lawsuit, declined comment.
The amended lawsuit said starting about November 2004, the defendants held investor meetings to encourage Temecula and Murrieta residents to purchase houses in the area as investments.
The suit says the defendants falsified loan applications, charged excessive fees and opened lines of credit in the names of the investors.
According to the suit, the properties were appraised above the market value and surplus proceeds from mortgages were routed directly to the investment group rather than the buyers. The lawsuit said the defendants promised to rent out and manage the properties and pay the difference between the rent and the mortgages, an amount that for Reiss totaled $20,000 monthly on five houses.
In late 2006, the lawsuit said, the defendants demanded that the investors, including Reiss, cash out all of their open lines of credit and pay the proceeds to the defendants or face foreclosure. Other investors were told to cash out retirement and other accounts or be financially ruined, the lawsuit said.
Reiss said in an interview that because she depended on the defendants to pay the mortgages, she had difficulty saying no to their demands.
“I felt these people had a noose around my neck,” she said.
Richard Ackerman, Reiss’ lawyer, said in November that Reiss and other investors stopped receiving money from the defendants to pay their mortgages.
According to the lawsuit, at recent meetings with investors, including one on Wednesday, the defendants promised to continue making mortgage payments only on the investors’ primary residences, with the rest of the houses likely going to foreclosure because of the defendants’ alleged inability to release investment funds.
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