$1.2 Billion Dollar Fraud Scheme Alleged in Southern California
Temecula, CA (PRWeb) January 14, 2007 -- The Temecula law firm of Ackerman, Cowles & Lindsley filed a 1.2 billion dollar claim against what are alleged to be the perpetrators of a vast real estate and currency exchange scheme taking place in Southern California.
Riverside County Superior Court Case No. RIC463483 (Anonymous Investor v. Jovane Investments, et al.) was filed by an investor who claims to have suffered $3,000,000 in damages on her case alone. The plaintiff seeks to have the matter certified as a class action later this year because there are another alleged 400 investors in the alleged scheme.
The amended complaint, filed on January 12, 2007, alleges that the operators of the Jovane Investment firm of Murrieta, and related businesses, including Stonewood Consulting, Inc., Pacific Wealth Management LLC (Nevada), Oetting Enterprises, and Sunburst Financial Systems, Inc., engaged in a real estate scheme involving perhaps as many as 5000 home loans in the Southern California region. The defendants are alleged to have incited members of the general public. members of the military, and nursing staff at Rancho Springs Community Hospital in Southern California, to get involved in a real estate business whereby "investors" could each become the owners of multiple residential properties throughout the Temecula Valley and Northern San Diego County.
It is alleged in the complaint that defendants allegedly involved in the scheme would artificially inflate the values of the homes, complete 125% loan to value mortgages in certain cases, give escrow kickbacks to sellers who received as much as $100,000 more than an asking price, and sell the investors on the idea of giving up excess proceeds out of the sale to investment companies for a great profit over a period of years. In some cases, $50-60k-a-year salaried employees had mortgage obligations that were more than $20,000.00 a month because they "owned" 5-8 homes. The defendant companies are alleged to have taken money from other investors to pay the mortgages on behalf of plaintiff and others. The scheme is alleged to be a traditional Ponzi scheme.
Additionally, other investors were alleged to have been duped into buying into Iraqi dinar investments where the alleged victims would pay more than sixty times the actual value of the dinars. The victims were allegedly not told about the true value of the dinars and the dinars were allegedly never delivered to the victims.
The allegations were referred to the Riverside County District Attorney's office back in November of 2006. However, according to lead counsel, Richard D. Ackerman, "I am quite certain that the district attorney's office is swamped with thousands of criminal cases and simply has to allocate investigation resources toward violent crime at this time. Justice will eventually prevail. Unfortunately, however, if action is not taken soon, our entire Southern California economy may suffer as a result of the type of practices alleged by the many victims in our case."
All told, it is alleged that the damage to investors, lenders, the county tax rolls, Southern California neighborhoods, and others is far in excess of the 1.2 billion dollars cited in the complaint.
The case has been assigned to Judge Dallas Holmes of the downtown Riverside Superior Court in Riverside, California, for trial. The plaintiff intends on working with alleged victim-lenders and governmental agencies in an effort to prevent hundreds of foreclosures and additional damage as a result of the alleged fraud. The victim lenders are alleged to include Bay Capital Mortgage, Community First Bank, GMAC Mortgage, Suntrust Mortgage, Aurora Loan Services, Home Eq Servicing, and SLS Loan Servicing. Numerous credit card companies are alleged to be affected by the currency scheme as well.
Defendant Pacific Wealth Management LLC and defendant Maurice McLeod, a principal of Pacific Wealth Management LLC, have already been ordered by this same judge to stop all investments activities in California under the name of Pacific Wealth Management LLC. The related case is captioned Pacific Wealth Management LLC v. Pacific Wealth Management LLC, Superior Court of California, Riverside Case No. RIC462505. The injunction order was entered on January 9, 2007.
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Ackerman, Cowles & Lindsley
RICHARD ACKERMAN
951-308-6454
E-mail Information
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Well, It is sad since people think they can trust anyone without any actual agreement and or a signed contract! I hate to say this I seached Google for Sunburst Financial Systems, and if any one did, they could easily have found this suspicious story about Sunburst Financial Systems of Palm Deserts in 2003 !!!!
Desert company cuts back business
PALM DESERT: Sunburst says it has no conection to MX Factors, which is
under investigation.
Thursday, October 23, 2003
By Devona Wells / The Press-Enterprise
A Palm Desert firm has sent its employees home and stopped accepting
investments after plagiarizing marketing materials from an Inland
company that is being investigated.
Sunburst Financial Systems also dismantled a Web site that "plagiarized
sales and marketing information out of MX Factors," said Sunburst
general manager Christopher Oetting by phone Wednesday. He declined to
say why biographical information on one of Sunburst's managers mirrored
that of Richard Harkless, the owner of MX Factors.
Riverside's MX Factors is being investigated by the U.S. Postal
Inspection Service and the Securities and Exchange Commission, and has
been accused in a recent lawsuit of operating a Ponzi scheme.
Like MX Factors, Sunburst Financial does not have a license to sell
securities in California, according to the state Department of
Corporations. In September, the no-license violation earned MX Factors
an order from the department to no longer accept money from investors.
Spokeswoman Kam Coveyou said she could not confirm whether such an order
would be issued to Sunburst or whether an investigation of the company
is under way.
Oetting said Sunburst and MX Factors are not connected.
"We are not MX Factors. We are not affiliated with MX Factors. None of
the principles of MX Factors are involved with Sunburst," he said.
But biographical information about a Sunburst director named Richard
"Rick" Nelson is very similar to that of Harkless.
According to literature from Sunburst and MX Factors, both Nelson and
Harkless have an MBA with an emphasis in business organization and
mathematical applications, were collection agents for a national firm in
1986 and started a company for clients needing protection from
collection agents.
Some sentences are exact duplicates, including: "This company was one of
the first in California to begin converting sole proprietors and
partnerships to limited liability companies. The company continues today
and has a client base of over 150 manufacturers and wholesalers."
Harkless could not be reached for comment Wednesday.
In August, Sunburst opened in Palm Desert, according to Oetting. The
company has pulled in $205,000 from nine investors, he said in a phone
interview. A company name is absent from the front door of the Sunburst
office on Fred Waring Drive. All business is conducted by phone, fax or
the Internet, he said.
Sunburst incorporated in California on Sept. 11 - two days after MX
Factors investors were notified in a letter that it was no longer taking
funds. Nevada records show MX Factors came to be in 2001.
Sunburst shut down its Web site and let go of its seven employees for a
week, said Oetting. He said he was acting on the advice of company
lawyers after he received a call Tuesday from Barry Minkow, an
investigator with the Fraud Discovery Institute. Minkow, jailed in 1988
for securities fraud, said he has been checking into Sunburst for two
weeks and turned over information he uncovered to a postal inspector and
the Securities and Exchange Commission. Minkow also shed light on MX
Factors and gave his research to the Better Business Bureau and has
since shared it with investors.
Sunburst saw MX Factors' literature and loved it, said James Duncan, a
Sunburst consultant. On its Web site, Sunburst advertised a 17 percent
yearly return to investors who put in at least $20,000. The money would
be used to finance other companies by purchasing accounts receivable, a
practice called factoring - the arrangement MX Factors offered its
investors.
"We thought we could do the same thing. Did we make some mistakes?
Probably. But, that's why we stopped. We'll pay the fines, face the
repercussion," Duncan said by phone.
Since MX Factors was ordered to stop taking investments, a trio of
lawsuits have been filed by investors and customers seeking their money
from the Riverside firm. Estimates put the amount invested in MX
Factors, which promised investors a 12 percent return every 90 days, at
$50 million or more. An Oct. 2 lawsuit asks for more than $26 million
and accused MX Factors of running a Ponzi scheme, which uses money from
new investors to pay the original ones.
Caren Singer, an MX Factors investor for more than two years, attempted
to acquire information by phone and in person Tuesday from Sunburst
after hearing about the company from another investor.
Singer saw the Web site before it was taken down and said, "I'm still
trying to catch my breath from the shock."
"This is way more than a coincidence," she said in a phone interview.
A San Diego accountant hired to reconcile the accounts of MX Factors
said Wednesday he's received financial documents from at least 150
participants. Dan Tobias said by phone that he hopes to have the job
done by the end of the year.
An e-mail newsletter warning investors about Sunburst was sent out
Monday by Venture Research Institute. The Lake Forest institute provides
information on private investments and issues warnings about ones it
finds violating laws and other guidelines.
"The suspicion is that Sunburst Financial is a continuing effort of the
folks that brought you MX Factors," the e-mailed warning says.
Staff writer Jonathan Shikes contributed to this story.Reach Devona
Wells at (9090 368-9559 or dwells@pe.com
http://www.frauddiscovery.net/sunburst.html
Now How much is the whole region and the industry is going to suffer? Ofcourse we all are going to suffer too.
Jeri
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