S. California Duo To Get Hard Time In Mortgage Scam That Duped Homeowners Into Investing Proceeds From 'Cash-Out' Refinancings In Bogus R/E Program

In Southern California, The Press Enterprise reports:

• The accused ringleader of a $142 million mortgage and securites fraud centered in Southwest Riverside County agreed Monday to spend nearly 20 years in state prison rather than go to trial. James B. Duncan, who prosecutors say masterminded the scheme, and Maurice McLeod, his alleged second in command, both agreed in court to negotiated guilty pleas.

• The two men, both from Murrieta, were arrested with five other defendants more than a year ago for their roles in what authorities described as a series of complex investment scams that enabled the top organizers to live lavishly and defraud hundreds of investors in California and Arizona, pushing 201 Riverside County homes into foreclosure. After a day of negotiations at the Riverside County courthouse in Corona, the Riverside County district attorney's office reached settlements with lawyers for the two men.

• Duncan, 40, pleaded guilty to six counts of securities fraud and one count of corporate identity theft. Superior Court Judge Patrick F. Magers said if Duncan abides by the terms of a memorandum of understanding with the district attorney, he will receive a sentence of 19 years, eight months in state prison. If he fails to comply, the sentence will be increased to 22 years.

• McLeod, 38, pleaded guilty to five counts of securities fraud, and agreed to a memorandum of understanding under which he will receive a prison sentence of six years, with credits for time already served if he complies and 12 years if he does not.

• Deputy District Attorney Cormac Kehoe had the court seal the terms of the memorandum, until the state's case against the five remaining defendants is resolved. Formal sentencing could occur as early as May 5.

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• Victims allegedly were recruited on the promise that they would become wealthy and achieve their dreams in three years. They were prone to believe the pitch because they were referred by friends, relatives or co-workers, investigators said.

• The investors said they were persuaded to refinance their homes to buy multiple investment properties, primarily in southwest Riverside County, with the guarantee that mortgage payments would be covered. However, ultimately the mortgage payments stopped and the houses fell into foreclosure.

For the story, see Murrieta men agree to prison in fraud case.

(1) In all, the seven defendants were accused of 249 felony counts that included securities fraud, grand theft, elder abuse and corporate identity theft, the story states. In previous testimony, an investigator described an elaborate scheme to shield Duncan and associates from the law, including bank accounts in Malta and the Cayman Islands, according to the story.