American-based channel CNBC Prime has shed light on the story of two California fraudsters who stole millions of dollars from clients and spent it on luxury homes, cars and holidays, including in Malta. The latest episode of American Greed was broadcast on Friday.
It focused on the $142 fraud scheme masterminded by James Duncan and his partner Hendrix Montecastro, who duped investors out of millions of dollars, spending nearly $30 million on "personal expenses."
Duncan was sentenced to 19 years in 2009 while Montecastro was jailed for 81 years. There were seven people arraigned over the fraud that took place between 2004 and 2008.
The CNBC Prime show aired footage filmed at seminars organized by Duncan and Montecastro, during which they duped unsuspecting investors into buying undervalued properties. The programme explained that they would find a home that had originally been appraised at $580,000 but the selling price had dropped to $500,000. They bought the houses for their clients for $500,000 but used the original appraisal to take out loans of $580,000. "Almost magically, $80,000 has been conjured out of thin air." The money, which they called a "concession fee" was kicked back to a company they had set up from Duncan's home in 2004, Pacific Wealth Management. Duncan and Montecastro then told their clients that the extra $80,000 would be invested into anything from real estate, to foreign currency or that it would be used to pay the mortgage until the houses were sold for a profit.
Their clients ranged from wealthy businessmen to military personnel. The fraudsters even targeted members of their church, taking advantage of their "faith in god" and greatly exaggerated their property portfolios.
Between 2004 and 2006 Duncan's company purchases $118 million worth of properties in clients' names, netting more than $10 million in concession fees. Almost none of it is invested in anything but themselves. James Duncan had a network of shell companies he used to launder money. While clients faced foreclosure and bankruptcy he and his partner burned through nearly $30 million of their money.
American Greed aired pictures of Duncan and Montecastro during their lavish Hawaiian and Malta holidays, including pictures of Duncan posing in the stockade at the Mdina Dungeons and on a boat off the coast of St Julians. He allegedly also made bank deposits in Malta. The two spent $1.7 million from client money in 2004, $4.8 million in 2005 and $10 million in 2006, at the peak of the fraud.
In part of the footage of one of Duncan's seminars he told clients that he "cared about what they wanted in life and would run through a brick wall to make sure he did everything in his power to get them what they wanted."
Despite telling investors about being a good Christian and a man of God, Duncan, who styled himself as 'James the Cash King,' routinely used prostitutes and gambled in Las Vegas.
Police caught up to him in 2008 after a potential client became wary of the strict rules she was told she would have to follow and realized that Duncan was making use of the name of a real company. By that time, he had masterminded a $125 million dollar investment scheme that victimised hundreds of investors.
The pair, along with five other people, was charged in court in 2009. Hendrix Montecastro portrayed himself as the victim of "ringleader" James Duncan. He faced 311 felony charges, including grand theft by false pretenses and securities fraud. He was sentenced to 81 years, eight months.
Duncan, who cooperated by serving as the key witness, was sentenced to 19 years and eight months in He was also ordered to pay $3.4 million in restitution to 33 victims. His victims complained that the sentence was not nearly enough for someone who had destroyed many lives and left families in debt.