Skip to comments.JV Huffman Sams over 500 for $35 million (plus)
Posted on 11/15/2008 9:54:52 PM PST by ChadsDad
CLAREMONT - J.V. Huffman Jr. confessed to scamming hundreds of investors out of millions of dollars, according to documents released Thursday by the U.S. Securities and Exchange Commission.
In a civil action lawsuit filed in federal court Wednesday by the SEC against the Huffman and his company, the Biltmore Financial Group Inc., the SEC said Huffman conducted a Ponzi scheme, pulling in 500 people in North Carolina and other states since 1991.
He raised about $25 million from these investors, who initially believed they were investing in a mutual fund. After Sept. 11, 2001, Huffman expanded his claims, and told investors the Biltmore Financial pooled investors' money to purchase and sell mortgages for a profit.
Huffman confessed to authorities a week ago, when the N.C. Secretary of State's office searched his home on Wishing Well Lane in Claremont, according to a release from the SEC. He told authorities he never invested the funds the investors gave his company, Biltmore Financial, and said he used new investor funds to pay the profits of earlier investors. Some funds were used for his lavish lifestyle, including an Aston Martin convertible, a $1 million RV, renovations to his home, vacations and rental properties.
"In a tragic example of the way a fraudster operates a Ponzi scheme, Huffman deceived neighbors and members of his church and religious community, as well as strangers, to finance his extravagant way of life," said Katherine Addleman, director of the SEC's Atlanta, Ga., regional office. "Huffman lied to get investors' trust and then spent their invested funds on fancy cars and vacation homes."
Huffman's wife, Gilda, was named as a relief defendant in the civil suit, so assets filed under both names could be attained, according to officials with the SEC.
An order also was filed in federal court Wednesday to appoint a receiver and freeze all of Huffman's and Biltmore Financial's assets. These include assets, money, securities and properties. A receiver's job is to take control of assets and ensure they're protected. Walt Pettit, of Kellam and Pettit in Charlotte, was appointed as the receiver.
According to the order, Pettit has the authority to manage, control and operate Huffman's estate. He can use the income, earnings and profits of the estate to take into possession any goods, money, lands, books or record of accounts, data or materials, conduct the business operations of Biltmore Financial and the properties they control and make any payments or dispose of assets as necessary. Pettit also can receive and collect money owed to Biltmore Financial and Huffman, and can renew or cancel lease agreements.
As the receiver, Pettit must file a preliminary report with the court within 45 days of the order, identifying the location and values of Huffman's and Biltmore Financial's assets, and any liabilities he had.
The receiver also is the individual who will ultimately decide how Huffman's profits will be divided up.
The order also states that funds be frozen, with the exception of $15,000 for living expenses for the Huffmans for one month. After one month, Huffman can apply to the court with a signed, sworn statement of financial condition for the amount they need for ordinary living expenses.
The scheme: Since 1991, J.V. Huffman Jr. operated Biltmore Financial Group Inc. Investors gave him $1,000 or more, and were told the money would be invested in a mutual fund.
After Sept. 11, 2001, Huffman changed his claims to investors by saying profits were generated by buying and selling mortgages. Profits fluctuated at market rates, but were guaranteed "never to drop below 0.00 percent."
Investors received monthly or quarterly reports, and were told they could withdraw their money without penalty in no more than 30 days. Biltmore Financial said its "approach is very conservative and tries to provide a healthy return at no risk."
According to the Biltmore Financial Group Company Dossier, which was sent to investors, interest rates paid to investors ranged from 8.02 percent one year to as high as 16.54 percent in 2007. In Huffman's first year, 1991, interest was 10.15 percent.
Other information provided to investors stated that "measures are taken to insure against any loss. Included but not limited to various forms of insurance from: State Farm, Thrivent Financial, American Express, Asset Guarantee, Securities Investor Protection Corporation." It also states the company's assets are insured and secured by the FDIC, SIPC and Thrivent Financial Services.
I’m just glad that I wasn’t sammed.
Sounds like the guy's got a future working for Social Security.
Sounds like his investors got lucky. If they'd have bought Fannie Mae or Freddy Mac, they'd have actually been invested in buying and selling mortgages and would have lost almost all their investment. This way, when they sell the cars and RVs and houses the guy actually bought, the investors will get some of their money back. Lucky day!
Is he eligible for bailout funds?
This is a very, very big deal around here. Just thought my friends at fr would have some good insights. Read the Blogs at The hickory daily record, or google “topix claremont NC”
He did give to Patrick Mchenry. But he gave to everyone, real big local philanthropist, all with stolen money of course.
Poor guy, having to scrape by on only $15K a month. He may even have to switch to a cheaper grade of caviar.
J.V. Huffman Jr., 44, president of Biltmore Financial Group Inc., was arrested Nov. 7 and charged with four counts of felony securities fraud. He is in jail under a $1 million secured bond.
Huffman is accused of issuing promissory notes through his company. He told investors the funds would be used to buy and sell real estate mortgages or deeds of trust. Investigators with the N.C. Secretary of States office believe Huffman took investors money for personal use.
By Sarah Newell Williamson | Hickory Daily Record
Published: November 13, 2008
A visibly frustrated Sandra Porter attended a meeting Wednesday night for people who invested in the now-defunct Biltmore Financial Group Inc. She left the same way.
Porter and her husband joined more than 300 investors at St. Peter’s Lutheran Church to learn what could be done about the money they invested in Biltmore Financial Group with J.V. Huffman Jr.
Representatives from the district attorney’s office, the N.C. Secretary of State’s office and the U.S. Securities and Exchange Commission attended the meeting.
“I want to know why they didn’t put the accelerator on the investigation when they first suspected he might have been doing something?” Porter said. “If they first started looking into this in February or March, why didn’t they do something then? It could have saved a lot of people a lot of money. I bet he got another 75 or 80 clients this year.”
Eric Bellas, with the district attorney’s office, assured the group the investigation into Huffman’s actions is continuing and he faces criminal and civil charges.
Huffman was charged with four counts of securities fraud. He could face more charges, according to the N.C. Secretary of State’s office. Huffman’s civil suit will play out in federal court, and is being brought by the Securities and Exchange Commission.
“We’ve filed a lawsuit against Mr. Huffman and the Biltmore Group, and his wife is a relief defendant,” said Bill Dixon, with the SEC. “That means she’s not named, but we allege she has gotten proceeds.
The defendants are not fighting us on this lawsuit. We have appointed a receiver, and his job is to locate and ID all assets.”
A receiver is appointed to preserve the property when litigation has been brought against a person or when property might be lost or removed without the receiver.
Dixon described Huffman’s business as a typical Ponzi scheme. These schemes follow the “rob-Peter-to-pay-Paul” principle. He said although the receiver would try to distribute the assets fairly, investors should be prepared to suffer a loss.
Porter’s husband, Richard, was concerned about the upkeep of Huffman’s home. If it deteriorates with no one living there, so, too, does their investment.
“My major concern is the preservation of property, so we can recoup our money,” he said.
Huffman’s secretary, Tameria Smith, also spoke. She said anyone who thought she knew what Huffman was doing was mistaken. Between she and her husband, their parents and extended family, they invested more than $1 million in Huffman’s company. As the wife of a pastor, Smith said she thought he used her as a cover.
“I worked sometimes an hour a week, sometimes five hours a week. My job consisted of writing numbers on a piece of paper and putting a check in a box for Mr. Huffman,” Smith said. “I never knew anything about the business, other than what he told client after client. I assumed that’s what he did, and never questioned that.”
Now she’s in the same position as many others in the surrounding area.
The SEC receiver will establish a Web site in the coming days with information about the situation.
By Sarah Newell Williamson | Hickory Daily Record
Published: November 12, 2008
HICKORY - J.V. Huffman Jr. lives in a big house, drives flashy cars and spreads his money around generously, people say. He’s also now sitting in jail, after being arrested this weekend for allegedly duping many in a widespread scam that sent ripples across the nation.
Many people who invested in Huffman’s corporation, Biltmore Financial Group Inc. (BFGI), believed they were investing in mortgages bought and resold for a profit. Huffman told investors the more money they invested, the higher their percentage of interest. He claimed BFGI’s assets were insured and secured by the FDIC, SIPC and a Thrivent Financial Services insurance policy, in the event of his death, according to a search warrant.
Now those investors are scrambling for answers.
Phyllis Owens lives in Colorado. She and her husband, Tom, began investing money with Huffman and BFGI in 2001. Owens said she was introduced to Huffman by her sister and brother-in-law, who knew Huffman from church and also invested their money with BFGI.
Through the years, Owens, 68, and her husband invested about $100,000 with BFGI. She wasn’t the only one in her family who invested with him. Her sons, sister and brother-in-law did, as well.
“We never had any trouble getting our money out when we needed it,” Owens said. “Our mother had her money with him, and when she died, he distributed all of her money properly. He sent us a check, but we reinvested it with him.”
The Owenses were getting 12.25 percent interest, and 0.75 percent interest bonus rates.
“The bonus and interest rates were according to how much you invested. The highest was 13.75 percent, the lowest was 8 percent,” Owens said. “The more you put in, the more you got. It was an incentive to invest.”
Owens said she and her husband planned to retire using money from their investment with BFGI next spring. That likely won’t be possible now.
“We trusted him because we knew him, because he was a Christian and he’d been in business 17 years,” Owens said. “We were with him in 2001 when the market dropped, and we rode it out.”
Another couple, retired and living in Florida, didn’t know anything was wrong with BFGI until they tried to withdraw money from their account. They live on the money they have invested with BFGI, and withdraw money from their investment every few months to pay the bills, they said, asking not to be identified.
On Nov. 6, they faxed Huffman, telling him how much they wanted to withdraw. They didn’t hear back from him, which was unusual, they said. They e-mailed him Saturday, and still didn’t hear back. On Monday, they called Huffman’s cell phone and his secretary’s phone, both of which were out of service.
When they called Huffman’s house phone, they finally reached his son, who told them Huffman was in jail.
The Florida couple said they don’t know what they will do for money. Both in their 70s, they have no money and are facing the prospect of losing their home.
“The money would have been in mutual funds if it wasn’t with him,” the wife said. “We would have lost a lot of it, but not all of it.”
One man in Arkansas invested several hundred thousand dollars with BFGI. He admitted the investment opportunity Huffman presented sounded too good to be true, but, like many others, he knew people who had invested with Huffman for several years and vouched for him. He said that was enough to convince him to invest.
“I questioned it all along, but when you have family who knows him, you trust him,” the investor said.
He ran an online financial report on Huffman, looking for any debts in his name. He didn’t see any red flags, so he began investing money.
When the sub-prime mortgage crisis hit, the investor called Huffman with detailed questions, trying to trip him up. However, Huffman had an answer to every question.
“He said he only dealt in five- to seven-year mortgages and the competition is tough, but there was still money to be made. He said he may have to reduce the five- to seven-year mortgages to two- to three-year mortgages, but it would be OK,” he said. “He had an answer for anything I asked.
Everyone believed what he said, but it was all a hoax.
“I had money for kids, education, retirement, everything. It’s all gone,” the investor said, mentioning he has three children who will be going to college in a few years.
His parents also had their retirement money invested with BFGI.
“My dad just had surgery, and I don’t have the heart yet to tell them that everything they have is gone,” he said. “This is miserable to me, but I’ll figure it out. I don’t know how they’ll figure it out.”
He said he has no choice now but to start building up his savings all over again.
“I have to start over day by day, little by little. You make decisions based on what you think you have. Now, we have to start over,” he said.
Word is wife and kids are hiding out at his house at myrtle beach or the mountain cabin in Boone.
Just. He voted that he did not to be part of a normal society. He voted so lets help him. Trie him and execute him quickly
Posted by ( avgcitizen ) on 11/14/2008 at 08:02 am.
I have known of the Huffman family my entire life and would like to express some of my feelings. It is amazing how many people are sympathetic to the Huffman family saying they have lost a lot and how innocent they are because they didn’t know what was going on. Those who say this should be thinking of the hundreds of people who trusted JV and gave him their life savings-what about them? Sympathy should first go to them. Stop and think about itthe entire Huffman family has been living high on the hog for YEARS while benefiting from J.V.s lavish lifestyle. I find it hard to believe that his wife didnt suspect that he was scamming people. Think about it, she had to know—even if she wasnt involved in the scam with him. Also, if she truly was not a part of the scam, why was she not honest enough to have turned him in? It doesn’t take a brain surgeon to figure out that a man cant have all the money and possessions and power that JV had by staying home every day and not having a real job. Does Gilda Huffman expect people to believe she didnt know?-give me a break! It was obvious to a lot of people that there had to be crooked dealings going on, for him to get rich that fast. So why was it not obvious to his wife and his parents and other close family members that he was a crook? How could his wife live with him for over 20 years and his parents live right in his front door and not suspect, when outsiders suspected him? Do they really expect us to believe that they didnt have a clue? Anyone who believes this would believe anything! Gilda Huffman sure didn’t complain while she sat back and watched JV buy up all those possessions and keep adding more and more square footage to the compound. Bet she didn’t complain either when she used those $3,000 towel warmers and $3,000 showerheads and rode in those fancy cars! She sure was basking in the joy of all the cruises, the motor homes, the fancy cars, the trips, the indoor gym, the indoor home movie theatre, the I Love Lucy room (did hubby create this for her??). She wasnt hiding out or taking cover then. Same goes for his parents and his brothers. I dont believe they were in on the scam, but surely they had to know that he was scamming not only his friends, neighbors, & relatives, but theirs as well (in a lot of the cases) so the very least they could have done was to have turned him in, rather than stand by as they watched him scam more and more and more people and accept the lavish gifts he bestowed upon them as well. Therefore, in an indirect way, his wife and his family are also guilty!
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Posted by ( dababus ) on 11/14/2008 at 08:05 am.
He’s ruined generations of families for years to come. I have friends and relatives that will lose their entire retirement plans and college tuitions. The list goes on and on. I really hope he’s got big burly over friendly cell mate.
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Posted by ( avgcitizen ) on 11/14/2008 at 08:08 am.
dababus: I agree. I hope Big Burly Bubba is JV’s cell mate and takes care of him!
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Posted by ( consumer ) on 11/14/2008 at 08:36 am.
Probably the remaining millions are in a bank under a false account name maybe in another country.JV jr will may recieve 10 years if he goes to prison he will probably be out early for good behaviour he will only be in his early 50’s. He will probably be on probation for a few years then he will leave the country to “retire” this is my speculation.I could be wrong.
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Posted by ( dababus ) on 11/14/2008 at 09:02 am.
And he will make a ton of money selling the rights to make a cheesy B movie or book out of how he ripped off a whole christian community.
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Posted by ( athomemom ) on 11/14/2008 at 09:04 am.
avgcitizen If you knew the family your entire life and knew what a lavious lifestyle they ALL supposively lived, then why didn’t YOU suspect anything and why didn’t YOU report it since you knew all this information? Just curious?
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Posted by ( bigheaddaddy ) on 11/14/2008 at 09:05 am.
He is currently charged with 4 counts, but won’t there be a new charge for each investor he stole from? If so, this should add years to the possible sentence. If/when JV has a parole hearing, I’ll be there to do my best to make sure he never breathes a breath of “free” air again. I also hope that his future roommate at Central Prison gives JV a dose of “justice” each and every night. The maggot deserves everything he gets, and then some.
How many kids? They should be able to rent a decent apartment for $1200 a month, add in bus passes and food - $3k a month would seem generous. Perhaps the wife should be looking for a job.
You must be crazy. If he made all his political contributions regularly, only a minimal slap on the wrist. Probably not even a prison that has group showers.
This type is of a different class than the average citizen. He will not get a true trial nor punishment as we think of it.
Ankle bracelet at home in his mansion with trips to the private beach house in the summer.
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