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.