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The Securities and Exchange Commission announced that
it obtained an emergency order freezing the assets of a Texas man accused of
operating a $35 million Ponzi scheme through the sale of distressed mortgages. James
G. Temme, 42, of Plano, and the entities he controls, including Stewardship
Fund, LP, were charged with multiple violations of federal securities laws,
including the Securities Act of 1933 and the Securities Exchange Act of 1934.
In addition to the emergency asset freeze already obtained, the SEC is also
seeking injunctive relief, civil monetary penalties, and disgorgement of
ill-gotten gains with prejudgment interest.
According to the SEC, Temme controlled various limited
partnerships, including Stewardship, which functioned as the general partner of
at least sixteen entities through which interests were marketed to investors. Since
at least 2008, Temme lured potential investors by describing a plan to purchase
non-performing home mortgage loans. Temme would then work with homeowners in
restructuring the non-performing loans into performing loans. Investors would
then share either in the payment stream from those performing loans or
from the resale of the repackaged mortgages or underlying properties.
Prior to the SEC instituting its enforcement action,
Temme and the Stewardship entities were the targets of multiple civil lawsuits
that raised similar allegations. However, rather than curtail the fraud, the
SEC alleges that Temme continued to raise funds from new investors. This
included at least $1.6 million in a Texas bank account, which represented the
recommendation of the Stewardship Philanthropy Fund 4, LP ("SPF") by
an investment adviser representative of a major investment bank. That account
was later closed due to questionable activity, but Temme continued to move
funds around in efforts to pay various investor groups. But Temme did not stop
there and continued to solicit new investors. In early 2011, Temme pitched the
newly-created Equitas Housing Fund III, LP, which also promised to acquire
non-performing home loans. This resulted in new investor funds exceeding $3
million. Since 2008, Temme raised at least $35 million from over 30 individuals
The SEC has also sought the appointment of a receiver to
marshal assets for the benefit of defrauded investors. A hearing has been
scheduled by United States District Judge Michael Schneider for October 27th.
A copy of the SEC's complaint is here.
For more news and analysis of Ponzi schemes, visit Ponzitracker, a
blog by Jordan Maglich, an attorney at Wiand Guerra King P.L.
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