The Securities and Exchange Commission added charges Wednesday to a Catawba County man, who it says took more than $25 million from investors across the country and spent the money on vacation houses, a home movie theater and an Aston Martin convertible.
The SEC charged J.V. Huffman Jr. and his Claremont company, Biltmore Financial Group Inc., with securities fraud in connection with what it calls a multimillion-dollar, 17-year Ponzi scheme. Huffman could not be reached for comment.
The actions, announced a few days after state authorities arrested Huffman, 44, on four counts of securities fraud, shed more light on the alleged scheme. According to the newest charges, filed in Federal Court in the Western District of North Carolina, Huffman sold $25 million in investments to more than 500 people, many of whom were part of the Lutheran community in the Claremont area, about 50 miles northwest of Charlotte.
Initially, he told investors his company operated like a mutual fund; he changed his pitch after Sept. 11, 2001, to ease fears about market volatility, saying Biltmore generated profits by pooling investors' funds to buy and sell mortgages, the SEC alleges.
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Instead, Huffman spent the money on luxury cars, a $1 million recreational vehicle, renovations to his massive Claremont compound and vacation and rental properties, the complaint says.
The SEC has obtained a court order freezing Huffman and Biltmore's assets. A number listed for Huffman's home and business has been changed or disconnected. After his arrest, he was being held in jail in Catawba County under a $1 million secured bond.
Some investors interviewed Wednesday had placed their entire savings in Huffman's hands, they said. Some had known him his whole life; others said he persuaded them to move their money out of traditional retirement accounts, promising higher interest rates.
“I told him, ‘Now, J.V., this is what I have to live on,' and he told me my money was safe,” said one Hickory woman, who asked not to be identified because she's in the process of consolidating her bills. “It turned my life upside down. It was the money I was going to live on the rest of my life.”
According to the SEC complaint, Huffman's operation began more than 17 years ago. He promised interest rates as high as 16.5 percent and told investors their money was insured by the FDIC, Securities Investor Protection Corp. and Thrivent Financial.
In company materials, Huffman claimed Biltmore's “approach is very conservative and tries to provide a healthy return at no risk,” the SEC complaint says.
Even as worries mounted recently about the subprime mortgage crisis, Huffman reassured investors, saying he only bought mortgages “with a good five- to seven-year history and a minimum equity position of 20 percent,” the complaint says.
The representations were false, the SEC's charges say.
On Friday, N.C. Secretary of State investigators, who conducted a parallel probe, raided Huffman's home on Wishing Well Lane, seizing documents and computer equipment. Huffman then confessed that he had never invested the money as he promised, used new investor funds to pay earlier clients and used the money for his own benefit, the SEC says.
Huffman is scheduled to appear in court in Catawba County Dec. 1.