1 00:00:05,480 --> 00:00:10,300 In this episode of American Greed. Hey, everybody. James the Cash King here. 2 00:00:10,500 --> 00:00:14,940 Investment advisors James Duncan and Hendrix Monte Castro claim to have the 3 00:00:14,940 --> 00:00:16,860 tools to make investors rich. 4 00:00:17,240 --> 00:00:22,720 We're the 1%. They're the 99%. All the sheep go to Bank of America. 5 00:00:22,940 --> 00:00:25,220 All the stallions come work with us. 6 00:00:25,620 --> 00:00:30,200 But the home purchasing program they promote leaves investors on the hook for 7 00:00:30,200 --> 00:00:32,680 more than $100 million of debt. 8 00:00:33,000 --> 00:00:35,220 That wasn't financial freedom. It was financial chaos. 9 00:00:35,460 --> 00:00:40,780 While clients face foreclosure and bankruptcy, this slick -tongued duo 10 00:00:40,780 --> 00:00:43,320 through nearly $30 million of their money. 11 00:00:43,580 --> 00:00:44,660 That's not bad. 12 00:01:03,590 --> 00:01:07,750 Visionary entrepreneur James Duncan is a man with a heart of gold. 13 00:01:08,210 --> 00:01:09,610 Or so he says. 14 00:01:10,170 --> 00:01:12,530 I care about what you want in life. 15 00:01:12,850 --> 00:01:17,010 And I want to talk to you and find out what you want. And I will run through a 16 00:01:17,010 --> 00:01:22,290 brick wall to make sure that I do everything in my power to help you get 17 00:01:22,290 --> 00:01:23,029 you want. 18 00:01:23,030 --> 00:01:24,810 More like get what he wants. 19 00:01:25,590 --> 00:01:28,990 By the time law enforcement catches up to him in 2008, 20 00:01:29,710 --> 00:01:35,450 He has masterminded a $125 million investment scheme that victimizes 21 00:01:35,450 --> 00:01:36,450 investors. 22 00:01:39,650 --> 00:01:45,850 But this story begins under the sunny skies of Southern California in 2003, 23 00:01:45,850 --> 00:01:50,690 he and a friend named Hendrix Monte Castro turned this modest two -story 24 00:01:50,690 --> 00:01:54,430 in Murrieta into a company called Pacific Wealth Management. 25 00:01:55,100 --> 00:01:59,840 a name also used by a legitimate company in San Diego that has nothing to do 26 00:01:59,840 --> 00:02:00,840 with the scam. 27 00:02:00,980 --> 00:02:01,980 The plan? 28 00:02:02,420 --> 00:02:07,500 Convince investors that they can find hidden treasures that no one else can 29 00:02:08,000 --> 00:02:09,800 We are a counterintuitive organization. 30 00:02:10,320 --> 00:02:13,500 We find gold where gold does not exist. 31 00:02:14,620 --> 00:02:19,800 Through telemarketing, word of mouth, and seminars, Duncan and Monte Castro 32 00:02:19,800 --> 00:02:23,280 about the magical returns to be made in real estate investing. 33 00:02:24,040 --> 00:02:29,280 So you buy a house for $500 ,000, and basically a year later it's worth $550 34 00:02:29,280 --> 00:02:33,380 ,000. So there you have it. There's your 10%. But yet, what if you bought that 35 00:02:33,380 --> 00:02:35,140 property with a 5 % down loan? 36 00:02:35,380 --> 00:02:40,100 So you took $25 ,000 out of your pocket. You locked down a $500 ,000 house. Now 37 00:02:40,100 --> 00:02:43,280 it's worth $550 ,000. I don't know about you. I just doubled my money. 38 00:02:43,740 --> 00:02:45,520 What if you got a zero down loan? 39 00:02:47,320 --> 00:02:50,600 Does the word or term infinite return ring a bell? 40 00:02:50,860 --> 00:02:55,620 According to Duncan, it's a system he's mastered that can break the chains of 41 00:02:55,620 --> 00:02:56,900 financial uncertainty. 42 00:02:57,460 --> 00:02:58,460 I have freedom. 43 00:02:58,960 --> 00:03:02,280 I get to do what I want, when I want to do it, and how I want to do it. 44 00:03:03,480 --> 00:03:05,700 Nobody tells me what to do, I can tell you that. 45 00:03:06,040 --> 00:03:08,060 I'm pretty happy with how things are going. 46 00:03:08,720 --> 00:03:10,300 So, am I an expert? 47 00:03:10,780 --> 00:03:11,780 I don't know. 48 00:03:12,680 --> 00:03:16,080 Maybe. He wants to talk that he's not an expert. He's really not. 49 00:03:17,390 --> 00:03:19,570 other than working out a way to get money from people. 50 00:03:20,030 --> 00:03:21,370 And he's good at that. 51 00:03:21,770 --> 00:03:25,930 Brent Westwood and Craig Johnson are investigators for the Riverside County 52 00:03:25,930 --> 00:03:28,630 District Attorney's Office in Southern California. 53 00:03:28,950 --> 00:03:34,070 And according to them, almost every claim made in these seminars is a gross 54 00:03:34,070 --> 00:03:37,210 misrepresentation. I will tell you this. 55 00:03:38,210 --> 00:03:44,490 I own a portfolio of roughly 90, 93 property. 56 00:03:45,210 --> 00:03:48,050 Through our investigation, Craig, did we see that he had 93 properties in his 57 00:03:48,050 --> 00:03:51,110 name? He didn't have any properties in his name. Exactly. 58 00:03:52,250 --> 00:03:57,990 He can, however, identify and facilitate investment home purchases for his 59 00:03:57,990 --> 00:04:03,090 clients. He says he'll even find tenants to rent out the home, or better yet, 60 00:04:03,250 --> 00:04:07,050 flip it for a nice profit in a forever -rising real estate market. 61 00:04:07,870 --> 00:04:11,290 Unfortunately, he doesn't tell his clients everything. 62 00:04:11,870 --> 00:04:17,370 Does the word infinite return ring a bell? Remember that $500 ,000 property 63 00:04:17,370 --> 00:04:19,649 can earn an investor an infinite return? 64 00:04:20,510 --> 00:04:24,270 There's a little trick he and Monte Castro play in the middle of the 65 00:04:24,270 --> 00:04:28,830 transaction. It's how they find gold where gold does not exist. 66 00:04:30,350 --> 00:04:31,830 It goes like this. 67 00:04:33,210 --> 00:04:39,230 Their company finds a home that is originally appraised at $580 ,000, but 68 00:04:39,230 --> 00:04:41,910 selling price has dropped to $500 ,000. 69 00:04:42,250 --> 00:04:46,930 They buy the house for their client for the $500 ,000, but use the original 70 00:04:46,930 --> 00:04:52,070 appraisal to take out a $580 ,000 loan in their client's name. 71 00:04:52,510 --> 00:04:57,010 Almost magically, $80 ,000 has been conjured out of thin air. 72 00:04:57,640 --> 00:05:02,020 That money kicks back to Pacific Wealth Management in what they call a 73 00:05:02,020 --> 00:05:03,020 concession fee. 74 00:05:03,820 --> 00:05:10,340 Being $580 ,000 in debt for a $500 ,000 house is a bad start for the client. 75 00:05:10,820 --> 00:05:15,740 But Duncan and Monte Castro tell investors that the concession fee will 76 00:05:15,740 --> 00:05:19,860 to make the mortgage payments until the house is resold for a profit in the 77 00:05:19,860 --> 00:05:20,860 booming market. 78 00:05:21,200 --> 00:05:26,580 Any cash left over will be used as capital to invest on the client's 79 00:05:27,240 --> 00:05:29,200 I've been in the business almost 16 years. 80 00:05:29,600 --> 00:05:33,980 I've sold every type of investment, tried every type of investment known to 81 00:05:33,980 --> 00:05:37,540 mankind. Trust me, I've tried it. They were going to be invested in real 82 00:05:37,760 --> 00:05:42,680 stock, foreign currency. It was relatively vague. There was no, there 83 00:05:42,680 --> 00:05:43,780 lot of specificity to it. 84 00:05:44,900 --> 00:05:51,120 Between 2004 and 2006, Duncan's company purchases $118 million 85 00:05:51,120 --> 00:05:53,980 worth of properties in clients' names. 86 00:05:54,640 --> 00:05:58,740 netting themselves more than $10 million in concession fees. 87 00:05:59,180 --> 00:06:03,040 And almost none of it is invested in anything but themselves. 88 00:06:05,580 --> 00:06:10,400 When American Greed returns, Duncan and Monte Castro take advantage of their 89 00:06:10,400 --> 00:06:16,940 clients' faith in people and their faith in God to do the devil's work. 90 00:06:17,760 --> 00:06:21,740 Unfortunately, there are very crafty, very evil people out there. 91 00:06:22,200 --> 00:06:24,160 that are very happy to take your money from you. 92 00:06:35,920 --> 00:06:41,040 From their home base in Murrieta, California, James Duncan's Pacific 93 00:06:41,040 --> 00:06:44,840 Management is always looking for a new way to lure in clients. 94 00:06:45,500 --> 00:06:49,100 About a month and a half ago, someone in our company had this really great 95 00:06:49,100 --> 00:06:51,160 bright idea that we need to try a seminar. 96 00:06:51,820 --> 00:06:52,840 Whose idea was that? 97 00:06:53,980 --> 00:06:55,600 It was actually my idea. 98 00:06:57,460 --> 00:07:02,920 We were invited to South Coast Winery Seminar, and it was interesting. 99 00:07:03,460 --> 00:07:08,000 Deborah and Herman Weber have been married 14 years and have three grown 100 00:07:08,000 --> 00:07:09,700 children through previous marriages. 101 00:07:10,080 --> 00:07:14,100 When the two go to the seminar, their interest is piqued. 102 00:07:14,380 --> 00:07:17,640 At that point, it all looked really good. It sounded real good. 103 00:07:17,900 --> 00:07:22,520 And they were giving presentations about how wonderful the company is and how 104 00:07:22,520 --> 00:07:23,840 it's making so much money. 105 00:07:24,560 --> 00:07:29,060 Even before attending the seminar, they are contacted by a representative of 106 00:07:29,060 --> 00:07:35,100 Pacific Wealth named Charlie Choi, who explains that becoming a client isn't as 107 00:07:35,100 --> 00:07:37,080 easy as just handing over your money. 108 00:07:37,440 --> 00:07:39,180 There were three rules to become a core client. 109 00:07:39,420 --> 00:07:41,920 There was someone who would give three years. 110 00:07:42,780 --> 00:07:46,220 to the company, ask no questions, and give them full financial control. 111 00:07:46,560 --> 00:07:50,120 So as a core client, basically you were doing what you were told. 112 00:07:50,400 --> 00:07:54,060 The consequences for not following the rules are simple. 113 00:07:54,320 --> 00:07:56,200 You need to do what we say. If you don't, you're fired. 114 00:07:57,960 --> 00:08:01,460 I mean, I don't know how to sugarcoat it. I mean, that's just the way it is. 115 00:08:01,460 --> 00:08:05,380 just can't do business with it. That's okay. Go work with Shearson Lehman or 116 00:08:05,380 --> 00:08:09,960 Smith Barney or New York Life or MetLife or the Snoopy company or whatever it's 117 00:08:09,960 --> 00:08:11,200 called. I mean, that's fine. 118 00:08:12,040 --> 00:08:15,900 But you have to do what we say. If we tell you to do 100 things and you do 99 119 00:08:15,900 --> 00:08:18,980 and the 100th you don't, you can't do business with us. The rules make Weber 120 00:08:18,980 --> 00:08:22,920 nervous, so she decides to look into the company a bit deeper. 121 00:08:23,200 --> 00:08:27,200 I did research the name of the company, Pacific Wealth Management. 122 00:08:27,800 --> 00:08:30,980 I found out they were a company based out of San Diego. 123 00:08:31,720 --> 00:08:36,140 Unfortunately for Weber, it's just another game of deception Duncan is 124 00:08:36,380 --> 00:08:38,940 There was a legitimate Pacific Wealth Management. 125 00:08:39,549 --> 00:08:44,530 And Duncan's Pacific Waltz management had nothing to do with them, although he 126 00:08:44,530 --> 00:08:45,530 was using their name. 127 00:08:45,770 --> 00:08:46,970 And their credibility. 128 00:08:47,510 --> 00:08:52,410 When Weber asks about it, she says Choi does nothing to clarify the distinction. 129 00:08:52,950 --> 00:08:59,390 I mentioned it to Charlie Choi that I did investigate your company, and I have 130 00:08:59,390 --> 00:09:02,130 discovered that you're a good company out of San Diego. 131 00:09:03,190 --> 00:09:04,370 And he said yes. 132 00:09:04,920 --> 00:09:09,100 It lulls the Webbers enough to let Duncan's illegitimate Pacific wealth 133 00:09:09,100 --> 00:09:10,760 refinance their house. 134 00:09:11,100 --> 00:09:15,280 Then the Webbers hand over the $190 ,000 of equity. 135 00:09:16,080 --> 00:09:22,980 With housing booming, the refinance is for $130 ,000 more than the original 136 00:09:22,980 --> 00:09:27,900 price the Webbers bought the house for. And the monthly payments increase by $2 137 00:09:27,900 --> 00:09:29,300 ,200 a month. 138 00:09:29,620 --> 00:09:33,360 But according to Duncan's company, that's where the equity comes in. 139 00:09:33,640 --> 00:09:38,480 So we're paying our initial payment, our original payment, and then they pay 140 00:09:38,480 --> 00:09:42,840 everything on and above because it's money coming from our investment. 141 00:09:43,840 --> 00:09:48,820 Fortunately for the Webbers, Duncan's Pacific Wealth never buys a property in 142 00:09:48,820 --> 00:09:49,820 the Webbers' name. 143 00:09:50,120 --> 00:09:55,300 But dozens of investors aren't so lucky. For some people, even though on their 144 00:09:55,300 --> 00:09:59,680 own they wouldn't be able to qualify to buy even one house, Pacific Wealth would 145 00:09:59,680 --> 00:10:03,200 go out and they would buy them two, three, sometimes four houses. 146 00:10:03,420 --> 00:10:07,660 To get unqualified buyers in the front door would be a near impossible 147 00:10:07,660 --> 00:10:08,660 proposition. 148 00:10:09,240 --> 00:10:14,140 So Duncan's company falsifies loan applications to get in through the back. 149 00:10:14,420 --> 00:10:20,200 They sometimes lied about the core client's income. So even if the core 150 00:10:20,200 --> 00:10:26,160 was, say, making $80 ,000 a year, they would lift the income at a much higher 151 00:10:26,160 --> 00:10:31,160 amount. But more commonly, what they would do is they would say that the 152 00:10:31,160 --> 00:10:35,420 also had a brokerage account someplace and that the brokerage account held 153 00:10:35,420 --> 00:10:36,960 hundreds of thousands of dollars. 154 00:10:37,520 --> 00:10:41,520 But even if the lies on the applications aren't enough to get a loan approved, 155 00:10:42,040 --> 00:10:47,900 they have a secret weapon, a mortgage lender named Cindy Kelly. I think it was 156 00:10:47,900 --> 00:10:51,920 obvious from the evidence we saw, emails we saw back and forth, that she 157 00:10:51,920 --> 00:10:55,340 obviously knew that she was pushing through fraudulent loans. 158 00:10:56,340 --> 00:11:01,520 Kelly's help gets loans approved, but she leaves investors high and dry. 159 00:11:04,780 --> 00:11:06,340 We bought the house in 2000. 160 00:11:07,120 --> 00:11:10,580 So we've been here 14 years and love this house. 161 00:11:11,140 --> 00:11:12,200 Love this house. 162 00:11:12,420 --> 00:11:17,980 But this is the house that, you know, we're upside down in. Tucson, Arizona 163 00:11:17,980 --> 00:11:23,040 natives Clancy and Dale Hahn first hear about Pacific Wealth Management from 164 00:11:23,040 --> 00:11:24,780 Cindy Kelly in 2006. 165 00:11:26,020 --> 00:11:30,100 The Hahn's have been close friends with Kelly for more than 20 years and have 166 00:11:30,100 --> 00:11:33,360 seen her develop into a presumably successful businesswoman. 167 00:11:33,820 --> 00:11:38,380 She worked hard. I mean, she would work from morning till night, and she would 168 00:11:38,380 --> 00:11:43,080 invest and save, and she was very good at that. So when she started to become 169 00:11:43,080 --> 00:11:47,040 successful in this, she was excited about it. Who wouldn't be? 170 00:11:48,520 --> 00:11:53,540 By the summer of 2006, the Hans have also done well for themselves. 171 00:11:54,200 --> 00:11:57,980 We were in this house, affordable house payment. 172 00:11:58,940 --> 00:12:03,820 had some savings set aside. And so we were, financially, we were in good 173 00:12:03,820 --> 00:12:04,820 situation. 174 00:12:04,860 --> 00:12:10,220 For Clancy, it's a near -perfect scenario in a happy marriage going on 24 175 00:12:10,220 --> 00:12:13,080 with two children and living in her dream home. 176 00:12:13,520 --> 00:12:17,320 Oh, yeah. I thought, we'll buy this house and we'll pass it through the 177 00:12:17,320 --> 00:12:21,760 generations and have that homestead feeling where this has been in our home 178 00:12:21,760 --> 00:12:24,820 seven generations, to be that family. 179 00:12:25,280 --> 00:12:29,680 Cindy Kelly tells them that by investing with Pacific Wealth Management, they 180 00:12:29,680 --> 00:12:34,260 could achieve their dream of a secure future even sooner than they think. 181 00:12:34,520 --> 00:12:38,340 So we thought, gosh, if we could pay this house off early, then it's paid for 182 00:12:38,340 --> 00:12:38,939 and done. 183 00:12:38,940 --> 00:12:43,800 It's kind of out of the way, and we can focus on giving to people and helping. 184 00:12:44,720 --> 00:12:49,080 Helping people is exactly what Duncan and Monte Castro say they want to do. 185 00:12:49,520 --> 00:12:54,260 And when the Hans reach out, it's as if the company is preaching to the choir. 186 00:12:55,240 --> 00:12:57,620 Both my wife and I are very, very strong Christians. 187 00:12:58,020 --> 00:13:04,480 And in our conversations with PAC wealth people, you know, they came at it with 188 00:13:04,480 --> 00:13:08,460 that affinity of coming in as Christian folk. 189 00:13:08,720 --> 00:13:10,640 It's a hard issue. That's what it's about. 190 00:13:11,500 --> 00:13:15,520 That's why we're here. It's a hard issue. It's basically being a good 191 00:13:15,520 --> 00:13:18,140 with what God has given me. That's what it's about. 192 00:13:18,680 --> 00:13:20,600 Eventually, the horns take the plunge. 193 00:13:21,180 --> 00:13:25,500 They refinance their home and have faith that Duncan's Pacific wealth can turn 194 00:13:25,500 --> 00:13:30,180 the $71 ,000 of equity into the financial independence they're promised. 195 00:13:30,540 --> 00:13:35,580 It's our hearts to do for others. And so when we saw an opportunity to be able 196 00:13:35,580 --> 00:13:42,360 to give back to our church on various projects and missions to help. 197 00:13:42,700 --> 00:13:46,820 even our own family members, to be able to do that. It wasn't necessarily self 198 00:13:46,820 --> 00:13:50,340 -serving. I mean, it was really a thought of, hey, we'd have some more 199 00:13:50,340 --> 00:13:52,060 freedom to do more for others. 200 00:13:53,200 --> 00:13:57,920 Little do the Hans know, they aren't on the path to financial freedom, but 201 00:13:57,920 --> 00:13:59,380 financial enslavement. 202 00:13:59,740 --> 00:14:03,140 The refinance nearly doubles the Hans' monthly mortgage payments. 203 00:14:03,520 --> 00:14:07,720 But the company says they'll wire the difference into the Hans' bank account 204 00:14:07,720 --> 00:14:09,820 each month to make the payment. 205 00:14:10,240 --> 00:14:11,240 And they did. 206 00:14:11,970 --> 00:14:17,270 They did for the first four months. So in November, it was wired directly into 207 00:14:17,270 --> 00:14:18,270 our bank account. 208 00:14:18,630 --> 00:14:23,070 In December, in January, and then in February. 209 00:14:23,850 --> 00:14:25,910 And guess what happens in March? 210 00:14:27,570 --> 00:14:29,270 When American greed returns. 211 00:14:29,910 --> 00:14:30,990 You can do this all night. 212 00:14:31,270 --> 00:14:35,490 Duncan and Monte Castro fleece millions from investors with their slick tongues. 213 00:14:35,970 --> 00:14:38,290 Now they want to tap into their minds. 214 00:14:39,230 --> 00:14:43,970 I think that they were kind of an idea that they can control people if they use 215 00:14:43,970 --> 00:14:48,050 their higher powers more effectively, use their minds more effectively. 216 00:15:01,070 --> 00:15:04,190 In 2006, in Murrieta, California, 217 00:15:04,970 --> 00:15:09,010 James Duncan and Hendrix Monte Castro's investor pool is growing into the 218 00:15:09,010 --> 00:15:13,850 hundreds, and it's thanks mostly to an extensive word -of -mouth campaign. 219 00:15:14,270 --> 00:15:19,430 The way Pacific Wealth worked is that they brought in a few initial core 220 00:15:19,430 --> 00:15:24,630 clients. Then those initial core clients, some of them became what's 221 00:15:24,630 --> 00:15:28,790 referral partners, and that meant that they would go out and they would recruit 222 00:15:28,790 --> 00:15:29,790 their friends. 223 00:15:30,560 --> 00:15:36,300 Cindy Kelly and Charlie Choi hunt down potential investors, as does a man named 224 00:15:36,300 --> 00:15:40,480 Tuan Du, who infiltrates the martial arts community in San Diego. 225 00:15:41,020 --> 00:15:45,260 Hendrix Monte Castro's mother, Helen Pedrino, even gets in the act. 226 00:15:45,560 --> 00:15:49,440 She was a nurse, so they recruited through the nursing and the medical 227 00:15:49,440 --> 00:15:50,440 community. 228 00:15:50,640 --> 00:15:54,200 She was also Filipino, so they recruited through the Filipino community. 229 00:16:00,840 --> 00:16:03,300 I'm sorry, I'll give you to them. 230 00:16:03,560 --> 00:16:07,720 They know what to do. And the end result, I don't know what they're doing 231 00:16:07,720 --> 00:16:10,960 between that, but the delivery, they deliver things. 232 00:16:11,400 --> 00:16:15,660 Duncan described her, she was like a machine out there, just recruiting 233 00:16:15,660 --> 00:16:19,620 everybody she could. But according to Duncan and Monte Castro, the network 234 00:16:19,620 --> 00:16:22,080 doesn't just reach out towards the everyday Joe. 235 00:16:22,750 --> 00:16:26,930 It also stretches in the opposite direction towards captains of industry. 236 00:16:27,370 --> 00:16:31,530 We just got involved recently in an organization called the Positive Deviant 237 00:16:31,530 --> 00:16:33,010 Network. Kind of a strange name. 238 00:16:33,210 --> 00:16:35,170 Positive Deviant Network. 239 00:16:35,390 --> 00:16:39,170 At times it seems like there were parts of the truth involved with what they 240 00:16:39,170 --> 00:16:43,290 were saying, but there were complete misrepresentations. We know the guys 241 00:16:43,290 --> 00:16:47,690 started AOL. We know Bill Gates' best friend. What's that guy worth? A hundred 242 00:16:47,690 --> 00:16:49,790 billion dollars or a couple billion dollars? 243 00:16:50,670 --> 00:16:55,170 Are any of you curious what Bill Gates is currently investing in? I'd like to 244 00:16:55,170 --> 00:16:59,910 know. We have a guy who, he's personal friends with the trade minister for 245 00:16:59,910 --> 00:17:04,650 China. Everybody in this room are within five people of Ben Stiller, of knowing 246 00:17:04,650 --> 00:17:08,270 Ben Stiller. We're within six people of knowing what the president of the United 247 00:17:08,270 --> 00:17:09,530 States is investing in. 248 00:17:09,869 --> 00:17:11,390 You can do this all night. 249 00:17:11,650 --> 00:17:14,170 They made it sound like they could be talking to Colin Powell within a couple 250 00:17:14,170 --> 00:17:15,170 phone calls. 251 00:17:15,349 --> 00:17:17,770 Or that they could be talking to the president within a couple phone calls 252 00:17:17,770 --> 00:17:20,069 because of the people they knew through the Positive and Deviant Network. 253 00:17:20,849 --> 00:17:24,790 Just as they trade on the name of the legitimate Pacific Wealth Management of 254 00:17:24,790 --> 00:17:29,530 San Diego, Duncan and Monte Castro once again bend a lawful group's reputation 255 00:17:29,530 --> 00:17:31,730 to match their devious ends. 256 00:17:32,450 --> 00:17:33,810 That's how we make money. 257 00:17:34,270 --> 00:17:36,850 That's why we run circles around Merrill Lynch. 258 00:17:37,050 --> 00:17:39,450 That's why we run circles around Lehman Brothers. 259 00:17:40,190 --> 00:17:44,350 That's why we could care less what New York Life does. We don't care what B of 260 00:17:44,350 --> 00:17:50,170 does. We don't care about what they do. We're the 1%. They're the 99%. All the 261 00:17:50,170 --> 00:17:51,750 sheep go to Bank of America. 262 00:17:52,970 --> 00:17:55,330 All the stallions come work with us. 263 00:17:55,990 --> 00:17:58,310 Between 2004 and 2007, 264 00:17:59,010 --> 00:18:04,470 Duncan's Pacific Wealth Management has bought more than $125 million in 265 00:18:04,470 --> 00:18:05,950 in their clients' names. 266 00:18:06,560 --> 00:18:11,280 while pulling in almost $30 million for themselves out of concession fees and 267 00:18:11,280 --> 00:18:12,540 investment capital. 268 00:18:12,860 --> 00:18:18,600 And Duncan has an entire network of subsidiary companies he can use to 269 00:18:18,600 --> 00:18:19,600 all that money. 270 00:18:19,820 --> 00:18:24,120 I think there were probably eight or nine different shell companies that Mr. 271 00:18:24,300 --> 00:18:28,740 Duncan owned. They had addresses, but they did not have any actual operations. 272 00:18:29,950 --> 00:18:34,570 Despite the network of shell companies, Duncan intentionally keeps his name from 273 00:18:34,570 --> 00:18:38,850 being associated with any of them in a clear effort to conceal his involvement. 274 00:18:39,390 --> 00:18:44,550 Even the flagship enterprise has a figurehead president, a man named 275 00:18:44,550 --> 00:18:49,850 MacLeod. Some of you may know me as Moe, so you can call me Moe. 276 00:18:50,170 --> 00:18:54,610 James Duncan took Maurice MacLeod under his wing and started sort of teaching 277 00:18:54,610 --> 00:18:57,590 him how to sell and teaching him how the business worked. 278 00:18:57,960 --> 00:19:01,520 I'd like to ask you guys to keep an open mind because this isn't for everyone. 279 00:19:01,800 --> 00:19:07,000 And at a certain point, James Duncan decided to install Maurice McLeod as the 280 00:19:07,000 --> 00:19:10,680 president of Pacific Wealth Management because, again, Mr. Duncan wanted to 281 00:19:10,680 --> 00:19:12,160 his name out of the paperwork. 282 00:19:12,800 --> 00:19:17,460 Duncan may keep his name clear of the businesses, but he and Monte Castro's 283 00:19:17,460 --> 00:19:20,020 hands dig deep inside their coffers. 284 00:19:20,430 --> 00:19:26,930 In 2004, they spent $1 .7 million on their own personal expenses. 285 00:19:27,170 --> 00:19:29,530 In 2005, it was $4 .8 million. 286 00:19:29,790 --> 00:19:36,730 In 2006, sort of near the peak of the fraud, they spent almost $10 million. 287 00:19:38,190 --> 00:19:39,970 They lived in very expensive homes. 288 00:19:40,410 --> 00:19:44,210 Mr. Duncan, for example, the home he was in was a little over $3 million. 289 00:19:46,000 --> 00:19:50,520 He took lavish vacations to Hawaii, to Malta. 290 00:19:50,760 --> 00:19:55,220 And then he also, you know, despite the fact that he told investors that he was 291 00:19:55,220 --> 00:20:00,520 a good Christian and he was a man of God, he used a lot of money to go to 292 00:20:00,520 --> 00:20:07,040 and not only gamble a lot of the money away, but routinely use prostitutes. 293 00:20:08,600 --> 00:20:10,240 Mandalay Bay, $1 ,056. 294 00:20:11,000 --> 00:20:13,840 The same day, Mandalay Bay, $2 ,089. 295 00:20:14,720 --> 00:20:18,400 $10 ,000 at the Grand Waialea in Hawaii, over $10 ,000. 296 00:20:18,940 --> 00:20:22,100 For those of you that have never stayed at the Grand Waialea, I'm telling you, 297 00:20:22,120 --> 00:20:25,340 stay at the Grand Waialea. That place is off the charts. 298 00:20:26,620 --> 00:20:33,280 Between 2004 and 2007, they spend more than $21 million of clients' money on 299 00:20:33,280 --> 00:20:34,280 personal expenses. 300 00:20:34,740 --> 00:20:37,500 And it's not just the big three getting the cash. 301 00:20:37,800 --> 00:20:40,680 They're spreading it around to friends as well. 302 00:20:40,960 --> 00:20:42,920 One of them was a lady named Shannon. 303 00:20:43,290 --> 00:20:45,610 And we eventually figured out who she was. 304 00:20:46,210 --> 00:20:49,930 And it was James Duncan's mistress. James Duncan was married, and he had a 305 00:20:49,930 --> 00:20:50,930 mistress that he was paying for. 306 00:20:51,710 --> 00:20:55,270 She was a stripper and went by the name The Honey with the Money. 307 00:20:56,270 --> 00:21:01,210 And her and Duncan, and I think Montecastro, were trying to set up a 308 00:21:01,210 --> 00:21:04,130 in Orange County as another way to make money. And they were using investor 309 00:21:04,130 --> 00:21:05,570 money to set up the strip club. 310 00:21:06,530 --> 00:21:07,710 That's what gets us excited. 311 00:21:08,490 --> 00:21:09,510 We love entrepreneurs. 312 00:21:09,790 --> 00:21:11,630 We're entrepreneurs, so we love them. 313 00:21:12,030 --> 00:21:16,710 They never actually opened up, but they were certainly in the research phase of 314 00:21:16,710 --> 00:21:20,150 where they could open up. Duncan was clear. They wanted to do that. 315 00:21:20,370 --> 00:21:23,330 But a strip club isn't their most reckless investment. 316 00:21:23,750 --> 00:21:27,790 That would be the one they make in a company called BioCybernaut. 317 00:21:28,610 --> 00:21:35,150 Duncan and Monte Castro spend $195 ,000 of investor money to undergo training 318 00:21:35,150 --> 00:21:40,570 sessions designed to teach them and their associates how to control their 319 00:21:40,570 --> 00:21:41,570 waves. 320 00:21:41,790 --> 00:21:46,370 I think that there was kind of an idea that they can control people if they use 321 00:21:46,370 --> 00:21:50,490 their higher powers more effectively, use their minds more effectively. 322 00:21:50,790 --> 00:21:55,750 Duncan and Monte Castro put so much belief in the company that they want to 323 00:21:55,750 --> 00:21:56,750 become a part of it. 324 00:21:57,110 --> 00:22:03,150 They send $550 ,000 of investor money to the doctor in charge of BioCybernaut, 325 00:22:03,290 --> 00:22:06,770 thinking the investment is buying a stake in the company. 326 00:22:07,410 --> 00:22:09,630 But who's the one playing mind games? 327 00:22:10,250 --> 00:22:14,090 The doctor took over $500 ,000 and built a home. 328 00:22:14,650 --> 00:22:17,930 So they eventually, Duncan and Monte Castro, eventually asked for the money 329 00:22:17,930 --> 00:22:22,030 back, and they were told thanks for the gift and never got the money back. 330 00:22:22,810 --> 00:22:27,950 Losing money is a feeling their investors can relate to. They just don't 331 00:22:27,950 --> 00:22:28,950 yet. 332 00:22:29,470 --> 00:22:35,330 When American Greed returns, Duncan and Monte Castro have a surprise gift for 333 00:22:35,330 --> 00:22:36,330 their clients. 334 00:22:36,700 --> 00:22:40,380 And it's almost literally not worth the paper it's printed on. 335 00:22:40,720 --> 00:22:46,620 Each dinar is like worth .0000006 cents. 336 00:22:59,480 --> 00:23:04,760 By the summer of 2006, James Duncan has been robbing Peter to pay Paul. 337 00:23:05,390 --> 00:23:07,110 And Peter wants his money back. 338 00:23:08,490 --> 00:23:12,690 Duncan's Pacific Wealth Management has been trading on the reputation of a 339 00:23:12,690 --> 00:23:17,690 legitimate company of the same name to take out more than $100 million in home 340 00:23:17,690 --> 00:23:21,330 loans in their clients' names that they promised to cover. 341 00:23:21,790 --> 00:23:24,430 But they're having trouble making good on that promise. 342 00:23:24,910 --> 00:23:28,610 Keep in mind that, you know, I don't know that on any of the investment home 343 00:23:28,610 --> 00:23:32,470 purchases, 20 % was put down. I think a lot of times it was 100 % financing. 344 00:23:33,230 --> 00:23:37,410 or 90 % financing, so there were just massive amounts of debt that were still 345 00:23:37,410 --> 00:23:41,610 outstanding. In their desperation to keep up with the payments and keep the 346 00:23:41,610 --> 00:23:47,110 fraud going, they'll pitch anything to try to raise more money, no matter how 347 00:23:47,110 --> 00:23:48,470 absurd it may sound. 348 00:23:48,790 --> 00:23:52,130 We're going to come at you with investments that don't make sense, and 349 00:23:52,130 --> 00:23:57,390 going to ask you to trust us because that's what the 1 % is going to say or 350 00:23:57,530 --> 00:24:01,170 and the other 99%, your brothers and your aunts and your uncles and your 351 00:24:01,170 --> 00:24:02,170 neighbors. 352 00:24:02,320 --> 00:24:06,680 And the school teachers and your soccer coach for your kids are all going to 353 00:24:06,680 --> 00:24:10,780 think you're crazy and are going to go, what in the world are you doing? And 354 00:24:10,780 --> 00:24:14,980 you're going to have to believe in us because we're the 1 % and they're the 355 00:24:14,980 --> 00:24:20,040 Here's one investment from the summer of 2006 that a few aunts and uncles may 356 00:24:20,040 --> 00:24:21,040 find crazy. 357 00:24:21,380 --> 00:24:26,540 They began opening credit card accounts in people's names or opening lines of 358 00:24:26,540 --> 00:24:28,760 credit and asking people to draw down. 359 00:24:30,040 --> 00:24:34,680 either the maximum amount or close to the maximum amount, and wire that money 360 00:24:34,680 --> 00:24:36,240 a Duncan -controlled company. 361 00:24:36,600 --> 00:24:41,640 One of the clients who receives credit cards is Deborah Weber. They tell her 362 00:24:41,640 --> 00:24:46,560 other investors that they will pay the monthly minimum fee on the cards and use 363 00:24:46,560 --> 00:24:49,000 the rest of the cash as investment capital. 364 00:24:49,240 --> 00:24:54,460 It may sound strange, but it all comes back to the rules of being a core 365 00:24:54,780 --> 00:24:57,520 Do what we say, no questions asked. 366 00:24:58,090 --> 00:25:02,450 They told us if we did not get all of the money, all the cash advance, not 367 00:25:02,450 --> 00:25:07,270 the cash advance, but I mean call in, talk to the manager and get every single 368 00:25:07,270 --> 00:25:11,010 cent you can possibly get, that they would drop us. 369 00:25:11,330 --> 00:25:15,870 It's not going to feel good, but it's going to be the right decision. 370 00:25:16,770 --> 00:25:20,470 Afraid of losing the $190 ,000 they've already invested. 371 00:25:21,120 --> 00:25:25,920 The Webbers eventually wire $40 ,000 more from credit cards registered in 372 00:25:25,920 --> 00:25:29,340 name to shell companies associated with James Duncan. 373 00:25:30,000 --> 00:25:32,960 To many clients, it may feel like they're under siege. 374 00:25:33,240 --> 00:25:37,700 So it should be no surprise when the next investment scheme leads them into 375 00:25:37,700 --> 00:25:38,960 actual war zone. 376 00:25:42,380 --> 00:25:47,800 Well, we actually have a contact in Jordan that will actually go into Iraq 377 00:25:47,800 --> 00:25:48,800 buy currency. 378 00:25:49,450 --> 00:25:51,310 We actually just bought some currency, didn't we? 379 00:25:51,750 --> 00:25:57,770 Yep. This is what we received. I believe it was around January 25th. 380 00:25:58,090 --> 00:26:00,610 We pulled it out. We counted them. 381 00:26:01,650 --> 00:26:08,350 And it turned out to be Iraqi dinars. They had made mention off and on during 382 00:26:08,350 --> 00:26:10,490 that they were investing in foreign currency. 383 00:26:10,810 --> 00:26:15,750 You know, but they didn't say, hey, you're going to be receiving dinars. I 384 00:26:15,750 --> 00:26:17,450 they never said anything like that. 385 00:26:17,960 --> 00:26:22,700 In their depreciated state, the package of dinars the Webbers receive are only 386 00:26:22,700 --> 00:26:24,000 worth about $6 ,000. 387 00:26:25,060 --> 00:26:30,500 Still, in seminars, Monte Castro explains that their projections show 388 00:26:30,500 --> 00:26:37,280 a $2 ,600 investment in Iraqi dinars will be worth $800 ,000 in just a few 389 00:26:37,280 --> 00:26:40,000 years. We have every reason to believe. 390 00:26:40,260 --> 00:26:43,560 I'm sorry. Can I jump in for just a minute? So let's just make sure we're 391 00:26:43,560 --> 00:26:46,340 the same page here. $2 ,600 investment. 392 00:26:47,400 --> 00:26:50,600 could be worth $800 ,000. 393 00:26:54,140 --> 00:26:55,240 That's not bad. 394 00:26:55,820 --> 00:27:00,220 It keeps some investors like the Webers believing in that pot of gold that 395 00:27:00,220 --> 00:27:04,720 they've been promised and primes them for the next big scam Duncan and Monte 396 00:27:04,720 --> 00:27:05,880 Castro put out there. 397 00:27:06,560 --> 00:27:10,640 A telemarketing script obtained by the Riverside District Attorney's Office 398 00:27:10,640 --> 00:27:12,000 tells the tale. 399 00:27:12,620 --> 00:27:15,440 Well, the partners came out of the meeting and announced the most amazing 400 00:27:15,440 --> 00:27:19,620 I've ever heard. You invest $4 ,000, you'll earn $30 ,000, or you invest $5 401 00:27:19,620 --> 00:27:21,060 ,000, you will earn $40 ,000. 402 00:27:21,260 --> 00:27:22,260 Be like this. 403 00:27:22,460 --> 00:27:27,560 For core clients already invested with their home equity, the script offers 404 00:27:27,560 --> 00:27:31,700 desperate suggestions on where to find more money to hand over. 405 00:27:32,000 --> 00:27:34,020 Some common places to look for hidden cash. 406 00:27:34,800 --> 00:27:38,500 Savings and checking. Maybe a savings account you forgot about. Business 407 00:27:38,500 --> 00:27:41,000 account. Cash hidden under the bed or somewhere in the house. 408 00:27:41,400 --> 00:27:45,880 look for your coin collections, your stamp collections, antique, comic book, 409 00:27:46,040 --> 00:27:47,640 inventory from your business. 410 00:27:47,980 --> 00:27:50,060 So this was pretty bad. 411 00:27:52,760 --> 00:27:56,700 The Hans don't have stamp collections, but they do have a little savings. 412 00:27:57,060 --> 00:28:02,280 And before March 2007, Duncan and Monte Castro's company is still coming through 413 00:28:02,280 --> 00:28:04,740 with the monthly payments on their refinance. 414 00:28:04,980 --> 00:28:09,340 Their reliability convinces the Hans to invest $10 ,000 more. 415 00:28:10,460 --> 00:28:15,880 Them making those mortgage payments for the first four months certainly lacked 416 00:28:15,880 --> 00:28:21,860 credibility, which caused me and Clancy to decide, well, let's invest a little 417 00:28:21,860 --> 00:28:24,120 more of these short -term investments with them. 418 00:28:25,300 --> 00:28:28,380 The Webbers get the same pitch by mail. 419 00:28:29,130 --> 00:28:33,570 Dear Deborah, if you have not already heard, we have had extremely exciting 420 00:28:33,570 --> 00:28:39,970 news. The Webbers take $35 ,000 out of their 401ks and hand it over to the next 421 00:28:39,970 --> 00:28:40,970 sure thing. 422 00:28:40,990 --> 00:28:46,170 They were all pushing this big, hot deal, you know, this is going to make a 423 00:28:46,170 --> 00:28:49,110 of money for all of us, you know. 424 00:28:49,910 --> 00:28:54,190 And unfortunately, we suckered for that one, too. 425 00:28:55,450 --> 00:28:58,030 They say a sucker is born every minute. 426 00:28:58,540 --> 00:29:01,780 James Duncan seems to want to put the theory to the test. 427 00:29:03,180 --> 00:29:08,280 When American Greed returns, Pacific Welt's never -ending pile of debt puts 428 00:29:08,280 --> 00:29:13,340 end to Duncan's stage show. But the Internet has an entirely new audience to 429 00:29:13,340 --> 00:29:18,140 exploit. I've run teams that have accumulated millions of dollars. 430 00:29:18,400 --> 00:29:20,840 Not hundreds of thousands of dollars. 431 00:29:21,460 --> 00:29:25,100 Millions of dollars. And I can teach you how to do the same thing. 432 00:29:25,840 --> 00:29:28,620 What other desperate pitches was Duncan making? 433 00:29:29,020 --> 00:29:33,380 Find out at CNBCprime .com slash American Greed. 434 00:29:34,200 --> 00:29:36,580 Want inside information from the show? 435 00:29:36,820 --> 00:29:38,820 Join the Greed social network. 436 00:29:39,180 --> 00:29:41,800 Like us on the American Greed Facebook page. 437 00:29:42,200 --> 00:29:43,200 We'll be right back. 438 00:29:50,360 --> 00:29:52,040 By early 2007, 439 00:29:52,890 --> 00:29:57,990 With loans drying up and payments to clients coming due, James Duncan sees 440 00:29:57,990 --> 00:30:00,590 the end of his specific wealth management is near. 441 00:30:00,850 --> 00:30:04,790 The number of investors who are coming in can't possibly keep up with the debt 442 00:30:04,790 --> 00:30:08,990 that is owed. And so, like all Ponzi schemes, it's basically a house of 443 00:30:10,050 --> 00:30:11,270 Eventually, it all collapses. 444 00:30:11,550 --> 00:30:12,550 And so it did. 445 00:30:12,990 --> 00:30:14,390 Mortgages stopped being paid. 446 00:30:14,710 --> 00:30:19,130 Credit cards stopped being paid. And they kind of rolled up their welcome mat 447 00:30:19,130 --> 00:30:20,130 and shut their doors. 448 00:30:21,260 --> 00:30:26,360 Once investors can no longer get in touch with anyone at the company, they 449 00:30:26,360 --> 00:30:28,440 people who will answer their calls. 450 00:30:28,820 --> 00:30:32,240 The SEC and the Riverside District Attorney's Office. 451 00:30:32,540 --> 00:30:37,120 And it appears that the men in charge are feeling the heat, literally. 452 00:30:37,580 --> 00:30:44,420 They had Montecastro, Duncan, and McLeod and other employees bring their 453 00:30:44,420 --> 00:30:49,460 laptops and files to Montecastro's home, and they had a burn party. 454 00:30:51,370 --> 00:30:55,510 Where they started burning files and burning hard drives, smashing and 455 00:30:55,510 --> 00:30:56,169 hard drives. 456 00:30:56,170 --> 00:30:57,170 You get rid of evidence. 457 00:30:58,690 --> 00:31:02,690 But even out of these ashes, a new scheme will arise. 458 00:31:03,350 --> 00:31:05,470 Hey everybody, James the Cash King here. 459 00:31:05,670 --> 00:31:07,570 Thanks so much for checking out my website. 460 00:31:07,990 --> 00:31:11,690 He had some videos online where he was trying to convince people money's just 461 00:31:11,690 --> 00:31:15,450 going to be rolling into you in FedEx packages every day if you join my James 462 00:31:15,450 --> 00:31:16,450 the Cash King. 463 00:31:27,820 --> 00:31:31,460 He's a very charismatic guy. He's a very enthusiastic guy. You want to believe 464 00:31:31,460 --> 00:31:34,840 what he's saying. And he basically said, you know, you can be independently 465 00:31:34,840 --> 00:31:38,840 wealthy, you can work from home, you can spend all day long with your kids and 466 00:31:38,840 --> 00:31:41,340 still have hundreds of thousands of dollars come in. 467 00:31:41,580 --> 00:31:44,100 Let me tell you what I wasn't doing this morning. 468 00:31:44,440 --> 00:31:49,720 I wasn't rushing to get in my car so I could get on the freeway stuck in 469 00:31:49,720 --> 00:31:53,800 for an hour to then get to a job that I didn't like and I didn't want to be at. 470 00:31:54,280 --> 00:31:57,520 Let me tell you what I did at 7 a .m. instead this morning. 471 00:31:57,860 --> 00:32:01,380 I woke my two younger kids up. I made them breakfast. 472 00:32:01,780 --> 00:32:06,620 I packed their lunches. I checked their backpacks, and then I walked them out 473 00:32:06,620 --> 00:32:07,620 the back door to school. 474 00:32:08,460 --> 00:32:13,200 After that, I had a leisurely breakfast. I read the paper, and then I went 475 00:32:13,200 --> 00:32:16,560 upstairs and took a nap for a couple of hours. I was kind of tired. 476 00:32:16,960 --> 00:32:22,260 Talking people out of their money is exhausting work, and it's coming to an 477 00:32:23,880 --> 00:32:29,360 In February 2008, the SEC has enough information to file a complaint against 478 00:32:29,360 --> 00:32:34,040 Duncan, Monte Castro, McLeod, and their company, Pacific Wealth Management. 479 00:32:34,540 --> 00:32:40,220 When the financial gurus come in to give their testimonies, SEC attorney Sarah 480 00:32:40,220 --> 00:32:42,640 Kalin is surprised at what she sees. 481 00:32:43,080 --> 00:32:44,080 During Mr. 482 00:32:44,220 --> 00:32:49,340 Monte Castro's testimony, he wore dim shorts and... 483 00:32:50,860 --> 00:32:57,180 flip -flops and a t -shirt and mr duncan was dressed similarly it was hard to 484 00:32:57,180 --> 00:33:01,300 believe that they were holding themselves out as investment 485 00:33:01,300 --> 00:33:06,980 and you know financial geniuses perhaps duncan and monte castro should take 486 00:33:06,980 --> 00:33:10,660 things a bit more seriously on july 6 2009 487 00:33:11,640 --> 00:33:15,280 A federal court in the Central District of California grants a summary judgment 488 00:33:15,280 --> 00:33:20,380 in favor of the SEC against Duncan's Pacific Wealth Management and its 489 00:33:20,380 --> 00:33:21,380 operators. 490 00:33:21,880 --> 00:33:27,300 Duncan is ordered to pay more than $30 million of disgorgement, Marty Castro 491 00:33:27,300 --> 00:33:32,740 just over $28 million, and Maurice McLeod, the figurehead president, just 492 00:33:32,740 --> 00:33:33,740 half a million. 493 00:33:36,200 --> 00:33:40,520 Four months later, the Riverside District Attorney's Office has a plan to 494 00:33:40,520 --> 00:33:45,600 execute simultaneous arrest warrants on criminal charges against seven of the 495 00:33:45,600 --> 00:33:46,600 collaborators. 496 00:33:47,200 --> 00:33:52,480 The three principals and four of their associates for selling securities 497 00:33:52,480 --> 00:33:53,399 a license. 498 00:33:53,400 --> 00:33:59,120 Cindy Kelly, Thuan Du, Charlie Choi, and Helen Pedrino. 499 00:33:59,740 --> 00:34:02,540 But the arrests don't go as planned. 500 00:34:06,510 --> 00:34:07,870 When American Greed returns. 501 00:34:08,870 --> 00:34:12,770 We were hoping to get everybody at once, and it worked well on six of them. 502 00:34:13,350 --> 00:34:14,949 The seventh one was on the run. 503 00:34:26,550 --> 00:34:29,449 Early morning, November 19th, 2009. 504 00:34:30,409 --> 00:34:32,250 With assistance from the FBI. 505 00:34:33,070 --> 00:34:37,810 the U .S. Postal Inspection Service, and local law enforcement, the Riverside 506 00:34:37,810 --> 00:34:41,429 District Attorney's Office, led by investigators Brent Westwood and Craig 507 00:34:41,429 --> 00:34:46,710 Johnson, are on their way to arrest James Duncan and six of his associates 508 00:34:46,710 --> 00:34:48,929 $125 million fraud. 509 00:34:49,690 --> 00:34:55,070 You go out early in the morning, say 7, 8 o 'clock in the morning, 510 00:34:55,670 --> 00:34:58,010 get set up there, knock on the door. 511 00:34:59,100 --> 00:35:02,080 Generally, people are just getting up. They don't usually start thinking about 512 00:35:02,080 --> 00:35:05,860 running right then or fighting, and you can take them into custody without 513 00:35:05,860 --> 00:35:06,860 incident. 514 00:35:06,920 --> 00:35:11,480 We were hoping to arrest them all in one day, and we certainly had a plan to do 515 00:35:11,480 --> 00:35:15,600 that, and I believe we got everybody in custody that morning except Helen 516 00:35:15,600 --> 00:35:21,280 Padrino. It appears Padrino catches word of some of the morning arrests, and 517 00:35:21,280 --> 00:35:24,980 instead of returning to work at the hospital, she makes a run for it. 518 00:35:26,280 --> 00:35:31,890 Eventually... We tracked her down through using an ATM machine, and it 519 00:35:31,890 --> 00:35:34,810 she was up by LAX, Los Angeles International Airport. 520 00:35:35,510 --> 00:35:37,730 We had some concern that she was going to try to leave the country. 521 00:35:38,590 --> 00:35:43,390 Fortunately, Investigator Johnson is able to bring her in before it's too 522 00:35:43,730 --> 00:35:45,990 I called Helen. Her husband answered. 523 00:35:46,490 --> 00:35:53,370 Bob told Bob that there was a $29 million warrant to arrest Helen and that 524 00:35:53,370 --> 00:35:56,350 would be safer and better for her just to turn herself in, and she... 525 00:35:57,050 --> 00:36:00,690 agreed to do that. They parked at a gas station, went to a Burger King, and we 526 00:36:00,690 --> 00:36:04,270 had a local agency up in the Los Angeles area arrested her and booked her into 527 00:36:04,270 --> 00:36:05,270 jail for it. 528 00:36:10,730 --> 00:36:12,870 Five of the defendants take plea deals. 529 00:36:13,390 --> 00:36:15,370 Kelly and Twandu receive probation. 530 00:36:15,950 --> 00:36:17,710 Choi gets four months jail time. 531 00:36:18,070 --> 00:36:22,050 But Monte Castro and his mother, Helen Pedrino, fight the charges. 532 00:36:22,600 --> 00:36:26,360 They were very contentious with their appointed attorneys. So eventually they 533 00:36:26,360 --> 00:36:31,360 fired all their appointed attorneys and represented themselves in trial, which 534 00:36:31,360 --> 00:36:32,540 was a treat. 535 00:36:33,600 --> 00:36:38,740 All of Monte Castro's and Pedrino's experience with the law is how to break 536 00:36:38,800 --> 00:36:40,380 not argue it in court. 537 00:36:40,660 --> 00:36:44,580 And their inexperience is on full display from day one. 538 00:36:44,920 --> 00:36:47,060 I think the jurors got a little bit... 539 00:36:47,320 --> 00:36:50,380 frustrated with them. There were times that the jurors would laugh out loud at 540 00:36:50,380 --> 00:36:54,220 some of their objections or some of their questions and things like that. 541 00:36:55,180 --> 00:37:00,300 The first witness to face the circus of the Monte Castro Padrino legal team is 542 00:37:00,300 --> 00:37:01,300 Deborah Weber. 543 00:37:01,660 --> 00:37:06,300 Hendricks and Helen were allowed to cross -examine me. 544 00:37:07,380 --> 00:37:10,140 Kind of like being cross -examined by Dumb and Dumber. 545 00:37:10,880 --> 00:37:14,320 A trial that the prosecutor expects to last six weeks. 546 00:37:14,840 --> 00:37:16,740 stretches to more than four months. 547 00:37:17,300 --> 00:37:23,820 It was very long, very long. A lot of repetitive questions that I was asked. 548 00:37:24,000 --> 00:37:27,440 I'll say it took a lot of patience to listen to them question me. 549 00:37:28,100 --> 00:37:32,340 They would go minutes without asking me a question, just looking at stuff I 550 00:37:32,340 --> 00:37:33,740 wasn't sure what they were trying to get at. 551 00:37:34,640 --> 00:37:38,760 The highlight of the trial comes when Duncan, who has agreed to cooperate with 552 00:37:38,760 --> 00:37:43,000 the prosecution, comes face -to -face with his old partner in crime. 553 00:37:43,840 --> 00:37:48,280 Duncan was on the stand for eight days, and 90 % of that was on cross 554 00:37:48,280 --> 00:37:49,380 -examination with Hendricks. 555 00:37:50,140 --> 00:37:53,660 Hendricks kept attacking him and saying, isn't it true that you thought of this? 556 00:37:53,760 --> 00:37:58,080 And Duncan would say, Hendricks, you and I sat down together and came up with 557 00:37:58,080 --> 00:38:02,400 that. Remember, in your office, in your home, we came up with that. 558 00:38:02,980 --> 00:38:07,880 The mother -son team's defense is that they were just patsies in Duncan's 559 00:38:07,880 --> 00:38:13,160 scheme. Monte Castro tried to say he didn't know it was a scam. He was a 560 00:38:13,160 --> 00:38:13,959 as well. 561 00:38:13,960 --> 00:38:18,740 Yet he's standing side by side with James Duncan in these seminars, making 562 00:38:18,740 --> 00:38:24,160 representations that are lies, just complete fabrications. And his mother is 563 00:38:24,160 --> 00:38:27,700 the seminars with him, standing up, giving the testimonies and repeating the 564 00:38:27,700 --> 00:38:28,700 lies. 565 00:38:29,380 --> 00:38:34,260 After more than two months of trial, Padrino can see the writing on the wall 566 00:38:34,260 --> 00:38:36,200 tries to evade justice yet again. 567 00:38:38,110 --> 00:38:42,430 didn't come to court. And the information we got from her son, 568 00:38:42,430 --> 00:38:44,070 that she was ill. She was home ill. 569 00:38:44,470 --> 00:38:48,390 And so, you know, when you're a criminal defendant in trial, you don't just get 570 00:38:48,390 --> 00:38:49,348 a call in sick. 571 00:38:49,350 --> 00:38:54,950 No local hospitals will confirm Pedrino's illness, but deception runs 572 00:38:54,950 --> 00:38:57,430 her and her son, and they have a plan. 573 00:38:57,750 --> 00:39:02,250 The judge received a letter from someone purporting to be a nurse practitioner. 574 00:39:02,550 --> 00:39:05,970 Well, it turns out this nurse practitioner was Hendricks' wife, who 575 00:39:05,970 --> 00:39:06,959 in Maryland. 576 00:39:06,960 --> 00:39:10,960 And we knew that she was his wife. But I guess maybe he didn't know we knew 577 00:39:10,960 --> 00:39:16,220 that. Monte Castro's wife is brought in to testify under oath that Padrino is 578 00:39:16,220 --> 00:39:17,700 too ill to come to court. 579 00:39:18,000 --> 00:39:23,340 But the judge finds her testimony unreliable and rules that Padrino needs 580 00:39:23,340 --> 00:39:24,500 return to the courtroom. 581 00:39:24,980 --> 00:39:28,300 Monte Castro's wife leaves the stand in a fit. 582 00:39:28,620 --> 00:39:32,320 She was very hostile, very hostile. My investigator said she... 583 00:39:32,760 --> 00:39:35,540 Gave me the finger as he left the courtroom, but I didn't see that. 584 00:39:37,560 --> 00:39:41,340 The judge and jury aren't pleased by all the antics. 585 00:39:41,740 --> 00:39:48,040 Monte Castro is found guilty of 304 charges against him and is sentenced to 586 00:39:48,040 --> 00:39:49,960 years and 8 months in prison. 587 00:39:50,420 --> 00:39:54,040 Pedrino is guilty of 54 counts and gets 7 years. 588 00:39:55,440 --> 00:40:00,080 After the district attorney's office determined that Duncan cooperated fully, 589 00:40:00,080 --> 00:40:05,480 is sentenced to 19 years and eight months, and all defendants combined are 590 00:40:05,480 --> 00:40:08,580 ordered to pay just over $6 million in restitution. 591 00:40:10,300 --> 00:40:15,220 For victims of the fraud like Clancy and Dale Hawn, they have to come to terms 592 00:40:15,220 --> 00:40:16,540 with a new life. 593 00:40:17,180 --> 00:40:21,680 I feel like the little girl who is just happy all the time until something 594 00:40:21,680 --> 00:40:24,300 happens, and then it's like, ooh, life is mean. 595 00:40:25,210 --> 00:40:26,210 That's mean. 596 00:40:26,590 --> 00:40:32,310 The Horns invested $71 ,000 of equity and another $10 ,000 of their savings in 597 00:40:32,310 --> 00:40:33,209 the scheme. 598 00:40:33,210 --> 00:40:37,710 But the heaviest burden on them now is the huge mortgage payment they have to 599 00:40:37,710 --> 00:40:41,090 make thanks to the refinance Duncan's company executed. 600 00:40:41,710 --> 00:40:45,210 The prudent decision, they believe, would be to walk away. 601 00:40:45,610 --> 00:40:46,990 But it isn't that easy. 602 00:40:47,250 --> 00:40:48,390 My heart is in this house. 603 00:40:48,790 --> 00:40:50,630 No, I definitely don't want to leave. 604 00:40:50,970 --> 00:40:53,710 It would be devastating to leave this house. 605 00:40:54,360 --> 00:40:55,940 I mean, would we? 606 00:40:57,260 --> 00:40:59,420 You know, maybe. 607 00:41:00,680 --> 00:41:01,680 Maybe. 608 00:41:03,440 --> 00:41:05,500 The Webbers had no choice. 609 00:41:05,860 --> 00:41:09,420 They simply couldn't afford to make the new payments that they were expecting 610 00:41:09,420 --> 00:41:13,060 Duncan's company to cover and had to walk away from the house. 611 00:41:13,800 --> 00:41:15,960 We were going to retire in that home. 612 00:41:16,620 --> 00:41:21,520 We had everything we wanted. It wasn't anything big. It wasn't lavish in a 613 00:41:21,520 --> 00:41:22,520 moderate neighborhood. 614 00:41:22,620 --> 00:41:23,620 Nothing fancy. 615 00:41:24,140 --> 00:41:28,560 But it was the house we wanted to retire in. 616 00:41:29,660 --> 00:41:30,820 And it's gone. 617 00:41:31,940 --> 00:41:37,200 Between the equity, the credit card advances, and other investments, the 618 00:41:37,200 --> 00:41:40,660 turned over more than $230 ,000 to the fraud. 619 00:41:40,980 --> 00:41:46,420 And all they have to show for it is a package of nearly worthless Iraqi 620 00:41:47,020 --> 00:41:52,700 Looks good, but it's worth practically nothing. 621 00:41:53,710 --> 00:41:57,690 Every once in a while, the Webers receive a restitution check in the mail. 622 00:41:58,070 --> 00:42:00,390 It's an almost laughable pittance. 623 00:42:00,830 --> 00:42:05,530 But attitude is everything when dealing with a criminal like James Duncan. 624 00:42:06,210 --> 00:42:07,930 This is my big check. 625 00:42:08,250 --> 00:42:09,510 Our big check. 626 00:42:09,990 --> 00:42:11,250 $15 .54. 627 00:42:12,230 --> 00:42:19,090 I don't care. I seriously don't care how small they are. I want him to see my 628 00:42:19,090 --> 00:42:22,610 name on his bankroll. He has to pay me. 629 00:42:22,910 --> 00:42:25,510 I don't care if it's 99 cents. 630 00:42:26,230 --> 00:42:32,410 So, yes, my $15 .54 check, love it. Love it. 631 00:42:32,730 --> 00:42:37,270 Next Thursday, he would steal money from anyone. He commits the crime, serves 632 00:42:37,270 --> 00:42:41,290 his time, but he wanted as much money as he could get his hands on. Greedy 633 00:42:41,290 --> 00:42:47,090 enough to be episode 100 of American Greed. Next Thursday, 10 Eastern on 634 00:42:47,430 --> 00:42:50,510 The fastest growing cable network in primetime. 635 00:42:51,030 --> 00:42:52,030 CNBC.