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Claremont man charged with bilking neighbors

$1 million bond set in $634,000 investment fraud case

DETAILS

Who: J.V. Huffman Jr, 45, of Claremont

Charges: Four felony counts of securities fraud and four counts of obtaining by false pretense

Bond: $1 million secured

Attorney: Anderson Terpening PLLC

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Investors can go to the Secretary of State’s Web site at www.sosnc.com for information to avoid investment scams and to check on stockbroker and investment adviser registrations.

Do you know J.V. Huffman, Jr?

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U.S. Securities Exchange Commission Complaint for Injunctive Relief

Consent order imposing permanent injunctions, order appointing receiver, order freezing assets, order prohibiting destruction of documents and order expediting discovery

By Sarah Newell Williamson | Hickory Daily Record

Published: November 11, 2008

NEWTON - Wayne Bumgarner saved for years for retirement. Six years ago, when J.V. Huffman Jr. told him about an investment opportunity that guaranteed 11 percent to 13 percent returns, it sounded like a dream come true.

"The Bumgarners and the Huffmans grew up together," Bumgarner said. "I knew him. We both live in Claremont. When he told me that I would be investing in mortgages, and it was bonded and secured, I thought it sounded OK. I ran into several of his clients that I knew, and thought it was great."

Huffman, 44, was charged Friday on four counts of felony securities fraud in cases involving four investors who invested $634,000, according to the North Carolina Secretary of State's Department.

The arrest came after investigators searched Huffman's residence at 3400 Wishing Well Lane in Claremont, where he also operates his business, and seized material including paper documents, computer equipment and other electronic devices.

The department is investigating Huffman and his company, Biltmore Financial Group Inc. (BFGI).

Officials said Monday more charges are possible. Huffman was in court Monday on a first court appearance. He's in jail under a $1 million secured bond.

The Secretary of State's investigation began earlier this year after confidential sources raised suspicions about Huffman and his company, said George Jeter, director of communications with the Secretary of State's office.

"People who are knowledgeable in the investment industry came to us saying that the promises being made sounded 'too good to be true,'" said Elaine Marshall, secretary of state. "In most cases, when an investment sounds too good to be true, it usually is."

The department issued a cease and desist order against Huffman and his business.

Lost investments

In 2002, Bumgarner invested $10,000 with Huffman's investment company, Biltmore Financial Group Inc. He was told he could withdraw his money at any time without any penalty — and knew some people who did. Bumgarner gradually began investing more money. He introduced his dad to the Biltmore Financial Group Inc.

On Saturday, Bumgarner's son called with the news that Huffman was arrested on securities fraud. Bumgarner showed up in court Monday to see Huffman arraigned on four felony counts of securities fraud, which is punishable by up to 10 years in jail.

"My dad invested several thousand dollars. I invested all I had," Bumgarner said. "My dad's 87. He can't make that money back."

Dozens are echoing Bumgarner's story across the Catawba Valley area.

According to the search warrant that was executed by the N.C. Secretary of State, the Biltmore Financial Group Inc. (BFGI) was formed in November 1991 and cited in its annual report in 2007 that it's a business and personal consulting group.

In the search warrant, Huffman told an agent with the Secretary of State that he, "buy(s) mortgages from individuals and sells them to other investors for a profit. That profit is what I pay my clients with. It's that simple. There are trillions of dollars in mortgages held by individuals for sell, and many people who want to buy them. When I find a good deal for sale I need the ready capital to purchase it and then turn around and sell it for a profit to people who want to hold that type of investment and are willing to pay someone a premium price for finding it for them. The funds from my clients provides me with the capital I need to make that all work, and for the privilege of using their money, I pay them a really good return."

Huffman has not been licensed to sell securities in North Carolina since October 1991, the search warrant states.

He also stated under the company's dossier that BFGI's assets are insured and secured by the FDIC, SIPC and Thrivent Financial Services.

The FDIC (Federal Deposit Insurance Corporation) insures money up to $250,000 in a bank account. The SIPC (Securities Investor Protection Corporation) provides up to $500,000 protection to investors when a brokerage firm fails. Neither of these applies to BFGI. Huffman also was fraudulently using Thrivent Financial Services' name, which does not have an insurance policy in place to cover investors, according to the search warrant.

Claremont resident Carolyn Huffman, who is not related to J.V. Huffman, said Huffman told potential investors all of these things. Her sister, Mary, invested $30,000 in BFGI, and Huffman tried to get her to invest, as well.

"He told my sister it was FDIC insured, and said he had life insurance that was over $1 million, and the company was over $1 million. He said the money was usually only out of the bank for a few days," Ms. Huffman said.

She said Huffman told her mortgages were packaged and sold through BFGI. She had several thousand dollars she was considering investing with BFGI. In the end, though, she decided to invest her money in CDs.

"Do I want the extra percentage or do I want peace of mind?" Ms. Huffman asked herself.

The Secretary of State's department said it is working to recover the money investors gave to Huffman, which they believe Huffman took for personal use, Jeter said.

"We know that for the victims, the biggest question is always how much of their money can they recover?" Secretary Elaine Marshall said. "We are taking steps to discover the remaining assets in this case, and clearly the needs of the victims will take the highest priority."

Additional charges may be forthcoming.

Although Ms. Huffman didn't invest with him, she's furious at Huffman for her sister's sake and for several other friends who did.

"This is going to wipe out a lot of Catawba County people that have worked really hard," Ms. Huffman said. "It just makes me sick that we trusted him."