Investor fraud probe expands - East Valley Tribune: Business

Investor fraud probe expands

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Posted: Friday, September 26, 2003 6:40 am | Updated: 1:18 pm, Thu Oct 6, 2011.

The latest wrinkle in the lawsuit involving a Mesa couple accused of defrauding investors of millions of dollars is they have obtained a "reverse mortgage" on their Leonora Street home, an attorney for the Securities and Exchange Commission said Thursday.

Ronald Stephen Holt is accused of soliciting at least $1.4 million and as much as $25 million in investment money from as many as 4,600 people nationwide. The SEC, which filed its lawsuit in U.S. District Court in Phoenix earlier this month, claims Holt ran a phony investment scheme from about 1997 through at least November 2001. Holt, 52, did not respond to the Tribune’s request for comment.

The lawsuit also names Holt’s business, International Funding Association, his wife, Annette Holt, 46, and other businesses, including the Leonora Street Trust and Clarendon Avenue Holding Trust.

International Funding Association was originally located in Phoenix, but later claimed the Bahamas as its headquarters, according to the lawsuit.

Marshall Gandy, an SEC attorney based in Fort Worth, Texas, said he learned of the reverse mortgage, in which a monthly payment is paid to — rather than by — the owner of the house, after filing the lawsuit on Sept. 18.

The Leonora Street house, which the SEC said was bought in part with money from investor deposits, had been listed for sale at $998,000 until late July, Gandy said. Earlier this month, Holt took out a reverse mortgage for $755,628 in the name of his 78-year-old mother, Rose Holt, who lives in California, Gandy said. She isn’t named in the lawsuit.

According to the SEC’s lawsuit, Holt told prospective investors that International Funding Association would pool investor funds for overseas investments in what he called Federal Reserve Notes and various for-profit ventures, including trading in currency, commodities and precious metals and real estate. He said the investments would generate returns of 7 percent to 10 percent per month.

Holt sent investors — whom he solicited in person and through direct mail — account statements reflecting the promised returns, but has not substantiated the use and location of investor funds, the SEC said. Holt has also refused to return investors’ principal or pay the profits he claimed, it said.

At least $250,000 from investor accounts was used to buy the Holts’ Mesa home, and at least $325,000 was used to purchase and pay property taxes on various properties, the lawsuit said.

Through May 2002, Holt assured investors their funds were safe, and even insisted they were fully secured by gold bullion, the lawsuit said.

At the SEC’s request, Judge Paul Ronsenblatt of Phoenix has allowed a temporary restraining order that freezes the couple’s assets and requires relevant documents be preserved. There will be a hearing on a preliminary injunction at 3 p.m. Monday.

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