Feds probe fraud claims affecting D-M airmen - Air Force News | News from Afghanistan & Iraq - Air Force Times

Feds probe fraud claims affecting D-M airmen

TUCSON, Ariz. — The federal Securities and Exchange Commission is investigating an alleged investment scam affecting more than 125 Tucson residents, including a dozen airmen from Davis-Monthan Air Force Base.

The probe came to light inside a California courtroom this month involving a civil lawsuit filed against Pacific Wealth Management LLC of Nevada, which allegedly offered shady real estate deals and near worthless Iraqi currency while losing upwards of $400,000. Some Tucson residents are now in danger of losing their homes.

Temecula, Calif., attorney Richard Ackerman represents several California plaintiffs in Pacific Wealth lawsuits and said he plans to file another suit in California this week on behalf of a dozen or so Tucsonans.

Ackerman calls Pacific Wealth a Ponzi scheme that stayed afloat only as long as new investors joined. Many who lost money were brought in by trusted friends and relatives, he said.

Ackerman said the SEC investigating Pacific Wealth is significant because if wrongdoing is uncovered, the feds have the power to refer the case for criminal prosecution, put the companies into receivership and set up a compensation fund for victims.

One Davis-Monthan airman, Tech. Sgt. Ken Fraleigh, is listed in a lawsuit as the main Tucson referral partner for Pacific Wealth.

Fraleigh’s son-in-law, Maurice McLeod of Murrieta, Calif., managed Pacific Wealth from July 2003 until March 2007. Fraleigh is not named in the SEC action, nor as a defendant in the California lawsuits, and he is not commenting on the case.

Ackerman said he expects to subpoena Fraleigh to testify if the case goes to trial.

Carlsbad, Calif., attorney Paul Runes represents Pacific Wealth and McLeod in some of the California matters.

Runes is seeking to have McLeod excused from answering questions in one California suit.

Runes said that since the SEC is investigating the same fraud allegations in the lawsuit, and since that could lead to criminal charges, McLeod has a right to remain silent so as not to incriminate himself.