The Charlotte Observer reports…
“The phone rang at 8:30 on a chilly Friday night at the woman’s Hickory home. Her caller ID showed the number for J.V. Huffman Jr., who managed her $130,000 retirement account – but there was a different voice on the line.
“This is agent Shawn Pruett with the N.C. Secretary of State’s office,” the woman recalled hearing. “Do you have money invested with J.V. Huffman? We’ve got him for fraud.”
“I started shaking so bad, it was like I was having a seizure,” said the woman, who asked not to be named for fear it would compromise plans to consolidate her loans. “It turned my life upside down. It was the money I was going to live on the rest of my life.”
Claremont, a blink-and-you-miss-it town of 1,100, has been jolted by accusations that Huffman, one of its best-known residents, cheated hundreds of investors out of millions, spending the money on fancy cars and his sprawling home.
Interviews with about a dozen friends, associates and investors paint a complicated portrait of the former school board member and church leader. Those who know him say they’re torn between images of the man they know – a soft-spoken hometown boy who quoted scripture, donated to charity and threw parties for college students – and the man they’ve read about in the papers recently.
Some say they feel foolish for getting caught in the web or angry that they’ve lost their savings; others say they’ve forgiven Huffman and are praying for his family.
Huffman, who remains in jail in Catawba County under a $1 million bond, confessed the scheme to state investigators after they raided his house, seizing documents and computer equipment, authorities said. Huffman could not be reached for comment, and family members did not return phone messages or answer their doors in recent weeks.
State authorities arrested Huffman on Nov. 7 on four felony counts of securities fraud. A few days later, the SEC filed a civil suit in federal court, saying Huffman and his company, Biltmore Financial Group, sold $25 million in investments to more than 500 people across the country, many of whom were part of the Lutheran community in Claremont, 50 miles northwest of Charlotte.
Court documents say Huffman spent investors’ money on vacation houses, a home movie theater and an Aston Martin convertible, among other lavish purchases.
Associates say he used his small-town connections and strong reputation – plus the promise of high returns – to persuade strangers, friends and family members to invest.
In the 17 years since it launched, Biltmore Financial collected clients nationwide, from Claremont to Colorado. Huffman didn’t advertise; most investors found out about the company through church members or relatives.
Hometown sonHuffman, 44, was born Joshua Vance Huffman Jr. and grew up in Claremont.
Friends and family say his parents are God-fearing, honest people, and that Huffman was a mild-mannered young man. His father, who lives in a two-story Claremont home, worked as a furniture upholsterer and later opened S&H Pools Inc., a swimming pool construction company.
Huffman Jr. attended Bunker Hill High School and Lenoir-Rhyne College, friends and relatives say. After college, he worked as an insurance salesman for the Aid Association for Lutherans.
In November 1991, Huffman launched Biltmore Financial Group. Authorities say he has not been registered to sell securities since October of that year, and a check with the Financial Industry Regulatory Authority confirms Huffman has not been licensed as a broker anywhere in the United States for the past two years, the oldest records available.
Huffman was plugged into his community. He won a seat on the Catawba County Board of Education in 1996 and was elected at least once again, serving until he lost a bid for re-election in 2002.
He donated to his church and charities and served on Catawba’s Board of Adjustment, where fellow members say he was respected and did a good job.
Huffman was successful in business. He moved into his house on Wishing Well Lane, which friends say his father built, in 1993, gutted it and added on, installing the movie theater with reclining leather seats, among other upgrades.
The house, whose tax value is $765,000, unfolds along a winding ribbon of asphalt in the Claremont foothills, surrounded by mobile homes and modest brick houses, chain-link fences and barking dogs. There’s a circular driveway with a fountain in the center, bright sprays of flowers outside and a long, low porch with rocking chairs and fans.
No one answered the door on a recent day – friends say Huffman’s wife and four children have left town.
Public records show Huffman owns almost a dozen other properties, including vacation and rental homes. Court documents allege he spent investors’ money on a $1 million recreational vehicle and other luxuries, and friends say he wore expensive clothes and took frequent trips to the islands and, about a month ago, to Alaska.
His business pitch
Court records and clients detail how the business worked:
Initially, he told investors his company operated like a mutual fund, but he changed his pitch after Sept. 11, 2001, to ease fears about market volatility. He would say Biltmore profited by pooling investors’ funds to buy and sell mortgages.
Huffman promised interest rates as high as 16.5 percent and told investors their money was insured by the FDIC, Securities Investor Protection Corp. and other groups.
As worries mounted 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 SEC said.
In a recent letter to investors, Huffman promised higher interest rates to clients who increased their account balance by Nov. 15 and said if investors transferred money from a declining mutual fund or stock into a new account with Biltmore, “I will restore your balance back to the level on your last quarterly statement or as of Sept. 30, 2008.”
Investors say they never had trouble withdrawing money; some received monthly interest payments; others took out $5,000 or $20,000 whenever they needed it. They said they didn’t suspect anything until news broke about the arrest.
The Hickory woman who got that Friday-night phone call said she invested $130,000 with Huffman after her ex-husband introduced her to him. She remembers plaques in his office with Bible verses and the promise of higher returns than the BB&T account she had her money in previously.
The woman, 63, has been retired about two years, and wonders what she’ll do now. She’s negotiated with her insurance company to lower her monthly payments, is trying to consolidate bills – and is waiting for whatever happens next.
“What else can we do?” she said. “I’m running on pure emotion right now.”
Another investor, Vickie Drum of Newton, is Huffman’s second cousin and saw him about once a year at family Christmas parties, she said. Drum said Huffman’s clients were mostly frugal, hard-working folks who saved their whole lives. Her money came from selling property passed down through generations in her family, she said.
“(Investors) pinched pennies,” Drum said. “They did without to put this money aside to live off of for the rest of their lives. It’s kind of a slap in the face.”
He took care of studentsThe swirl of accusations has been difficult for one group of college students at Lenoir-Rhyne, who knew Huffman though church and a campus ministry and considered him almost family, they said recently at a Hickory coffee shop.
“I only think of good things when I think of J.V.,” said Harrison Smith, a junior from Clayton, who’s known Huffman since his freshman year. “… Everything he did was geared around someone else.”
The Huffmans invited students to their home for Thanksgiving, for instance, offered to let students do laundry there and often hosted parties for students, where Huffman would grill burgers and make smoothies. He used his RV for church mission trips and drove it to college football tailgates, offering a spread of pizza and other snacks.
Huffman would often speak on campus, too, dressing casually in Abercrombie pajama pants and slippers and carrying a bag of CDs and T-shirts to give away. He was friendly and inspiring – but never slick, students said.
Samantha Quave, a junior from Winston-Salem, said she and the others have talked about the situation with their pastor and friends.
“We certainly don’t try to excuse it,” she said. “For me, it’s just confusing. It’s really just very hard to put the J.V. we know with the horrible picture the press has painted of him. He taught us so much about grace and forgiveness. … We want to extend that to him.”
Huffman is scheduled to appear in court Monday. He’s requested court-appointed attorneys.
Kit Addleman of the SEC said she has never investigated a Ponzi scheme where investors have gotten all their money back.
“They will be lucky to get between 30 cents and 50 cents on the dollar,” she said.
Even that could be good news for investors, some say.
One investor, a 63-year-old former race car driver, said he might have to sell his vacation home and rental properties to cover his losses. The man, who asked not to be identified because he grew up with Huffman’s father and is close to the family, said his extended family had invested close to $750,000.
“We were so confident, and he led us to believe everything was so healthy,” he said. “For somebody I have known his whole life, I can’t believe he could look me in the eye and tell me that.”
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