Aiming to prevent and root out real estate fraud, the area's largest association of agents is preparing to put new pressure on law-enforcement agencies and new rules on its own members, directors said this week.

The Southwest Riverside County Association of Realtors needs to warn local prosecutors and homebuyers of future scams as they develop, the group's attorney, John Giardinelli, said Friday. Giardinelli and one of the group's directors said they are acting in response to several unusual real estate investment groups, the largest of which is accused of pushing more than 100 Murrieta-area houses into foreclosure.

In 2005 and 2006, the brokers in charge of many local real estate offices warned their agents to be wary of those deals, which allegedly relied on inflated appraisals and generated kickbacks as large as $100,000 to Stonewood Consulting Inc., a mortgage and property brokerage that represented the buyers.

The California Department of Real Estate revoked the licenses of Stonewood agents Hendrix and Bayani "Bob" Montecastro. The two men and a web of their business partners face lawsuits and parallel investigations by the FBI and the Securities and Exchange Commission. No criminal charges have been filed and attorneys for the men have denied any illegal activity.

In numerous cases, real estate agents listed houses at $400,000 or $500,000 for months but then suddenly raised prices to $600,000 or more, according to a database used by local agents. Stonewood clients bought the houses with 100 percent financing just a few weeks later, according to the database.

In many other such cases, a seller would fire the agent and immediately hire another agent, who would list the house at a higher price and sell it to a Stonewood client.

Short listings and dramatic price hikes were common in the heady days of 2003 and 2004, but the frenzy had ebbed by 2005, when Stonewood closed most of its transactions.

The Realtor group should become more aggressive in warning against tactics that agents can use -- wittingly or not -- to facilitate fraud, President-elect Gene Wunderlich said.

"All of our members will not respond appropriately -- some out of ignorance, some because they're just too hungry for a paycheck and some because they're bad apples," Wunderlich said. "But we'll try."

Several residents of the Copper Canyon neighborhood complained that a small handful of agents appeared to be seeking out deals with Stonewood and similar operations.

The Realtor group already forbids a range of tactics that can be used to manipulate property values, but it hadn't been able to act unless a buyer, seller or real estate agent claims to have been harmed. One rule adopted recently allows the group's board to investigate and enforce certain rules more aggressively, Wunderlich said.

Additional rules haven't been spelled out in detail, but would give the association wider latitude in regulating member agents' dealings, he said.

Wunderlich and David Lynch, a local Realtor and appraiser, are expected to research and recommend new policies in tandem with Realtors from associations in the Corona and Riverside areas. Giardinelli said he expects the Riverside-area group, which he also represents, to sign on to the task force at a meeting Wednesday. The task force will begin meeting in mid-September, he added.

The real estate industry should address fraud both regionally and locally, said Giardinelli, whose office and home are in Canyon Lake.

"The problem, frankly, is all over the place," he said. "This was unquestionably the most concentrated area we've seen it in."

Contact staff writer Chris Bagley at (951) 676-4315, Ext. 2615, or cbagley@californian.com.