Tuesday, June 12, 2012

Loan Mod Fraud, Use Of Forged 'Conditional Approval' Letters In Phony Refi Offers Among Accusations That Bag Five; One Cops Plea, Gets Year In Jail

In Orange County, California, the Orange County Register reports:

  • Andrew Michael Phalen was sentenced [] to a year in jail and five years of formal probation [] for his role in a scam that offered home loan modification assistance to struggling mortgage holders across the country.

  • But four of the Mission Viejo 25-year-old's cohorts are looking at much more serious prison time for the scheme that relied on letters forged with CitiFinancial or CitiMortgage logos. Phalen's co-defendants are: Jacob John Cunningham, 25, of Irvine; Justin Dennis Koelle, 22, of Costa Mesa; Dominic Adam Nolan, 31, of Irvine; and John D. Silva, 27, of Irvine.
  • All five allegedly sent promotional letters to people throughout the U.S. with offers to restructure their home loans, with references to the individual homeowner's specific lender and principal balance. Those who signed on were charged upfront fees for loan modification services, despite California having outlawed such charges on Oct. 11, 2009.

  • Those who called a number on the letter were told they could get a complete refund of the fee if their loan was not modified, something that was unlikely, or so it seemed, because the company boasted a 95 to 100 percent success rate.

  • But Phalen pleaded guilty to, and the others are accused of, taking the money people paid without securing loan modifications, and of failing to return or refund the fees.To hide the thefts, company names, addresses and phone numbers constantly changed.

  • By late December 2011, more than 100 victims from California and other states had submitted complaints against the companies to various law enforcement agencies and better business bureaus, according to an OCDA statement.

  • It was then that Cunningham, Nolan and Silva are accused of launching a new fraud. Forged "Conditional Approval" letters with CitiFinancial or CitiMortgage logos in the letterhead were sent to distressed homeowners offered interest rates of 2.8 percent or lower to refinance their loans. "Escrow Instructions" attached to the letters directed the homeowner to deposit between $3,500 and $4,600 directly into the bank accounts of the accused.
For the Orange County District Attorney press release, see Man Sentenced For Defrauding Hundreds Of Victims In Real Estate Loan Modification Scam (Hundreds of fake letters with CitiFinancial or CitiMortgage logos sent as part of scam).

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