Final Sentences Come Down in Multi-State Loan Modification Scam That Used Phony Bank Logos
Four men received sentences of less than a year in jail each for defrauding hundreds of victims in a home loan modification scam that had them illegally collecting upfront fees and using CitiFinancial or CitiMortgage logos on customer correspondence without authorization.
It's estimated the real estate scam cost victims more than $130,000.
Jacob John Cunningham, 26, and John D. Silva, 28, both of Irvine, pleaded guilty May 8 to felony conspiracy to collect illegal upfront fees and conspiracy to commit theft by false pretenses. They each were sentenced to eight months in jail and five years formal probation. They have jointly paid $40,000 toward restitution and will be ordered to pay even more when an amount is determined at a later hearing, according to prosecutors.
Justin Dennis Koelle, 23, of Costa Mesa, who pleaded guilty May 8, 2013, to the same felonies, was sentenced to nine months in jail and five years of formal probation. Dominic Adam Nolan, 32, of Irvine, pleaded guilty May 8 only to felony conspiracy to collect illegal upfront fees. He was sentenced to six months in jail and five years of formal probation.
Andrew Michael Phalen, 26, of Mission Viejo, had pleaded guilty June 4, 2012, to conspiracy to collect illegal upfront fees and conspiracy to commit fraud and was later sentenced to a year in jail and five years formal probation.
Each of the five fraudsters is prohibited from engaging in loan modification or loan consulting practices during the duration of their probations. A future hearing will determine the amounts of restitution Koelle, Nolan and Phalen must pay.
Between January 2009 and March 2012, the fearsome fivesome created numerous fraudulent loan modification businesses including CSFA Home Solutions, Mortgage Solution Specialists, Inc., CS & Associates, National Mortgage Relief Center, National Mortgage Relief Center, NMRC, NMRC Inc., N.M.R.C. Inc., Allied Home Servicing and Allied Loan Servicing.
They 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 what the men actually did was take 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. That's when Cunningham, Nolan and Silva launched 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.
Of course, Cunningham, Nolan and Silva had no real affiliation to CitiFinancial or CitiMortgage, and they made no efforts to secure loans through those financial institutions.
While hundreds of known victims were found, others remain unknown in California and out of state, according to the Orange County District Attorney's office. Prosecutors are being aided in the investigation by the U.S. Secret Service, Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), Department of Real Estate, Orange County Probation Department, Orange County Sherriff's Department and the Costa Mesa, Irvine, Santa Ana and Huntington Beach police departments.
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