California Real Estate Fraud Report

On September 10, 2009, California Attorney General Edmund G. Brown met local residents and community activists at a town hall meeting organized by Los Angeles City Councilman Alarcon at Mission College in Sylmar. The purpose of the meeting was to discuss loan modification fraud by con artists - including some attorneys - as well as the general unwillingness of banks that have received bail-out money from the federal government to modify the terms of distressed borrowers’ loans.

There has been no shortage of news regarding Attorney General Brown’s efforts to stamp out loan modification fraud by prosecuting those who prey on homeowners in default. This author has published a number of articles in both Examiner.com and the North Valley Community News advising borrowers to use extreme caution when dealing with loan modification consultants, and if they do, the questions that should be asked of these persons. Number One, though, is not to pay these individuals and firms any upfront money unless the firm is run by a licensed real estate broker or an attorney who has filed a plan of their business practices with the state of California Department of Real Estate (DRE).

Despite this, I get several emails and phone calls each week from homeowners who, through a combination of ignorance and desperation, caved in to the siren calls of loan modification firms.

Because the public still has not gotten the message about loan modification fraud, during the town hall meeting with Attorney General Brown, I got up and asked him to do the following to stop the fraud NOW:

When the County Recorder sends out a Notice of Default (NOD) to a homeowner who has defaulted on his or her mortgage, attached or enclosed with the NOD should be a letter with official letterhead from the Office of the California State Attorney General warning homeowners about loan modification scams. The cost to the state is minimal in terms of outlay, but over time, it will reduce the number of cases the Attorney General has to file against loan modification firms and attorneys which may be breaking the law with respect to modifying the loans of homeowners who cannot pay their mortgages.

If YOU want to stop loan modification fraud, please call or write your state senators and assembly members and ask them to lobby the Attorney General’s office to place educational information in the Notice of Default mailings from the County Recorder. You will be helping your neighbors, your community and perhaps even yourself.

This article is also published on Examiner.com by the L.A. Fraud Examiner.

This is a news story, that if proven true in the courts, sets a new milestone in hubris and anti-social behavior by three licensed real estate professionals towards the public. When you read what has been alleged, perhaps you will wonder as I do how these individuals thought they could commit the alleged crimes without being detected.

Yesterday, California Attorney General Edmund G. Brown announced that he has arrested several employees of ALG, Inc., a Los Angeles-based mortgage company. Michael McConville, 39, Garrett Holdridge, 23, and Alan Ruiz, 28, are all being held on $2 million bail each. McConville is a sales manager for ALG, Inc., while Holdridge and Ruiz are loan officers for ALG. The three face a total of 44 charges for defrauding more than 70 borrowers.

Attorney General Brown’s office is alleging that McConville, Holdridge and Ruiz ran a loan modification scam by falsely promising distressed homeowners that they would help them refinance their loans with lower interest rates and other financial terms including - get this - even some cash out. It is alleged that McConville and his associates presented the homeowners with paperwork using the terms they had promised but which had never been approved by the lenders. After the borrowers signed the closing paperwork, the pages with the terms  were replaced with pages bearing the actual terms with which the lenders had agreed. The signatures of the victims were forged on the replacement documents by the defendants.

Said Attorney General Brown, “This was not some clerical error but a criminal conspiracy to steal nearly a million dollars from borrowers.”

The defendants have been charged with the following crimes:

1. 28 counts of grand theft (Penal Code Section 487, Subdivision (a))
2. 14 counts of forgery (Penal Code Section 470, Subdividion (d))
3. 1 count of elder abuse (Penal Code 182, Subdivision (d))
4. 1 count of conspiracy to commit grand theft (Penal Code Section 182, Subdivision (a)(1))
5. 3 special allegations of aggravated white-collar crime in excess of $500,000 (Penal Code Section 186.11,
Subdivision (a)(2))
6. Taking in excess of $3,200,000 (Penal Code Section 12022.6, Subdivision (a)(4) and (b)).

Read the Full Press Release by the Office of the California State Attorney General.

This article is also published on Examiner.com by the L.A. Fraud Examiner.