Four men pleaded guilty in federal court in San Diego to stealing more than $11 million in a loan modification scam that preyed on desperate homeowners trying to save their homes from foreclosure.
Gary Michael Bobel, 59 of Carlsbad, Scott Thomas Spencer, 35, Mark Andrew Spencer, 32, and Travis Corey Iverson, 35, pleaded guilty to conspiracy charges. Bobel, also admitted that he failed to report approximately $489,308 in taxable income received in 2009 from 1st American Law Center. An employee of 1st American Law Center, Roger Trent Jones, pleaded guilty a year ago and was sentenced in March to 21 months in custody for his involvement in the conspiracy.
According to court documents, Bobel opened up the loan modification business in North County in 2008. The defendants used high-pressure sales tactics and outright lies to induce customers of 1st American to purchase loan modification services — for payments of $1,995 to $4,495 — such as falsely claiming to have a team of attorneys who pre-screened clients and having a 98 percent success rate in obtaining loan modifications.
Among other ruses, telemarketers pretended that their grandmothers got a loan modification through the company, that they had a special relationship with a particular client’s bank, or that the company had helped thousands of happy homeowners with loan modifications, prosecutors said. The telemarketers even persuaded homeowners to pay the company’s fees instead of using their limited funds to stay current on their mortgage payments, according to prosecutors.
Through the use of false representations and promises, 1st American Law Center fraudulently obtained more than $11 million in client payments between 2008 and 2010 from more than 4,000 homeowners across the country, prosecutors said.
From his classified ad two years ago – sound familiar? bobel ad
It is our mission and highest priority to provide Americans in every city with an ethical, affordable, and effective program in obtaining multiple solutions to financial freedom. Our vision is to create the largest and most reputable law firm in the country by providing education, customized client resolutions, and 100% customer service/satisfaction. It is evident, through the financial crisis that is taking place in all aspects of lending, that consumers need a personal advocate to help intervene. 1st American Law Center and Gary Bobel are committed to protecting all Americans from predatory lending and financial distress. It is our confident belief that success ultimately depends on establishing a customer service and relationship oriented environment, that instills the integrity in each team member in the crusade of “Protecting The American Dream.”
Gary Bobel
It must have been a slow week for real estate news – from thelatimes.com:
Could today’s seductive conditions in the housing market — severely marked-down prices, record low interest rates and hundreds of thousands of foreclosures waiting to be resold — be breeding new generations of the very practices that led to the crash?
In an ironic twist, there are signs that the wreckage left over from the housing bust may be reigniting dubious real estate schemes and fraud. According to researchers:
• Property flippers are back in action in places like south Florida and Las Vegas, where condominium prices crashed but are now appreciating again in some areas.
• So-called floppers are defrauding banks by hijacking short sales at prices below what legitimate buyers are willing to pay. In these schemes, realty agents obtain fraudulent appraisals to persuade banks to sell houses at below-market prices to investor groups. The investors then flip the houses at fair market prices to ordinary home buyers and split the quick profits.
• Creative “credit enhancement” companies are “renting” investors the bank account balances they need to demonstrate to lenders that they have the financial wherewithal to qualify for a mortgage. The accounts are real, but they don’t belong to the loan applicants who claim them. Account names are assigned to applicants — who pay for the service — but they are never allowed access to the money. When mortgage underwriters check to verify the deposits, which are in reality fraudulent sub-accounts, they are told the money is in the name of the loan applicant.
• Investors are hoodwinking lenders into giving them low down payments and rock-bottom interest rates by lying about their intentions to occupy the property they plan to buy as a principal residence. Some investors consider such dissembling nothing more than a fib, but in reality it’s bank fraud. Researchers at the Federal Reserve Bank of New York have documented that widespread falsehoods by investors about occupancy played a major but previously unrecognized role in the real estate bust.
Hat tip to daytrip for sending this along, frombetabeat.com:
A new wave of startups is working on algorithms gathering data for banks from the web of associations on the internet known as “the social graph,” in which people are “nodes” connected to each other by “edges.” Banks are already using social media to befriend their customers, and increasingly, their customers’ friends. The specifics are still shaking out, but the gist is that eventually, social media will account for at least the tippy-top of the mountain of data banks keep on their customers.
“There is this concept of ‘birds of a feather flock together,’” said Ken Lin, CEO of the San Francisco-based credit scoring startup Credit Karma. “If you are a profitable customer for a bank, it suggests that a lot of your friends are going to be the same credit profile. So they’ll look through the social network and see if they can identify your friends online and then maybe they send more marketing to them. That definitely exists today.”
And in the last year or so, financial institutions have started exploring ways to use data from Facebook, Twitter and other networks to round out an individual borrower’s risk profile—although most entrepreneurs working on the problem say the technology is three to five years away from mainstream adoption.
“Credit score is a lagging indicator,” said Brett King, a tall, puffy Australian with white blond hair who is the founder of the online-only bank Movenbank and author of BANK 2.0: How Customer Behavior and Technology Will Change the Future of Financial Services. “At best, your credit score is about 60 days behind. What we’re trying to do is look for things that reflect the likelihood of a future default, rather than what’s happened in the past.”
Movenbank is an online bank in private alpha release that replaces plastic credit and debit cards with a mobile device such as an iPad or smartphone. Mr. King is a major proponent of the questionable young science of using social media to evaluate creditworthiness.
When it comes to online privacy, Mr. King subscribes to the Mark Zuckerberg school of thought: standards are evolving, and the world will be better for it. (As long as you’re connecting and sharing, only good things can happen to you!) “Our view of what ‘private’ is, is changing,” Mr. King said. “We make friends with people we barely know!”
He predicts that banks will soon start asking customers to verify their social media profiles. Not everyone has a social media presence, of course, so submitting your Twitter handle will first be pitched as a way to provide customer support or account alerts, which will later open the door for “more complex products,” Mr. King said.
Thanks to the few readers who sent in the links about the Fannie/Freddie executives who had civil lawsuits filed against them today – but it doesn’t look like they will be facing jail time. Excerpted from theAP:
In a lawsuit filed in New York, the Securities and Exchange Commission brought civil fraud charges against six former executives at the two firms, including former Fannie CEO Daniel Mudd and former Freddie CEO Richard Syron.
The executives were accused of understating the level of high-risk subprime mortgages that Fannie and Freddie held just before the housing bubble burst.
“Fannie Mae and Freddie Mac executives told the world that their subprime exposure was substantially smaller than it really was,” said Robert Khuzami, SEC’s enforcement director.
Many legal experts say they don’t expect the six executives to face criminal charges.
“If the U.S. attorney’s office was going to be bringing charges, they would have brought it simultaneously with the civil case,” said Christopher Morvillo, a former federal prosecutor now in private practice in Manhattan.
Robert Mintz, a white-collar defense lawyer, says he doubts any top Wall Street executives will face criminal charges for actions that hastened the financial crisis, given how much time has passed.
The SEC has brought other cases related to the financial crisis since it began a broad investigation into the actions of Wall Street banks and other financial firms about three years ago.
Most cases, however, didn’t involve charges against prominent top executives.
An exception was Angelo Mozilo, the co-founder and CEO of failed mortgage lender Countrywide Financial Corp. He agreed to a $67.5 million settlement with the SEC in October 2010 to avoid trial on civil fraud and insider trading charges that he profited from doling out risky mortgages while misleading investors about the risks.
(These perpetrators will probably settle for something less than the Tan Man?)
Gary Michael Bobel, 59 of Carlsbad, Scott Thomas Spencer, 35, Mark Andrew Spencer, 32, and Travis Corey Iverson, 35, pleaded guilty to conspiracy charges. Bobel, also admitted that he failed to report approximately $489,308 in taxable income received in 2009 from 1st American Law Center. An employee of 1st American Law Center, Roger Trent Jones, pleaded guilty a year ago and was sentenced in March to 21 months in custody for his involvement in the conspiracy.
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