Desperate homeowners facing foreclosures and evictions were taken for millions
A California man has pled guilty to operating a multimillion-dollar mortgage modification fraud scheme, the US Attorney for the Southern District of New York said Tuesday.
Sergio Lorenzo Rodriguez of Orange County, Calif., pled guilty to one count of wire fraud in connection with a fraudulent foreclosure rescue scheme that took in at least $5 million in prohibited advance fees from thousands of financially distressed homeowners, the Department of Justice officials said. The man pled guilty before US Magistrate Judge Sarah Netburn, according to a Press release.
“As he admitted today, for years, Sergio Lorenzo Rodriguez took advantage of desperate homeowners who were facing foreclosure and eviction to collect from them, in the aggregate, millions of dollars in advance fees based on promises that Rodriguez knew he could not, or would not, keep,” US Attorney Damian Williams said. “He exploited the financial vulnerability of his victims and is now being held accountable for his crime.”
According to the complaint, indictment, statements made in court and public documents, from around mid-2015 through August 2020, Rodriguez and a co-conspirator owned and/or managed a series of mortgage modification companies through which they perpetrated a scheme to defraud and attempt to defraud, through deceptive marketing practices, financially distressed consumers who were facing or were at imminent risk of foreclosure, according to the US Attorney’s Office.
The companies included American Home Servicing Center; National Advocacy Center; National Advocacy Group; and Capital Home Advocacy Center. According to the US Attorney’s Office, the defendants “…tricked desperate homeowners into paying thousands of dollars each in prohibited advance fees through various misrepresentations, including: falsely claiming that the homeowners had been pre-approved by their lender or servicer for a mortgage modification; misrepresenting prohibited advance fees as closing costs or other non-prohibited costs; fraudulently claiming that the companies achieved success rates of 95% or higher for mortgage modifications; and making empty promises of a no-risk money back guarantee. As a result of their intentional misrepresentations – and misrepresentations they encouraged their subordinates to make – the defendants induced thousands of homeowners to pay, in the aggregate, millions of dollars in prohibited advance fees to the companies, including a large number of consumers who were ultimately denied mortgage modifications or who received modification offers that were less favorable than they had been led to expect at the time they paid advance fees, the US Attorney’s Office said.
In February 2018, the Federal Trade Commission brought a civil lawsuit against the defendants, among others, in federal court in Santa Ana, California. That civil action resulted first in a temporary restraining order and then a permanent injunction barring the defendants from marketing and selling all debt relief products and services, the official said. As alleged in the indictment, the defendants flouted those judicial orders by having a relative create another mortgage modification company named 1st Premier Asset Solutions, which the defendants operated using aliases and some of the same deceptive practices, according to the Press release.
Rodriguez, 47, of Laguna Niguel, Calif., pled guilty to one count of wire fraud, which carries a maximum sentence of 20 years in prison along with a maximum fine of $250,000 or twice the gross gain or loss from the offense, the US Attorney’s Office noted.
According to a recent study, some parts of California are among the most at-risk housing markets vulnerable to pandemic-fueled economic damage. ATTOM, self-described as curator of the nation’s premier property database, released its fourth-quarter Special Coronavirus Report spotlighting vulnerable housing markets across the US at the county level.
California figured prominently in that study. California, combined with New Jersey and Illinois, had 31 of the 50 counties most vulnerable to potential economic impact of the pandemic – and, presumably, a vulnerability to fraudulent schemes positing solutions. The 50 most at-risk counties included seven sprinkled throughout northern, central and southern California, the report showed.
According to the ATTOM study, those seven vulnerable counties in California are: Butte County (Chico), El Dorado County (east of Sacramento), Humboldt County (Eureka) and Shasta County (Redding) in the northern part of the state; as well as Kern County (Bakersfield), Madera County (outside Fresno) and Riverside County (east of Los Angeles) in the central and southern sections of the state.