According to the Office of the Special Inspector General for the Troubled Asset Relief Program, Jacob Cunningham, John Silva, Justin Koelle, Dominic Nolan and Andrew Phalen created several fraudulent loan modification businesses between January 2009 and March 2012 to operate their scam. These entities included: CSFA Home Solutions, Mortgage Solution Specialists, CS Associates, National Mortgage Relief Center, NMRC, Allied Home Servicing, Allied Loan Servicing, U.S. Consulting Corp., and Accredited Processing Solutions.
To operate their scam, the conspirators sent a promotional letter to people throughout the country offering to restructure their home loans, in which the defendants referred to the homeowners specific lender and principal balance, and charged the borrower upfront fees for loan modification services.
Furthermore, the letter was fraudulently designed to make it appear that it came from the victims lender.
On Oct. 11, 2009, California Senate Bill 94 was enacted making it illegal in California for any person or business to collect any advance fee for any type of loan modification service.
SIGTARP said that when borrowers called the businesses on the letter, the defendants falsely told the victims that they could obtain a complete refund of the fee their company charged if the loan was not modified. Homeowners were also told that the company had over a 95% success rate.
However, none of these facts were true and after the scam victims gave the five defendants their money, they failed to receive any type of modification or get their money back as guaranteed.
While our country was in economic turmoil, the defendants, over a several year period, used lies and false promises of guaranteed mortgage modifications through HAMP to take advantage of hundreds of distressed homeowners struggling to save their homes from foreclosure, said Christy Romero, special inspector general for TARP. Holding out hope, they took upfront fees from victims and did little to no work on their behalf.
In order to avoid having their scheme detected, the defendants constantly changed the names, phone numbers and addresses of the companies they operated.
In December 2011, after more than 100 victims from California and other states submitted complaints to various law enforcement agencies and to the Better Business Bureau regarding this scam, Cunningham, Nolan and Silva started a new scheme in which they sent out forged Conditional Approval letters to the victims with a mortgage servicer logo.
These letters stated that they could offer the homeowner a low interest rate of 2.8% or less to refinance their home loan. The three conspirators also attached Escrow Instructions with the letter, therefore directing the homeowner to deposit between $3,500 and $4,600 directly into the defendants bank accounts.
Meanwhile, the defendants had no affiliation to the mortgage servicers or any authorization to offer a loan on behalf of these companies. They also made no effort to qualify the victims for loans with the servicers, SIGTARP stated.
Due to this scam, victim losses are estimated to be greater than $130,000.
All five defendants pleaded guilty to one felony count of conspiracy to collect illegal upfront fees. Their sentences range from eight months in jail to one year.
So far, Cunningham and Silva jointly paid $40,000 toward restitution. But they, along with the other three conspirators, will all be ordered to pay more restitution at a later hearing, SIGTARP said.