Seven Individuals Charged In Connection With Multi-Million Dollar Mortgage Modification Scheme
Scheme Victimized Financially Struggling Homeowners Across the United States
Preet Bharara, the United States Attorney for the Southern District of New York, Christy Romero, the Special Inspector General for the Troubled Asset Relief Program (“SIGTARP”), and George Venizelos, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of an Indictment in Manhattan federal court charging GUY SAMUEL, the co-owner of a company that purported to provide mortgage modification services, and four former employees of the company, ANTHONY BLACKWELL, ANGEL GONZALEZ, JONATHAN LYONS, and AREN GOLDFADEN, for their alleged participation in a multimillion-dollar scheme that victimized more than 500 financially struggling homeowners across the country. The defendants were arrested earlier this morning and will be presented in Manhattan federal court this afternoon before U.S. Magistrate Judge Frank Maas. The case is assigned to U.S. District Judge George B. Daniels.
Also unsealed today were the guilty pleas of SCOTT SCHREIBER and DARRELL KEYS in connection with their participation in the scheme. SCHREIBER pled guilty pursuant to an Information before U.S. District Judge Robert P. Patterson on October 16, 2013, and KEYS pled guilty pursuant to an Information before U.S. District Judge Robert W. Sweet on September 19, 2013.
Manhattan U.S. Attorney Preet Bharara said: “As alleged, these defendants told one lie after another, purporting to help struggling homeowners looking for an end to their financial troubles but instead defrauding them out of millions. This Office has zero tolerance for those who would target already distressed borrowers in hopes of turning a profit at their expense, and we will continue to work to hold these and like-minded defendants accountable.”
Special Inspector General of SIGTARP Christy Romero said: “Samuel and his coconspirators stand charged today with ripping off struggling homeowners desperately trying to keep a roof over their heads in the midst of the nation’s housing crisis. They allegedly claimed their ‘business’ was affiliated with TARP’s housing program, HAMP, and instructed victims to stop paying their mortgages immediately, transfer thousands of dollars in upfront frees to their company in exchange for false promises of a guaranteed mortgage modification, and cease all communication with their mortgage lenders. After allegedly swindling more than 500 struggling homeowners nationwide out of $2.3 million in ill-gotten proceeds, Samuel refused to provide refunds to victims for whom he and others did little if any work. Instead, Samuel purportedly spent hundreds of thousands of dollars on vacations, entertainment, and personal expenses. I commend U.S. Attorney Bharara and his team for their efforts in prosecuting this case, and let this be a warning to anyone allegedly engaged in fraud related to TARP; if guilty, you will be held accountable and brought to justice by SIGTARP and our law enforcement partners.”
FBI Assistant-Director-in-Charge George Venizelos said: “Struggling homeowners became easy prey for these defendants, who allegedly lured their victims into a false sense of security by promising to save them from financial burden in exchange for a fee. Those charged allegedly conspired to divert these funds into their own pockets and hid behind the façade of a legitimate federal assistance program with which they were not affiliated. This type of criminal activity is not only devastating to victims, but poses a serious threat to the integrity of our marketplace. Today we remind everyone of our commitment to identify sophisticated schemes that take advantage of vulnerable homeowners; those responsible will not go unpunished.”
According to the allegations contained in the Indictment, the Informations unsealed today, and statements made in related proceedings:
From approximately January 2009 to June 2011, the defendants perpetrated a scheme to defraud homeowners who were in danger of losing their homes because they could not afford to pay their residential mortgages. Through a company located in Long Island, New York (“Company-1”), and its successor companies (the “Mortgage Modification Companies”), the defendants and other employees falsely promised to help financially struggling residential mortgage holders refinance their mortgages for lower interest rates and monthly payments. Despite the defendants’ claims, however, the Mortgage Modification Companies delivered little or no service to their customers, diverting most, if not all, of the customers’ payments to the Mortgage Modification Companies’ owners and employees rather than using those funds to assist customers in procuring mortgage modifications. Through their scheme, the Mortgage Modification Companies obtained at least $2.3 million from more than 500 homeowners throughout the United States.
The Mortgage Modification Companies charged customers thousands of dollars in up-front fees—in violation of New York State law—and made fraudulent claims about the companies’ services, including that the Mortgage Modification Companies guaranteed that they would either: (i) secure a mortgage modification that would result in a significant reduction in the customer’s interest rate and/or monthly payments; or (ii) provide the customer’s money back. Through the Mortgage Modification Companies, the defendants and other employees also falsely claimed to be affiliated with the federal government’s Home Affordable Modification Program (“HAMP”), a federally-funded mortgage assistance program that is part of the Troubled Asset Relief Program and is available to homeowners free of charge.
SAMUEL, the co-owner and operator of the Mortgage Modification Companies, purchased on behalf of those companies tens of thousands of “leads” containing names and contact information for homeowners who had fallen behind or were in danger of falling behind in making mortgage payments on their homes. SAMUEL, BLACKWELL, who held himself out as an attorney for the Mortgage Modification Companies despite not having a valid law license for most of the relevant period, and GONZALEZ, a sales manager, instructed the companies’ sales representatives—who were responsible for calling, and answering calls from, struggling homeowners—to make materially false or misleading representations to convince prospective clients to pay upfront fees to the companies. Those false or misleading representations included that the Mortgage Modification Companies were associated with HAMP; that a mortgage modification was guaranteed and would take only approximately thirty to sixty days; and that the Mortgage Modification Companies would issue a full refund of the upfront fee to any client whose mortgage was not successfully modified in the stated time period. At the direction of SAMUEL, BLACKWELL, and GONZALEZ, the Mortgage Modification Companies routinely refused to provide refunds to customers despite the fact that those customers did not obtain mortgage modifications as promised.
SAMUEL, BLACKWELL, and GONZALEZ also personally met with and spoke directly to customers and told similar lies. They sought to cover up their fraudulent scheme by, among other things, directing sales representatives to assuage customers by falsely claiming that work was being done on the customer’s behalf and that the company just needed more time to obtain a mortgage modification, when, in fact, little or no work was being done to provide a mortgage modification to the customers. SAMUEL also made materially false and misleading statements in a deposition conducted by the New York State Attorney General’s Office in connection with an investigation of complaints by the Mortgage Modification Companies’ customers.
LYONS, GOLDFADEN, and KEYS worked as sales representatives for the Mortgage Modification Companies. SCHREIBER was the co-owner of Company-1.
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SAMUEL, 32, of Richmond Hill, New York; BLACKWELL, 47, of Manhattan, New York; GONZALEZ, 31, of Rosedale, New York; LYONS, 51, of Rockville Center, New York; and GOLDFADEN, 36, of East Rockaway, New York, are each charged with one count of conspiracy to commit wire fraud, and one count of wire fraud, each of which carries a maximum sentence of 20 years in prison.
SCHREIBER, 30, of Brooklyn, New York, pled guilty to one count of conspiracy to commit wire fraud and one count of wire fraud, and he faces a maximum sentence of 40 years in prison. KEYS, 51, of Uniondale, New York, pled guilty to one count of conspiracy to commit wire fraud, and he faces a maximum sentence of 20 years in prison.
Mr. Bharara praised SIGTARP and the FBI for their outstanding work in the investigation. Mr. Bharara also thanked the New York State Attorney General’s Office for its assistance.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a Co-Chair of the Securities and Commodities Fraud Working Group. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.StopFraud.gov.
This matter is being handled by the Office’s Complex Frauds Unit. Assistant U.S. Attorney Janis Echenberg is charge of the case.
The charges contained in the Indictment are merely accusations and the defendants are presumed innocent unless and until proven guilty.