California Man Operating Phone Room in Debt Relief Scam Pleads Guilty to Defrauding Consumers
An Orange County, California, man pleaded guilty today for his role in operating fraudulent debt relief firms that offered to settle credit card debts but instead took victims’ payments as undisclosed up-front fees, the Justice Department and U.S. Postal Inspection Service announced.
Jeremy Nelson, 30, pleaded guilty to one count of an indictment alleging conspiracy to commit mail fraud and wire fraud in connection with companies known as Nelson Gamble & Associates (Nelson Gamble) and Jackson Hunter Morris & Knight LLP (Jackson Hunter). According to the indictment, Nelson and his employees portrayed the debt relief companies as law firms and attorney-based companies that would negotiate favorable settlements with creditors. Clients made monthly payments expecting the money to go toward settlements. Nelson and his co-conspirators instead took at least 15 percent of the total debt as company fees, with the first six months of payments going almost entirely toward undisclosed up-front fees.
“Debt relief scams prey on vulnerable consumers trying to climb out of tough financial situations,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “The Justice Department will continue to investigate those who take advantage of consumers facing hard times, and prosecute unlawful schemes that bleed desperate consumers of their remaining resources.”
“This scheme victimized people already in financial distress,” said U.S. Attorney Eileen M. Decker of the Central District of California. “As today’s guilty plea shows, the Justice Department is committed to protecting consumers, particularly those who are vulnerable to fraud schemes designed to prey upon people already in perilous economic condition.”
“Protecting our customers from fraud is one of our agency’s biggest priorities,” said Acting Inspector in Charge Daniel Brubaker of the U.S. Postal Inspection Service. “The U.S. Postal Inspection Service will continue to vigorously pursue those who use our nation’s mail system to commit fraud or other illegal activity.”
Jeremy Nelson’s scheme ran from February 2010 to September 2012. Nelson admitted he changed the name of his company from Nelson Gamble to Jackson Hunter in 2011. Nelson and his co-conspirators told victims that Nelson Gamble had gone bankrupt and that Jackson Hunter was an unrelated company that had taken over some of the accounts. Nelson and his co-conspirators blamed past problems on Nelson Gamble and denied requests for refunds of money paid to Nelson Gamble. Some victims who previously demanded refunds accepted the explanation that Nelson Gamble was bankrupt and did not pursue complaints against Jackson Hunter.
Nelson faces a statutory maximum penalty of 20 years in prison. The court has not yet scheduled a sentencing date before U.S. District Judge Dale S. Fischer of the Central District of California in Los Angeles.
One of Nelson’s co-defendants, Elias Ponce, previously pleaded guilty in October 2015. Two other defendants, Athena Maldonado and Christopher Harati, pleaded guilty in June 2015 in a related case. Trial against the remaining defendant charged in the scheme, John Vartanian, is set for Sept. 13 in Los Angeles.
In September 2012, the Federal Trade Commission brought a civil case against Nelson and his companies, alleging that the defendants misrepresented debt relief services offered to consumers. (See https://www.ftc.gov/enforcement/cases-proceedings/122-3030-x120048/nelson-gamble-associates-llc-et-al). The case was settled by entry of a consent decree in August 2013.
Principal Deputy Assistant Attorney General Mizer commended the U.S. Postal Inspection Service team assigned to the Civil Division’s Consumer Protection Branch for their investigative efforts and thanked the U.S. Attorney’s Office of the Central District of California for their contributions to the case. The case is being prosecuted by trial attorneys Alan Phelps and James Harlow of the Consumer Protection Branch.