Three Charged with Conspiring to Defraud Consumers through Fraudulent Debt Relief Services Firms
A grand jury in Santa Ana, California, indicted three individuals for allegedly operating fraudulent debt relief services companies 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, 29, Elias Ponce, 27, and John Vartanian, 55, all of Orange County, California, were charged with conspiracy, mail fraud, and wire fraud in connection with their roles at companies known as Nelson Gamble & Associates and Jackson Hunter Morris & Knight LLP. According to the indictment, the defendants 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. But the defendants instead took at least 15 percent of the total debt as company fees, with the first six months of payments going almost entirely towards undisclosed up-front fees.
If convicted, the defendants face a maximum penalty of 20 years in prison and a $250,000 fine for each count of conspiracy, mail fraud, and wire fraud, or an alternate fine of twice the loss or twice the gain, whichever is greater, along with mandatory restitution.
“Americans facing credit card debts are sometimes desperate to improve their financial situations,” said Acting Assistant Attorney General Joyce R. Branda for the Civil Division. “The Civil Division will vigorously pursue those who take advantage of vulnerable consumers trying to dig themselves out of debt.”
“Lying to victims to get their money is not only wrong, it is criminal,” said Acting Inspector in Charge Troy Raper of the U.S. Postal Inspection Service. “Postal Inspectors aggressively investigate any operations that use the U.S. mail to perpetrate frauds on the American public.”
According to the Indictment, the scheme ran from February 2010 to September 2012. The Indictment alleges that Jeremy Nelson changed the name of the company from Nelson Gamble to Jackson Hunter after a series of complaints and refund requests. Nelson allegedly directed his co-conspirators and employees to tell victims that Nelson Gamble had gone bankrupt, and that Jackson Hunter was an unrelated company that had purchased the right to service some of Nelson Gamble’s files. The defendants and others allegedly blamed past problems on Nelson Gamble and assured victims that Jackson Hunter was a more experienced and better-run company. Some victims who previously demanded refunds accepted the explanation that Nelson Gamble was bankrupt and did not pursue complaints against Jackson Hunter.
Acting Assistant Attorney General Branda commended the 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 for the Central District of California for their contributions to the case. The case is being prosecuted by Trial Attorneys Dan Baeza and Alan Phelps with the Consumer Protection Branch.
The charges in the indictment are only allegations, and the defendants are presumed innocent unless and until proven guilty.