Lead Defendant in Multimillion-Dollar Boiler Room Scam that Targeted Timeshare Owners Pleads Guilty to Wire Fraud

SANTA ANA, California – A former Long Beach resident pleaded guilty today to a federal criminal charge for leading a telemarketing scheme in which boiler room tactics were used to scam dozens of timeshare owners out of more than $3.5 million by giving them false promises of financial relief.

Michael McDonagh, 42, who currently resides in Lowell, Massachusetts, pleaded guilty to one count of wire fraud. The other four defendants charged with along with McDonagh also have pleaded guilty to one count of wire fraud, 

McDonagh, this criminal case’s lead defendant, founded and/or controlled several telemarketing companies – Irvine-based Global Transfer Inc., Costa Mesa-based Global Transfer SoCal Inc., Santa Ana-based Nationwide Transfer Inc., and Signal Hill-based Nationwide Exit Specialist Inc. – that purported to offer timeshare relief. Once one telemarketing company became inundated with consumer complaints, McDonagh would form a new telemarketing company to perpetuate the fraud.

According to court documents, from 2015 to May 2019, “openers” who worked for the McDonagh-controlled telemarketing companies contacted timeshare owners and offered to help them terminate their timeshare interest for a fixed fee. If the timeshare owner expressed interest in the telemarketing companies’ services, the call was transferred to a “closer” who convinced victims to sign contracts with the telemarketing companies to get them out of their timeshare for a “one-time fee.”

Within weeks of the victim paying the fee, the victims were contacted and told a series of lies to induce them to pay more money. For example, some victims were falsely told that they would obtain – for an additional fee – a large settlement payment based on purported litigation against the victim’s timeshare company.

McDonagh and his co-schemers also made false promises of securing – for an additional fee – a large “restitution” payment from the victim’s timeshare company because the timeshare company had purportedly rented out the victim’s timeshare property without the victim’s permission.

McDonagh admitted in his plea agreement that more than $3.5 million in actual losses were caused by him or his co-schemers whom he employed at his telemarketing companies.

United States District Judge David O. Carter scheduled an October 30 sentencing hearing, at which time McDonagh will face a statutory maximum sentence of 20 years in federal prison.

The United States Secret Service and the Huntington Beach Police Department investigated this matter.

Assistant United States Attorneys Thomas F. Rybarczyk of the Public Corruption and Civil Rights Section and Ian V. Yanniello of the General Crimes Section are prosecuting this case.