Former San Diego Police Officer and Others Plead Guilty to Crimes Stemming from Operation of Illicit Massage Businesses
SAN DIEGO - United States Attorney Laura E. Duffy announced the convictions today of two defendants for their roles in defrauding 3,261 homeowners from across the nation through 1st American Law Center, a sham law firm in Oceanside, California. After a three week trial and a day of deliberation, the jury returned guilty verdicts against Dean Gregory Chandler, the former president, chief Executive officer and attorney for the company; and Michael Eccles, a manager in the telemarketing call center. Chandler was convicted of eight felony counts: Three counts of mail fraud, three counts of wire fraud, and one count each of conspiracy and money laundering. Eccles was convicted of five counts: Conspiracy and two counts each of mail fraud and wire fraud.
According to evidence presented at trial, Chandler created 1st American Law Center in 2009 in partnership with convicted drug trafficker Gary Bobel (who has been separately convicted and sentenced for his role in the scheme). Chandler arranged to have Bobel oversee the call center and its teams of telemarketers, who pitched loan modification services on behalf of the law center. Those telemarketers, including Michael Eccles, promised potential clients that a panel of attorneys would pre-screen applicants’ financial information to ensure that only the most qualified applicants would be approved as clients of the law firm; that a team of attorneys would negotiate with clients’ mortgage lenders; that those attorneys would draft all documents to be submitted to the mortgage lenders; that the “attorney retainer fee” averaging $3,495 would be preserved in an attorney client trust account until the client was satisfied, and that clients were protected by a money back guarantee.
As presented at trial, Michael Eccles was promoted to manager of the call center in December 2009, and he took advantage of the new position to script additional lies for the telemarketers to use with clients, including that the law firm had been in business since 1992; that they had been successfully modifying loans for over 20 years; that they had helped over a hundred thousand homeowners, and that it took attorneys on average 200 hours to complete a successful loan modification – all to suggest that the clients could take hope and comfort in the expertise and established success of the “law firm” they had hired. The telemarketers even persuaded homeowners to pay the company=s fees instead of using their limited funds to stay current on their mortgage payments.
Witness testimony and documentary evidence at trial proved that Chandler had almost no role in the loan modification process, and that nearly all of the statements made by telemarketers to the clients were lies. Chandler, the attorney, did not pre-screen all of the applications or negotiate with lenders. Rather than successfully modifying 98% of their client’s mortgages, the firm failed to modify 3 out of every 4 loans. Instead of keeping clients’ payments in an attorney trust account, they were funneled into various other accounts to pay co-schemers, sales commissions, and company expenses. Instead of having funds available to deliver on its money-back-guarantee, the firm failed to provide refunds to untold numbers of clients who requested them.
For his part, Chandler served as the face of the law firm, and the firm’s commercial, website, and brochure featured Chandler’s name, image, and state bar license number. Chandler reviewed telemarketer call scripts submitted to him for approval, and also listened in real time and on recordings to telemarketer calls to clients.
According to evidence at trial, however, Chandler’s chief role was to mislead regulatory and enforcement agencies which threatened the law firm’s profitable operations. In that capacity, in October 2009 Chandler lied under oath in a sworn declaration to an Assistant Attorney General at the California Department of Justice. Multiple witnesses testified that the statements in Chandler’s declaration were false. And when the customer complaints threatened the company’s bottom line, Chandler also lied repeatedly to the Better Business Bureau in efforts to try to inflate the law center’s sagging ratings. For his role in the scheme, Chandler earned over $275,000 in about a 14-month period. In July 2010, after the Federal Bureau of Investigation and Internal Revenue Service executed a search warrant at his law firm, Chandler also drained one of the firm’s bank accounts of $16,500 and used it for his own benefit, instead of to pay employees or refund victims. This transaction was the basis of the money laundering charge.
During the trial, multiple victims of the defendants’ fraudulent scheme came from across the country to testify about their experiences. For example, a couple from Evansville, Indiana, both in their 70s, related how they contacted 1st American Law Center to avoid losing the home where they had spent 27 years raising a family, which was specially modified to accommodate their paraplegic son’s wheelchair. Due to medical problems which forced the husband to retire as an auto mechanic, the couple fell behind on their payments. The couple put their faith in the promise that an attorney would negotiate with their lender. They also counted on the money back guarantee if the firm was unsuccessful. The couple ultimately lost their home, and their money.
The defendants will next appear before United States District Judge Roger T. Benitez on February 23, 2015 for sentencing. A restitution hearing for the victims of 1st American Law Center is set for April 21, 2015.
Today’s jury verdicts bring to a total of 13 the convictions that have resulted from the fraudulent operation of 1st American Law Center. Gary Bobel received a sentence of 92 months in custody. Telemarketer Shelveen Singh, who operated out of Riverside, was sentenced to 110 months in custody. Other convicted telemarketers include Travis Iverson, Scott Spencer, Johnny Hearn, Anthony Calandriello, Mark Spencer, and Roger Jones. Information Technology Director Steven Gersztyn was convicted and sentenced for lying to federal agents during the investigation of the case, and Amy Hintz and Sarah Grimm were each convicted of theft of government property for stealing documents while making copies of evidence in the custody of the FBI.
United States Attorney Laura E. Duffy commented, AThe real tragedy of this case is that the defendants chose to profit from the suffering of others. In difficult economic times, they exploited a particularly vulnerable segment of our population B homeowners who were desperately trying to make ends meet and stay in their homes.
“Mr. Chandler and Mr. Eccles misused and abused their positions of trust to prey upon those who were financially vulnerable and desperate to save their homes,” said FBI Special Agent in Charge Eric S. Birnbaum. “Today's convictions reaffirm our commitment to hold accountable the guilty who profit by taking advantage of vulnerable people.”
“The defendants used a slew of lies to sell their loan modification services and obtain money from distressed homeowners throughout the United States,” said IRS Criminal Investigation's Special Agent in Charge Erick Martinez. “Loan modification scams thrived for a time, but that time is gone, and as this verdict shows, it's time for those responsible to face judgment.”
|DEFENDANTS||Case Number: 12CR4031-BEN|
|Dean Gregory Chandler||Age: 57||Fallbrook, California|
|Michael Eccles||Age: 35||Vista, California|
Defendant Chandler was convicted of Counts 1-8.
Defendant Eccles was convicted of Counts 1, 3-4, 6 and 7.
Count 1: Conspiracy to commit mail fraud or wire fraud, in violation of 18 U.S.C. § 1349.
Counts 2-4: Mail Fraud, in violation of 18 U.S.C. § 1341.
Counts 5-7: Wire Fraud, in violation of 18 U.S.C. § 1343.
Count 8: Money Laundering, in violation of 18 U.S.C. § 1957.
Federal Bureau of InvestigationInternal Revenue Service, Criminal Investigation