Three men were arrested and charged in connection with what is believed to be one of the biggest mortgage modification schemes ever perpetrated, according to an announcement made by Christy Romero, Special Inspector General for the Troubled Asset Relief Program (SIGTARP), and Preet Bharara, the U.S. Attorney for the Southern District of New York.
The three defendants are Ped Abghari, aka Ted Allen, 37, of Irvine, California; Dionysius Fiumano, aka D, 43, of Irvine, California; and Justin Romano, 40, of Blue Point, New York. They are alleged to have stolen a total of $18.5 million from more than 8,000 financially struggling homeowners in all 50 states by falsely promising them pre-approval for lower payments through the Home Affordable Modification Program (HAMP) and aggressive legal representation, among other things.
"As alleged, these defendants preyed on thousands of homeowners struggling to make their mortgage payments and meet their financial obligations," Bharara said. "This office has zero tolerance for those who target and exploit financially vulnerable people, and we will continue to work to hold these and like-minded defendants accountable."
The scam allegedly took place for at least three and a half years, between January 2011 and May 2014. Abghari was co-president and Fiumano was a senior manager at a mortgage modification company (the "Telemarketing Firm") based in Irvine, California. Fiumano oversaw the sales and telemarketing staff at the firm. Romano was the president of two purported New York-based law firms that worked in conjunction with the telemarketing firm to offer purported mortgage modification services.
Abghari and Fiumano reportedly purchased from the telemarketing firm thousands of "leads," or in other words, names, addresses and other contact information for homeowners who were behind on mortgage payments. The men then allegedly made fraudulent solicitations to these homeowners via email, telling them that HAMP was already reviewing their cases and their respective lenders had already approved a modified mortgage payment plan.
The firm’s sales staff would then answer telephone calls from the recipients of these fraudulent solicitations, falsely promising (among other things) legal counsel to complete the HAMP application and negotiate with banks on the homeowner's behalf for a lower mortgage payment, underwriters who would guarantee a new rate and a lower mortgage payment, and free mortgage modification services, with any upfront fees going to the homeowner's lender.
Allegedly, these promises by the firm resulted in the payment of thousands of dollars in upfront fees by homeowners who believed their money was going to their respective lenders. The money was in fact going to the telemarketing firm, which never delivered on any of the promises.
What the firm didn't tell the homeowner was that the HAMP application is readily available and can be filled out by the homeowner for free without legal counsel.
"This was all a purported ruse used to trick vulnerable homeowners into paying the defendants thousands of dollars in up-front fees for which zero meaningful work was ever actually done," Romero said. "SIGTARP has aggressively pursued these allegations, working closely with Preet Bharara's office, to protect homeowners in New York and across our nation from becoming victims of this crime and to bring perpetrators to justice."
Each of the defendants is charged with one count each of wire fraud and conspiracy to commit wire fraud. Each count carries a maximum of 20 years in prison.