Defendants of a Loan Modification Scam Ordered to Pay $4M

Defendants who operated a national loan modification scam were ordered to pay more than $4 million in penalties and restitution, including $2 million to consumers who were falsely promised loan modifications, ""California Attorney General Kamala D. Harris"":http://oag.ca.gov/ announced Tuesday in a statement.

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Statewide Financial Group, Inc., which also functioned as US Homeowners Assistance and Webeatallrates.com, had more than 1,000 customers pay an amount exceeding $2 million for loan modification services, according to the statement. The company, based in Orange County, started in January 2008 and was shut down by the AG's office in July 2009.

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The owners of the business, Zulmai Nazarzai, Hakimullah Sarpas, and Fasela Sheren (who went by the name Sharon Fasela), were all found to have violated California's Unfair Competition Law and False Advertising Law.

""These defendants took advantage of vulnerable people in extremely difficult circumstances, including many who faced imminent loss of their homes,"" said Harris. ""The significant financial penalties imposed by the court let scammers know that severe consequences will flow to those who defraud California consumers.""

The defendants were ordered to pay $2 million in civil penalties and must provide a full refund upon request to loan modification customers of US Homeowners Assistance.

According to the statement, it is not yet clear how much money will be recovered and available to pay refunds or penalties.

In a separate proceeding, Harris prosecuted Nazarzai for contempt of court after he refused to turn over $360,000 that was unlawfully taken. Due to his continued refusal to follow the court's order, he has been in Orange County jail since December 2010.