5 Arrested for Defrauding Homeowners

Allison Tussey —  March 13, 2012 — 1 Comment

Jacob John Cunningham, Justin Dennis Koelle, Andrew Michael Phalen, Dominic Adam Nolan and John D. Silva have been arragined on charges of defrauding hundreds of victims in a real estate scam by sending out fake letters with the CitiFinancial or CitiMortgage logos offering home loan modification assistance.

Jacob John Cunningham, 24, Irvine, California, is charged with 14 felony counts of grand theft by false pretenses and one felony count each of conspiracy to charge illegal upfront fees, conspiracy to commit forgery, and money laundering. Cunningham is in custody on $48,257 bail and must prove the money is from a legal and legitimate source before posting bond. If convicted on all counts, he faces a maximum sentence of 13 years and eight months in state prison.

Justin Dennis Koelle, 23, Costa Mesa, California, is charged with seven felony counts of grand theft by false pretenses and one felony count each of conspiracy to charge illegal upfront fees. Koelle is in custody on $27,965 bail and must prove the money is from a legal and legitimate source before posting bond. If convicted on all counts, he faces a maximum sentence of seven years and eight months in state prison.

Andrew Michael Phalen, 25, Mission Viejo, California, is charged with eight felony counts of grand theft by false pretenses, two felony counts of theft from an elder, and one felony count of conspiracy to charge illegal upfront fees. Phalen is in custody on $25,035 bail and must prove the money is from a legal and legitimate source before posting bond. If convicted on all counts, he faces a maximum sentence of 10 years in state prison.

Dominic Adam Nolan, 30, Irvine, is charged with 14 felony counts of grand theft by false pretenses, and one felony count each of conspiracy to commit forgery, conspiracy to charge illegal upfront fees, and money laundering. Nolan is in custody on $48,257 bail and must prove the money is from a legal and legitimate source before posting bond. If convicted on all counts, he faces a maximum sentence of 13 years and eight months in state prison.

John D. Silva, 27, Irvine, is charged with 23 felony counts of grand theft by false pretenses, two felony counts of theft from an elder, and one felony count each of conspiracy to commit forgery, conspiracy to charge illegal upfront fees, and money laundering. Silva is in custody on $66,037 bail and must prove the money is from a legal and legitimate source before posting bond. If convicted on all counts, he faces a maximum sentence of 21 years and eight months in state prison.

Cunningham, Phalen, and Silva were arrested March 1, 2012. Koelle and Nolan were arrested March 2, 2012.

Between January 2009 and March 2012, Cunningham, Koelle, Phalen, Nolan, and Silva are accused of creating numerous fraudulent loan modification businesses including CSFA Home Solutions, Mortgage Solution Specialists, Inc., CS & Associates, National Mortgage Relief Center, National Mortgage Relief Center, NMRC, NMRC Inc., N.M.R.C. Inc., Allied Home Servicing, and Allied Loan Servicing for home loan modification assistance. Cunningham, Koelle, Phalen, Nolan, and Silva are accused of sending a promotional letter out to people throughout the United States with an offer to restructure their home loans, in which the defendants referred to the homeowner’s specific lender and principal balance, and charging the homeowner upfront fees for loan modification services.

California Senate Bill 94, enacted into law on Oct. 11, 2009, makes it illegal in California for any person or business to demand, charge, or collect any advance or upfront fee for loan modification work or services.

When victims called the number on the letter, the defendants are accused of falsely telling the victims that they could get a complete refund of the fee their company charged if their loan was not modified, and the company had a 100 percent success rate. After the victims gave Cunningham, Koelle, Phalen, Nolan, or Silva their money, the defendants are accused of keeping that money without securing loan modifications for the distressed victims. They are accused of not returning or refunding the victims the fee they paid for a loan modification.

In order to avoid having their theft discovered, Cunningham, Koelle, Phalen, Nolan, and Silva are accused of regularly changing the names, phone numbers, and addresses of the companies they operated.

In late December 2011, after over a hundred victims from California and other states submitted complaints to various law enforcement agencies and the Better Business Bureau regarding the defendants’ loan modification activities, Cunningham, Nolan, and Silva are accused of starting a new fraudulent scheme in which they would send out forged “Conditional Approval” letters to victims with a CitiFinancial or CitiMortgage logo in the letterhead. They are accused of stating in the forged “Conditional Approval” letters that they could offer the homeowner a low interest rate of 2.8 percent or less to refinance their home loan. Cunningham, Nolan, and Silva are accused of attaching “Escrow Instructions” with the letter, directing the homeowner to deposit between $3,500 and $4,600 directly into the defendants’ bank accounts.

Cunningham, Nolan, and Silva are accused of having no affiliation to CitiFinancial or CitiMortgage or any authorization to offer a loan on behalf of CitiFinancial or CitiMortgage. They are accused of making no efforts to qualify the victims for loans with CitiFinancial or CitiMortgage.

The investigation is still ongoing. Anyone with additional information or who believes they have been a victim is encouraged to contact Supervising District Attorney Investigator Eric Akerlind at (714) 347-8691, or visit www.orangecountyda.com and fill out the “Real Estate Fraud Reporting Form” available on the homepage.

There are presently hundreds of known victims and others that are unknown both in California and out of state. At this time, losses are estimated to be in excess of $65,000.

Deputy District Attorney Megan Wagner of the Major Fraud Unit is prosecuting this case.

The United States Secret Service, Huntington Beach Police Department, Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), Department of Real Estate, Orange County Probation Department, Orange County Sherriff’s Department, Costa Mesa Police Department, Irvine Police Department, and Santa Ana Police Department assisted in the investigation of this case and arrests of the defendants.

“The Huntington Beach Police Department takes our responsibility to the community seriously. Perpetrators who victimize many people in a way that could potentially cause them to lose their homes and property are a disturbing threat to our community,” stated Huntington Beach Police Chief Ken Small. “We were pleased to be able to contribute to the investigation of this case.”

“The United States Secret Service has been happy to assist the Huntington Beach Police Department in this investigation and would like to thank our state and local law enforcement partners for all their efforts and ongoing assistance in this investigation,” stated United States Secret Service Resident Agent In-Charge David Murray.

“It is charged today that during our nation’s housing crisis, these co-conspirators ran what has become a common hoax preying on the most vulnerable homeowners who were desperately seeking help to keep their homes,” said Christy Romero, Deputy Special Inspector General for SIGTARP. “CSFA Home Solutions allegedly, through its Web site www.csfahomesolutions.com, advertisements, and sales pitches, falsely touted money-back guarantees of securing mortgage modifications for homeowners through HAMP, which is sometimes referred to as the ‘Obama plan.’ Any exploitation of HAMP is unconscionable, and will not be tolerated by SIGTARP or its law enforcement partners.”

“The Orange County Probation Department is pleased to have assisted in the investigation and arrest of one of the individuals involved in this significant financial real estate loan modification fraud. The Department’s primary mission of ‘Protecting the Community’ has been well served by this collaborative effort to bring these individuals to justice,” said Chief Probation Officer Steven J. Sentman.

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Allison Tussey

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One response to 5 Arrested for Defrauding Homeowners

  1. These people (without conscience) stole $2,490.00 from us. We are very distrissed homeowners and were foolish enough to fall for their lies. Does anyone out there know how we might be able to get our money back?

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