LOS ANGELES, CA - The California Attorney General today announced that "nine men engaged in a Southern California boiler room, tricked out in high-roller style with a roulette wheel and other casino equipment, have been charged with 97 criminal counts for stealing at least $2.3 million from more than 1,500 desperate homeowners who were promised loan modifications but received no relief.
Arrested Tuesday and Wednesday night were Gregg Scott Quinn, 37, of Camarillo and Juan Pierre Washington, 40, of Winnetka, who worked as company sales managers and supervisors. They are being held at Los Angeles County Jail.
Gary Arnold Eisenberg, 71, of Westwood, a top telemarketer with the company, and Ira Itskowitz, 58, a sales manager, each spent more than five years in federal prison for previous fraud convictions and are already in federal custody for violating parole in connection with their participation in the scheme.
The four principal owners of the business, Niv Iskin, 30, of Reseda, Reviv Karpman, 38, of Tarzana, Tomer Kogman, 29, of Receda and Avraham Yechizkia, 34, of Encino; and a sales manager, Barel Iskin, 23, of Woodland Hills, are still being pursued by law enforcement.
The investigation started in March 2009 in response to numerous consumer complaints against the defendants' Canoga Park-based loan modification business, which operated as Mason Capital Group, LLC and Gretchen Fox and Associates.
When agents executed a search warrant at the office, they found a Las Vegas casino-themed sales floor complete with craps, poker and black jack tables fashioned as workstations, and a roulette wheel that top-selling telemarketers spun for cash bonuses.
Between January 2008 and June 2009, the four owners took in at least $2.3 million in up-front fees, which ranged from $1,000 to $5,000, from more than 1,500 homeowners throughout the country. In almost every case, no loan modifications were completed, as promised. Financial records indicate that the four owners spent hundreds of thousands on private school tuition, travel, entertainment, shopping and other personal expenses while running Mason Capital Group, LLC and Gretchen Fox and Associates.
The four owners used a telemarketing operation that targeted homeowners facing mortgage payment increases or foreclosure. During an initial call, the telemarketers touted the company's team of "attorneys, forensic accounting personnel, and loan negotiators" available to negotiate reductions in interest rates, monthly payments and principal balances; their suppos! ed 90% to 100% loan modification success rate and refund guarantee. The telemarketers then collected financial information from homeowners to determine if they "qualified" for the company's services.
Soon after the initial call, homeowners received a follow-up call to inform them that their case had been "reviewed" and "approved." Telemarketers closed sales by insisting the approval would expire unless homeowners acted quickly, while reminding them about the refund guarantee if promised results were not achieved.
In fact, the company completed very few loan modifications, rarely contacted lenders, failed to honor the refund guarantee, employed unlicensed "loan processors" and had no legal staff negotiating with lenders.
While homeowners waited, they were told their loan modifications, or refunds, would be voided if they tried independently to contact their lender. Many lost their homes to foreclosure as a result.
To skirt the state's foreclosure laws, avoid paying refunds and conceal profits, the owners changed company names, claimed bankruptcy and shifted loan modification files to another business they created called, American Financial Group, LLC.
Investigators located victims in dozens of California cities, including: American Canyon, Anaheim, Antioch, Artesia, Atwater, Bakersfield, Ceres, Chico, Cotati, Cloverdale, Crestline, Delano, Elk Grove, Encino, Fountain Valley, Fremont, Fresno, Guerneville, Hanford, Hayward, Hercules, Hood, Indio, La Jolla, Lancaster, Laguna Hills, Lodi, Long Beach, Los Angeles, Manteca, Modesto, Montclair, N. Hollywood, Newhall, Newman, North Highlands, Oakdale, Oakland, Ontario, Palmdale, Pittsburg, Pleasanton, Poplar, Porterville, Redding, Richmond, Riverbank, Rodeo, Sacramento, San Jose, San Pablo, Santa Clara, Santa Rosa, Sebastopol, Stanton, Stockton, Tracy, Tulare, Turlock, Union City, Upland, Valley Village, Van Nuys, Visalia, W. Sacramento and Yuba City.
By law, all individuals and businesses offering mortgage foreclosure consulting or loan modification and foreclosure assistance services must register with Brown's office and post a $100,000 bond. It is also illegal for loan modification consultants to charge up-front fees for their services.
Non-profit housing counselors certified by the U.S. Department of Housing and Urban Development provide free help to homeowners. To find a counselor in your area, call 1-800-569-4287.
If you are a homeowner who has been scammed, contact the AG's office at 1-800-952-5225 or file a complaint online at: www.ag.ca.gov/consumers/general.php.
The 97 criminal counts filed against the nine defendants, include 63 counts of grand theft, 26 counts of unlawful foreclosure consulting, 7 counts of tax evasion and 1 count of conspiracy.
The United States Postal Inspection Service assisted in the investigation.
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