Fraudsters Convicted of Operating Nationwide Home Mortgage Scam

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https://www.justice.gov/usao-edva/pr/fraudsters-convicted-operating-nationwide-home-mortgage-scam

Department of Justice
U.S. Attorney’s Office
Eastern District of Virginia

FOR IMMEDIATE RELEASE
Friday, April 21, 2017

Fraudsters Convicted of Operating Nationwide Home Mortgage Scam

ALEXANDRIA, Va. – Three co-conspirators who operated a nationwide, multi-year “home mortgage modification” fraud that scammed hundreds of victims out of at least $10 million were convicted today by a federal jury.
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According to court records and evidence presented at trial, Sammy Araya, Michael Henderson, and Jen Seko, all from the greater Los Angeles area, operated a large-scale “home mortgage modification” scam that victimized vulnerable individuals and families across the country for several years. The conspirators sent targeted mass mailers to homeowners facing foreclosure through Seko’s company, Seko Direct Marketing. The mailers referenced real federal programs designed to help struggling homeowners, such as the Home Affordable Modification Program (HAMP), and were titled “Notice of HUD Relief,” “Notice of Mortgage Relief,” and “New HAMP Benefits,” among other misleading titles. The mailers listed various toll-free telephone numbers for the homeowners to call for assistance. When a victim homeowner who had been solicited via a mass mailing called the toll-free number listed on the mailer, a member of the conspiracy posing as a “customer service representative” would answer the phone and collect financial information from the victim, as well as inquire about the victim’s mortgage and how far behind the victim was on his or her mortgage payments. The victims were told the information would be reviewed to determine if they qualified for a mortgage modification. Instead, the information was used by the conspirators to determine how much money could be stolen from the victim. Henderson served as one of the purported “customer service representatives” and helped to distribute the money collected by the scam, while Araya was the mastermind and principal beneficiary of the entire fraudulent operation.
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According to court records and evidence presented at trial, after being contacted by another member of the conspiracy and told that their mortgage modification had been approved, the victim homeowner would be told that their lender required a “reinstatement fee,” usually in the amount of thousands of dollars. Victims were also told that they were required to make several “trial” mortgage modification payments. After these so-called “trial payments” were completed, their modification would be complete and their new lower mortgage payment would become permanent for the life of the loan.
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Throughout this process, the members of the conspiracy represented themselves to homeowners in mass mailings, phone calls, emails, and other communications using a laundry list of aliases and fictitious entity names. Some of those fictitious entities included “Equity Restoration Group,” “Neighborhood Counseling Services of America,” and “Home Retention Center,” among many others. The conspirators changed their aliases and entity names regularly, in an effort to evade detection by law enforcement. The conspirators also falsely represented themselves as a “non-profit” organization or as affiliated with the federal government or the victims’ lenders, and they directed the victims to make their checks and money orders payable to other fake entities, such as “Payment Processing Services,” “Default Servicing,” and “Trust Funding.” They then opened bank accounts using those false entity names, and used those bank accounts to briefly deposit victim payments before withdrawing the funds and distributing the proceeds among the members of the conspiracy.

The victims of this scheme dutifully sent their payments to the fraudulent entities as instructed by the conspirators, only to discover that they had not been granted a mortgage modification by their lenders. When victims confronted the members of the conspiracy about this fact, the conspirators would make lulling statements designed to reassure the victims, such as telling them that the mortgage modification process takes time, and that they were dealing with individuals at a higher level at the bank than the lender representatives with whom the victims had spoken. In reality, however, the members of the conspiracy were simply diverting the victims’ payments for their own personal benefit, without doing anything to assist in modifying the victims’ mortgages. Araya, the ringleader of the scheme, used the proceeds of the fraud to purchase expensive vehicles, a racehorse, and a variety of luxury goods, as well as to fund his personal travel and a reality television show he produced called “Make It Rain.TV.”

This scheme had devastating consequences for the victim homeowners, all of whom were already in a precarious financial position. Many victims suffered substantially greater financial hardship after falling victim to this conspiracy than they were already facing when they entered into the bogus agreements with the conspirators. In many cases, the lenders ultimately foreclosed on the victims’ homes, after the victims had been induced to make their “trial” mortgage payments to the members of the conspiracy rather than to their lenders.
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