This summer, around 250 Southern California homeowners fell victim to one of the largest foreclosure scams on record. After cheating struggling homeowners out of $1 million in debt, the perpetrator was sentenced to 25 years in prison for his crimes.
How It Began
In the beginning, the perpetrator used a corporate front to pay real estate agents and others to unwittingly serve as false consultants. These consultants recruited customers who were facing foreclosure or large amounts of mortgage debt. Most of the customers were not native English speakers and therefore had little to no understanding of the contracts they were signing.
The perpetrator promised victims that “bonded promissory notes,” supposedly drawn form a U.S. Treasury Department account, would be sent to pay off mortgage loans and outstanding debts. They claimed that these notes would serve as a means of stopping foreclosure proceedings. Victims were promised that they would be able to buy back their homes from the corporate front and receive $25,000 in cash.
In exchange for these services, homeowners had to pay an outlandish cash fee ranging from $1,500 to $2,000. They also had to sign over the titles on their homes to the corporate front and pay the perpetrator half of their mortgage amount in rent for as long as they decided to stay in the house.
However, all of the promises made were false. The perpetrators didn’t have any access to bonds or a U.S. Treasury Department account. In fact, the U.S. Treasury does not even operate any such accounts. The perpetrator also had no intention of selling back the homes or giving the victims any of the promised cash.