Attorney General Kamala D. Harris Announces Seven Arrests in $6.2 Million Mortgage Fraud Scam
SAN BERNARDINO -- Attorney General Kamala D. Harris today announced the arrest of seven suspects who have been charged in a mortgage fraud scheme that defrauded more than 1,550 Inland Valley homeowners seeking loan modification services during California’s foreclosure crisis.
The felony complaint alleges that Nehad “Nick” Ayyoub Ayyoub, 57, of San Bernardino and president of The Firm Loans, Insurance and Investments Inc. and First Choice Debt Solutions Inc., along with his six colleagues, Ghydan Ayyoub Rabadi, 38, of Los Angeles, Zaid Rabadi, 49, of Los Angeles, James Clemons, 55, of Riverside County, Wissam Ismail, 32, of Riverside County, Eddie Mercado, 57, of San Bernardino, and Majid Safaie, 60, of Orange County, deceived homeowners by illegally charging up-front payments for loan modification services and lying about the services they provided.
“These individuals profited from the fear and desperation of hard working Californians who were simply fighting to keep their homes during the height of our state’s foreclosure crisis,” Attorney General Harris said. “This kind of predatory activity is reprehensible.”
The suspects are charged in a 24 count complaint of felony grand theft, personal and corporate income tax evasion and conspiracy. The suspects were booked at Murrieta Detention Center, Orange County Jail, Rancho Cucamonga Jail and Azusa Police Department today. Ayyoub is being held with bail set at $75,000 and all others are being held with bail set at $50,000. Ayyoub is facing a maximum exposure of 12 years in prison while his colleagues are facing a maximum exposure of 8 years.
According to court filings, Ayyoub and his colleagues took advantage of homeowners who were desperate to lower their mortgage payments by selling them home loan modification services and requiring payment of up-front fees. Homeowners were falsely told that attorneys would be negotiating their loan modifications, that they would get a loan modification with no risk of failure, that they would receive a refund if they were dissatisfied and that the suspects had special contacts with lenders, which would give them an advantage in obtaining lowered monthly payments.
Homeowners were instructed to stop paying their mortgage and to instead give the money to Ayyoub and his colleagues to ensure that they would obtain a loan modification, causing many victims to default on their home loans without obtaining a modification, according to court filings.
The suspects operated this scam from January 2007 to March 2010, according to court filings.
Attorney General Harris’ Mortgage Fraud Strike Force began investigating this case in 2010 yet business records were immediately sealed until September 2012 when Safaie’s claim of attorney client privilege was overruled.
Homeowners who feel they may have been victimized should file an online complaint with the California Attorney General’s Office: http://oag.ca.gov/consumers
Agents with the California Attorney General’s Bureau of Investigations were assisted by investigators with the State Franchise Tax Board.
Created in May 2011 by Attorney General Harris, the Mortgage Fraud Strike Force continues to lead the charge in investigating and prosecuting misconduct at all stages of the mortgage process.
In February 2012, Attorney General Harris secured a commitment from the nation’s five largest banks which has resulted in more than $20 billion for struggling California homeowners. Following the settlement, Attorney General Harris sponsored the California Homeowner Bill of Rights, a landmark package of legislation that restricts dual-track foreclosures, guarantees struggling homeowners a reliable point of contact at their lender and imposes civil penalties on fraudulently signed mortgage documents. In addition, homeowners may require loan servicers to document their right to foreclose. This legislation was signed by Governor Brown in July 2012 and took effect on January 1, 2013.
Please note that a complaint contains only allegations against a person and, as with all defendants, those named here must be presumed innocent unless and until proven guilty.
A copy of the complaint can be found attached to the electronic version of this release at: https://oag.ca.gov/news