California AG Bags Three Suspects In Refinancing Scam; 70+ Borrowers Allegedly Fleeced Of $950K+; Victims Left With $30M In Loans With Unwanted Terms

From the Office of the California Attorney General:

• Continuing his fight against mortgage scams, Attorney General Edmund G. Brown Jr. [...] announced that agents from his office have arrested Michael McConville, and two of his associates(1) for their roles in a "criminal conspiracy" to steal nearly $1 million from borrowers seeking to refinance their homes.(2)

• McConville and his co-conspirators lured dozens of borrowers into refinancing home loans by falsely promising low interest rates and brokers' fees, and other attractive terms. They then negotiated different terms with lenders, forged the victims' signatures on the final loan documents and collected hefty brokers fees - ranging from $20,000 to $57,000 - that were never disclosed. Only when the borrowers received true copies of the loan documents after the refinance did they discover that their names had been forged. In total, defendants stole over $950,000 from more than 70 borrowers, leaving victims holding $30 million in loans with terms they did not agree to.

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• McConville and his associates provided homeowners closing documents bearing terms promised, but which the lender never approved. After homeowners signed those documents, key pages were removed and replaced with pages bearing the terms that the lender had actually agreed to. The homeowners' signatures were forged on the replacement pages, and ALG forwarded the forged documents to the escrow company.

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• As a result of this scheme, homeowners suffered devastating financial losses. Some were forced to sell their homes, come out of retirement, or tap into retirement savings. Others paid significant prepayment penalties -- in one case, over $21,000. Borrowers often never received the significant amounts of cash-out they were promised.

For more, see Brown Arrests Three Mortgage Brokers for Stealing Nearly $1 Million from Borrowers.

(1) The alleged conspiracy was made up of:

• Michael McConville, 31, of Simi Valley, sales manager of ALG, Inc, a Los Angeles based mortgage company. He is being held on $2 million bail;
• Garrett Holdridge, 23, of Palmdale, California and Texas, loan officer for ALG, Inc. Holdridge is being held on $2 million bail;
• Alan Ruiz, 28, of Huntington Beach, a loan officer for ALG, Inc. He is being held on $2 million bail.

The charges include:

• 28 counts of grand theft, by violating Penal Code section 487, subdivision (a);
• 14 counts of forgery, by violating Penal Code section 470, subdivision (d);
• 1 count of elder abuse, by violating Penal Code section 368, subdivision (d);
• 1 count of conspiracy to commit grand theft, by violating Penal Code section 182, subdivision (a)(1);
• 3 special allegations of aggravated white-collar crime in excess of $500,000, by violating Penal Code section 186.11, subdivision (a)(2); and
• Taking in excess of $3,200,000, by violating Penal Code section 12022.6, subdivision (a)(4) and (b).

(2) According to the press release, AG Brown recently sued Michael McConville and his brother Sean for their part in the "Property Tax Reassessment" scam which targeted Californians looking to lower their property taxes. Tens of thousands of mailers were sent out that featured official-looking logos and demanded hundreds of dollars in payments for property tax reassessment and reassessment appeal services. The statements warned homeowners that if payments were not received by the "due date" they faced late fees or would have their file marked "non-responsive" or "ineligible for future tax reassessments." See Brown Sues to Block Property Tax Rip-Off .