Tuesday, July 14, 2015

Scammer Who Used Gov't-Sounding Labels In Naming His Outfits To Dupe Struggling, Loan Modification-Seeking Homeowners Into Believing An Affiliation With Federal Housing Programs Existed Gets 140 Months In Slammer

From the Office of the U.S. Attorney (East St. Louis, Illinois):
  • [J]onathan L. Herbert, 36, of Lighthouse Point, Florida, was sentenced to 140 months in federal prison for wire fraud, the United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced.

    In commenting on [the] sentence, United States Attorney Wigginton stated: "The stiff sentence imposed by Judge Herndon is entirely appropriate. The fraud scheme conducted by this defendant was particularly heinous. Herbert stole money by taking advantage of our citizens’ trust in government.

    He labeled his fraudulent companies as ‘federal’ or ‘government’ related. He took money that his victims thought was being paid toward their mortgages. This crime caused severe financial hardship for the victims, and even caused a few of them to lose their homes. We hope that the long prison sentence Herbert received will cause other criminals to think twice before engaging in similar fraud schemes. As always, whether a person steals money by pointing a gun or does so with a pen and a crafty ruse, my office will continue to protect the good people of Southern Illinois and elsewhere."

    ***

    Herbert outright swindled 247 struggling homeowners out of more than $470,000 with false claims that he was affiliated with federal housing aid programs, including HAMP, and could modify homeowners’ mortgage loans in order to make their payments more affordable. Instead, Herbert set-up businesses with names including ‘Federal’ with sham mailing addresses located in Washington, D.C. (addresses which were really just UPS mailboxes); instructed homeowners to mail their ‘modified’ mortgage payments to him at the addresses; re-routed homeowners’ payments to himself in Florida; and pocketed the proceeds himself for personal expenses and to keep the scam operating.

    ***

    In addition to the 140 month prison sentence, United States District Judge David R. Herndon also ordered Herbert to serve 5 years of supervised release following his release from prison, and ordered Herbert to pay restitution to the victims of his crime. Judge Herndon gave the parties additional time to calculate the exact amount owed in order that all losses would be the subjects of restitution.

    Herbert conducted his fraud scheme from a strip mall office located in Fort Lauderdale, Florida. As part of his guilty plea, Herbert admitted that he usually contacted his victims through unsolicited telephone calls, introducing himself as a "federal loan officer" with the "Federal Debt Commission," "Federal Mortgage Marketplace," or "Federal Assistance Program." Herbert used these names and titles in order to deceive the victims into believing that his fraudulent program was either operated, or approved, by the federal government. Herbert told his victims that they qualified for a loan modification because of financial hardship or some type of illegal conduct engaged in by their lenders.

    After the initial phone calls, Herbert mailed letters to the victims who expressed interest in his bogus loan modification programs. These letters congratulated the victims on their acceptance into the program, quoted a new monthly mortgage payment rate, and directed the victims to begin sending their monthly mortgage payments to one of two addresses located in Washington, D.C. The Washington, D.C., addresses were for mailboxes which Herbert had rented at UPS Stores. Pursuant to forwarding orders Herbert put in place with these UPS stores, the victims’ payments were forwarded to Herbert in Florida.

    Herbert admitted that he did not apply any of the money he received from the victims to reduce their home loan debt. Instead, he used the money he received from the victims for his own personal expenses and to continue his fraudulent operation. In the plea agreement, Herbert acknowledged that the total of the losses sustained by the victims as a result of his fraud scheme is approximately $750,000.

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