Friday, September 09, 2016

Co-Conspirator Who Ran Boiler Room Operation That Used 'Law Firm' Cover By 'Renting' Attorney's Bar License To Peddle Bogus Loan Modifications To Foreclosure-Facing Homeowners Dodges Serious Prison Time; Will Spend 8 Months In Federal Slammer

From the Office of the U.S. Attorney (San Diego, California):
  • San Diego telemarketer Charles Rose was sentenced [] to eight months in custody for his role in a fraudulent loan modification scheme that employed as many as 30 telemarketers to sell bogus legal services to hundreds of struggling homeowners. In reality, this “law firm” had just one figurehead attorney, and did not perform any legal services for the 1,000 clients they swindled.

    The telemarketers, who reported to Rose and followed his example to make sales, recruited new customers using a series of lies designed to lure them into paying a hefty $3,500 fee to the “law firm” of Haffar & Associates. Using scripts, form letters, and his own recorded sales calls, Rose taught his telemarketing staff how to use a variety of false statements to get desperate homeowners to pay the exorbitant fees. Among the lies used by Rose and his staff were claims of the firm’s “98% success rate,” clean record with the California State Bar, special access and success with “just about every lender,” and specialized staff and “lawyers” who would conduct a “forensic audit” of the clients’ loan documents.

    Rose and his co-schemers falsely told victims that their attorneys had “never” lost a client’s home to foreclosure, and that although the firm had a “100% money back guarantee,” no customer had “ever asked for a refund.” In fact, as Rose and figurehead attorney Mohamed Haffar have both admitted, Haffar & Associates did not have anything close to a 98% success rate, did not have any special connections with banks or their legal departments, did not successfully complete loan modifications, and many of their dissatisfied customers never received the refunds they requested.

    One of Rose’s co-schemers, Michael Nazarinia, did actually supervise the “case managers” who submitted some loan modification applications to banks. But in contrast to the representations made to clients, attorney Haffar did not directly supervise Nazarinia’s case managers – instead, they dealt with clients without any input or direction from Haffar. The schemers understood that Haffar’s fees were intended to compensate him for the risk he took in allowing Nazarinia and Rose to use his name, bar license, and law firm to execute the scheme.

    After Haffar & Associates stopped doing new business, Rose and Nazarinia started a new company, called “REST Report Matters,” charging even more money for a product they claimed would facilitate the review of applications for loan modifications. Rose admitted that he made false representations to potential clients in order to induce them to sign up and pay their fees.

    In addition to his fraudulent loan modification scheme, Rose was also charged with tax offenses for failing to report over $120,000 in income from Haffar & Associates to the IRS.
    Three co-defendants were also convicted on federal charges in the scheme. In addition to stipulating to his disbarment, attorney Mohamed Haffar pleaded guilty to tax charges relating to the venture [...], and was later sentenced [...] to three months. Michael Nazarinia pleaded guilty in November 2015 to mail fraud and tax offenses, [... and] was sentenced to nine months in prison, [...]. And in May 2015, Stacy Tuers pleaded guilty on tax charges and admitted that he knew the telemarketers were making false statements to potential clients, but continued to sell Haffar & Associates loan modification services.

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