California's attorney general has arrested several individuals and shut down businesses connected to a Los Angeles mortgage broker, who along with his sister and his mother, has been accused of bait-and-switch tactics and fraud on thousands of loans. The state is seeking $20 million in penalties and restitution.
Lifetime Financial, Nations Mortgage, Greenleaf Lending, Virtual Escrow, Olympic Escrow and Direct Credit Solutions were shut down yesterday, California Attorney General Edmund G. Brown Jr. announced. Bank accounts have been frozen, as have other assets, including $6 million in real estate and a car collection that includes two Ferraris and a Bentley.
The companies were part of a complex predatory lending scheme that used bait-and-switch tactics on thousands of California borrowers, the state said. Borrowers were promised rates of 5 to 6 percent and unrealistically low payments but presented with much worse terms at closing and hidden fees up to $20,000.
Borrowers paid for appraisals that had inflated fair market values, though they were never provided with a copy, Brown claimed.
"In some cases, consumers were saddled with monthly payments that exceeded their entire monthly income," the statement said. "Many consumers have either lost their homes to foreclosure or are facing foreclosure as a result of engaging in these transactions."
Salespeople arrived as late as 11:45 p.m. with documents that were either incomplete or not at the promised terms.
"If consumers complain about the terms, the salespeople tell them that there is a mistake, but they should just sign the paperwork to 'keep this great deal,'" the press release stated. "If a consumer refuses to sign the documents, company employees forge the customer's signature. In some instances, the forgeries are so blatant that the victims' names are misspelled."
Some borrowers were allegedly offered thousands of dollars cash back, though they weren't told those funds would be used to cover high fees. Others were falsely offered prepayment penalty reimbursements.
Lifetime employees are also accused of falsifying income information on loan applications, creating fake references and refusing to honor written loan cancellation demands. In some cases, they would sometimes present a new set of documents with lower fees but actually use the originally higher-priced set.
The companies were run by Eric Pony, who allegedly lied, forged documents and psychologically pressured thousands of borrowers. The broker was helped by his sister, Paulette Pony, who was a notary public until her license was revoked in December 2007, and his mother, Wilma Pony, who was also a notary and was president and chief executive officer of Nations and Direct.
Several other individuals affiliated with Lifetime were reportedly arrested on charges including conspiracy, grand theft, forgery and elder abuse.
Other individuals to be sued in connection with the case include notary public Eli Hassine, real estate brokers Dean Storm and John D H N Nielsen a.k.a. Doo Hyun No and escrow officers Carol Pencille and Sibpun Ampornpet.
The attorney general, who has identified 20 victims, is seeking civil penalties of $2,500 for each violation, full restitution and a permanent injunction against the businesses, the state said. The total amount is estimated at more than $20 million.