Hard charging New York attorney general Eliot Spitzer, who has his sights set on the governor’s mansion and possibly the White House, is continuing his aggressive crackdown on mortgage fraud.
Spitzer has announced that a husband and wife from western New York have admitted to running an advance fee loan scheme that defrauded customers of over $170,000.
Just last month Spitzer, a Democrat running for governor who has been mentioned as a possible future presidential candidate, announced indictments against eight members of what he described as a wide ranging mortgage fraud ring alleged to have stolen millions.
“My office will take aggressive action against those individuals who steal customers’ hard-earned money using false promises and deceit,” Spitzer said in a statement.
According to Spitzer Max W. Balcom Jr., 32, and his wife, Andrea Balcom, 29, of Williamsville, N.Y., have each pleaded guilty to one felony fraud count that could send them to jail for one to four years.
The couple ran a business called Source Funding that faxed advertisements to mortgage brokers. The brokers then recommended the Balcom’s company to loan applicants, according to Spitzer.
But instead of funding loans, the Balcoms took the fees and lived off of the money.
“The investigation … revealed that between February 2004 and November 2005, the Balcoms pre-approved 44 loan applications and received over $170,000 in advance fees from consumers,” Spitzer said. “During that same time, the Balcoms failed to place or approve a single loan and instead used the money for personal living expenses.”
Spitzer also obtained a court order against the couple that bars them from requiring or accepting advance payments from customers.
The civil court decree also orders the Balcoms to refund the $170,000 they admitted to stealing to their victims. If they don’t pay the full amount they will be permanently barred from the mortgage business in New York unless they post a $500,000 performance bond.
Spitzer said in the statement that his office has “commenced nine enforcement actions involving advance fee financing scams.”
Spitzer said that in New York is it illegal for companies doing business by phone “to promise you a loan and ask you to pay for it before they deliver.”
“Legitimate lenders never ‘guarantee’ or say that you will receive a loan before you apply, especially if you have a damaged credit history or no credit history at all,” Spitzer said in a statement posted on his office’s Web site.
