Three Charged in Connection with $18.5 Million Mortgage Modification Scheme

Those arrested allegedly defrauded over 8,000 homeowners in all 50 states in what is believed to be the largest mortgage modification scheme ever charged.

Palm Coast, FL – August 8, 2014 – Christy Romero, Special Inspector General for the Troubled Asset Relief Program (SIGTARP), and Preet Bharara, United States Attorney for the Southern District of New York, yesterday announced the unsealing of charges against Ped Abghari , a/k/a “Ted Allen,” Dionysius Fiumano a/k/a “D,” and Justin Romano for engaging in a mortgage modification scheme that defrauded over 8,000 homeowners in all 50 states out of over $18.5 million, in what is believed to be the largest mortgage modification scheme ever charged.

Romero said, “Earlier today (Thursday), SIGTARP special agents arrested Abghari, Fiumano and Romano after our investigation with the U.S. Attorney’s Office uncovered an alleged massive, nationwide mortgage modification fraud scheme that purportedly targeted homeowners behind on their mortgage payments who simply wanted help from TARP’s housing program, HAMP. The defendants are alleged to have stolen more than $18.5 million from more than 8,000 struggling homeowners by making empty promises that the homeowners would be preapproved for lower mortgage payments through HAMP. This was all a purported ruse used to trick vulnerable homeowners into paying the defendants thousands of dollars in up-front fees for which zero meaningful work was ever actually done.”

In return for up-front fees, the victim homeowners were allegedly told:

  • The homeowners were retaining a “law firm” and an “attorney” who would complete the HAMP application and negotiate aggressively on the homeowners’ behalf with banks to modify the terms of the homeowners’ mortgages.
  • The defendants would “pre-approve” the homeowners for a guaranteed modification through HAMP.
  • The defendants employed underwriters who would calculate and guarantee the homeowners a new, modified rate and monthly mortgage payment.
  • The defendants’ mortgage modification services were free, and the up-front fees paid by the homeowners would be paid directly to the homeowners’ lenders.

All of these representations were false. The defendants allegedly kept the up-front money and did little or nothing for the homeowners. Pursuant to HAMP, only a homeowner’s lender may determine the homeowner’s eligibility for a modification and, if appropriate, the modified rate and monthly payment for which the homeowner is eligible.

The investigation is ongoing. The names of the company or companies involved were not released. If you think you are or may have been a victim, call the SIGTARP Hot Line at 877-744-2009 and contact your State Attorney General. In Florida, call AG Pam Bondi’s Mortgage Fraud Hotline at 866-966-7226.

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