The Strike Force That Never Struck 

Despite pledging to crack down on foreclosure scam artists three years ago, Attorney General Kamala Harris has allowed an industry of fraud to flourish.

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Even the biggest counties in California appear to be struggling to muster the resources and staff necessary to investigate and prosecute even a fraction of the foreclosure consulting scams in their jurisdictions. "We have a couple [foreclosure consultant fraud] cases currently on our case load," said David Lim, deputy district attorney in the Alameda County DA's Office. "From January 2011 through the end of April 2014, we filed 28 cases against 44 defendants," said Lim. "Of those 44 defendants, 10 cases against 13 defendants were charged with actions related to mortgage fraud consulting." Lim said the real estate fraud unit was staffed with two attorneys and two investigators from 2009 to 2013, but in September 2013 the office added another prosecutor.

In Los Angeles, the state's largest county, and probably second only to Orange County in terms of the number of foreclosure consultant scammers operating there, the district attorney's real estate fraud unit has seven prosecutors and six investigators. "We're more than treading water, but, of course, we could always use more bodies, more investigators," said David R. Lopez, deputy district attorney in charge of LA's real estate fraud unit. "There's voluminous records, and it's always the case that you have to figure out what happened, who did it, and since these go hand-in-hand with identify theft, no one is who they say they are," Lopez said of foreclosure rescue scammers. "The suspects and companies are shells.

"Last fiscal year we prosecuted 103 cases involving over 250 defendants and a total aggregate loss of over $80 million," added Lopez, who clarified that about one-third of these cases involved loan modification scams perpetrated by foreclosure consultants. In other words, LA County took down approximately thirty foreclosure consultants last year alone.

Peter Pierce, senior deputy district attorney in charge of Orange County's major fraud unit, said his office has 116 cases pending. "I would estimate that about 30 to 35 percent would be considered foreclosure rescue scams," said Pierce. The Orange County DA has done all this with a staff of just three prosecutors and three investigators.

Last Thursday, the Orange County DA brought charges against a foreclosure consultant ring accused of stealing $13.5 million from 3,500 victims. The Orange County DA's Office believes this to be the largest-ever prosecution of a loan modification scam in the nation. The Newport Beach Police Department, the Orange County DA, the US Secret Service, and the state Franchise Tax Board conducted the investigation with help from the State Bar of California, the FBI, Huntington Beach police, Irvine police, and the California Bureau of Real Estate. Notably absent from the investigation was the California Attorney General's Office.

The San Diego County District Attorney's Office, meanwhile, has a team of three attorneys, three investigators, two paralegals, and one secretary, said spokesperson Steve Walker. Between April 1, 2008 and April 30, 2014, the San Diego County District Attorney's Office filed criminal felony charges against 38 individual defendants, alleging violations of California's foreclosure consultant laws, Walker said. "We work very hard as an office to prevent and prosecute foreclosure fraud whenever we find it. However, like most district attorney offices, we are confronted with a substantial demand on our real estate resources, and we must prioritize matters."


In August 2009, then-Attorney General Jerry Brown issued a stern warning to the foreclosure consultant industry, publicly naming 386 companies and threatening them with prosecution unless they complied with the state's Mortgage Foreclosure Consultant Law. The law requires foreclosure consultants to register with the California Department of Justice and post a $100,000 bond. Brown also sent letters to 27 loan consultants, demanding that they substantiate advertising claims related to foreclosure rescue programs they were marketing via the internet and through direct mailings to Californians.

However, as of today, only fourteen foreclosure consultants have bothered to register and post a bond with the DOJ, according to records obtained from the Attorney General's Office. And while most of the 27 companies to which Brown sent letters quickly went out of business, several remain open, marketing their foreclosure consulting services in apparent violation of state law.

For example, AvoidingForeclosure.com is still up and running. It's a trade name used by a Massachusetts company that claims to have developed a computer program to assist homeowners with loan modifications. The program "came from a man who spent his undergraduate years working in artificial intelligence programming with a Nobel prize winner," the company boasts on its website. AvoidingForeclosure.com allows California residents to apply for loan modifications, even though the company never registered with the DOJ or posted a bond as required.

Brown's letter to Fair Lender Audits, a company operated by a Borzou Hamzavi in San Diego, asked it to provide evidence for various claims it had made, including the following quote investigators copied from its website: "Our attorneys will contact your lender quickly (usually within one day) to let them know we will be negotiating a loan modification on your behalf. This will usually put a halt to any collection calls you are currently receiving from your lender." After Brown sent his letter to Fair Lender Audits, it quickly shut down.

But when I typed the exact language from Fair Lender Audits' old website quoted above into a search engine, I was pointed to a different and new website (registered in February 2014) of a new company calling itself Loss Mitigation Servicing. This company's website includes, verbatim, all of the language on Hamzavi's Fair Lender Audits company website. It contains no identifying information about the company, but directs visitors to fill out an intake form for their loan modification. According to public records, Loss Mitigation Servicing isn't a registered corporation in California, and no such company is licensed by the Bureau of Real Estate, nor is registered or bonded with the DOJ to offer foreclosure consulting services.

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