OC Lawyer Arrested for Defrauding 400 Homeowners with Promises of Loan Modifications – DA Presses Criminal Charges
Christopher Lee Diener, once a practicing attorney in Orange County, California, was arrested today on charges that include one count of conspiracy to commit grand theft, and 97 felony counts of grand theft by false pretenses, with sentencing enhancements for white collar crime and excessive taking. Diener and his partners are said to have defrauded 400 homeowners in a $1.25 million loan modification scam. If convicted, defendants face up to 70 years in state prison.
This appears to be the first criminal prosecution of an attorney offering loan modification services, that has resulted from the collaborative effort of the Orange County District Attorney’s Office, working with the State Bar of California, the Department of Real Estate, and the California Attorney General’s Office.
Diener’s business partners, Stefano Joseph Marrero and Terrence Green Sr., were also similarly charged, but a $1.5 million warrant for Marrero has been issued and he remains at large. Diener and Green are being held on $1.5 million bail each, and assuming either of the defendants were able to post such a bond over the weekend, the money posted as bail must be proven to have come from legal and legitimate sources, which means that the they could not use any of the proceeds of their alleged fraud.
According to the OC District Attorney’s Office, the pair will be arraigned on Tuesday, January 26, 2010 in Department CJ-1, Central Jail in Santa Ana.
The defendants are accused of targeting homeowners at risk of losing their homes and offering loan modification services that required an upfront fee. All three are in their early 40s and are neighbors in the upscale Ladera Ranch community, east of the 5 freeway as it passes through Mission Viejo. They are accused of operating loan modification businesses under a list of names that include: Home Relief Services, LLC, US Loan Mod Processing, HRS Communications, The Diener Law Firm, and Diener Law Group.
According to the OC District Attorney, the defendants made “false statements” and “enticed” homeowners to hire them by saying they could “guarantee loan modifications, negotiate lower interest rates with lenders, reduce the principal owed on a customer’s mortgage, have second mortgages eliminated or forgiven, and have late fees forgiven by the lenders”. They are also accused of promising to complete a homeowner’s loan modification in “less than 90 days,” and claimed a 90 percent rate of success.
It should go without saying that they promised a 100% money back guarantee if not successful, and required homeowners to pay 100% of their fee in advance of any work being completed. The new state law in California, signed by the governor last October, prohibits attorneys that offer loan modification services from accepting payment until services contracted for have been provided. Real estate brokers cannot accept payment in conjunction with a loan modification until all services have been provided and a loan modification has been granted by the lender or servicer.
They are also accused of soliciting referrals in exchange for payment from real estate and mortgage brokers, and are even said to have attended a mortgage banker’s convention in Las Vegas to promote such referral programs.
This is not the first time the state has run into the trio. The California Department of Real Estate issued a cease and desist against Marrero and Green in February 2009, related to soliciting clients, and in October last year, Diener was involuntarily enrolled as an inactive member of the California State Bar. And Attorney General Brown filed a civil suit against Diener last July, as part of the nationwide sweep of loan modification consultants, termed “Operation Loan Lies,” which was conducted with the Federal Trade Commission, the U.S. Attorney’s office and 22 other federal and state agencies. In total, the sweep resulted in 189 suits and orders to stop doing business were filed across the country.
According to the Attorney General’s Office, “NONE of Diener’s or U.S. Homeowners Assistance’s known victims received loan modifications despite paying upfront fees ranging from $1,200 to $3,500”.
According to the State Bar, “his conduct posed “a substantial threat of harm to his clients or the public”. In the press release issued by the OC District Attorney, “California’s Attorney General filed for civil penalties against the three defendants related to this scam, seeking restitution and an injunction from further illegal practices.”
If anyone has any information about the three men charged in this case, or if anyone believes they have been a victim of Diener’s company’s, they should contact Supervising District Attorney Investigator
Ron Frazier at (714) 347-8691. Deputy District Attorney George McFetridge of the White Collar Crime Team is prosecuting this case.
AUTHOR’S NOTE: With forecasts by Goldman Sachs and others showing an expected 14-17 million foreclosures coming in the next three years, and with million dollar mortgages already defaulting at twice the national average, Orange County homeowners will need ethical and skilled attorneys more than ever to help them navigate their way through a banking system that clearly doesn’t care, and through government programs that have failed as miserably as they have consistently.
Lawyers that “scam” people harm their victims, harm the profession, and harm our nation. They scare homeowners from seeking legitimate representation. We are entering a period in which we as homeowners, will need to depend on lawyers to help us protect our rights and guide us to the best resolution in a horrendous situation that was not of our making. It was Wall Street’s bankers the broke our economy, and we will need our lawyers to represent our interests as we seek the path back to prosperity.
To the Orange County District Attorney, I can only say… it’s about time.