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The former owners of a Bay Area foreclosure consulting firm now face prison time after a judge found the pair guilty of de-frauding hundreds of homeowners whose homes were in foreclosure. San Jose residents Rene Alvarez, 41, and Mariano Ortega, 37, co-owners of Campbell-based M&R Contemporary Solutions, pleaded guilty and no contest in Santa Clara County Superior Court Monday to grand theft and foreclosure fraud charges, according to the district attorney’s office. The two businessmen entered the pleas in exchange for five-year sentences that will include a maximum of three years in jail and two or more years of probation, Deputy District Attorney Mike Fitzsimmons said.
From August 2008 to September 2009, the pair scammed some 400 homeowners in seven states out of nearly $2 million with the promise that their homes would be saved from foreclosure, the prosecutor said. “With the real estate collapse I think they saw an opportunity to cash in, and they seized it,” he said. Almost all of the pair’s victims lived in the Bay Area, although some were from as far away as Hawaii, the prosecutor said. The vast majority were Latino homeowners who were referred to the consulting company by agents, family or friends or who had attended the duo’s foreclosure seminars in Campbell, Fitzsimmons said. In many cases, Alvarez and Ortega acquired new clients face-to-face in Spanish and had the homeowners sign contracts printed in English, the attorney said.
Alvarez and Ortega told homeowners who were going through the foreclosure process that they would set up the purchase of their existing lender’s loan by a third-party investor at a discounted rate. Homeowners believed that they would then be eligible for new loans at much lower payments, Fitzsimmons said. Accepting this offer, victims of the scam would fork over anywhere from $3,000 to $10,000 to the consulting firm, violating a state law that bars businesses from collecting up-front fees from homeowners in foreclosure, he said. “Homeowners in foreclosure should never pay advance fees for help,” Fitzsimmons said in a statement. “They should reach out to the agencies who can lend a helping hand for free.”
A third defendant in the fraud scheme, Los Angeles-based Cydney Sanchez, is still pending trial, according to the district attorney’s office. Sanchez allegedly conned the M&R co-founders by pledging to provide investors. Alvarez and Ortega realized they had been scammed but continued to accept payments from homeowners instead of halting the operation and reporting Sanchez to authorities, Fitzsimmons said. Although the two had believed they could provide the discounted loans, the attorney said, “they knew almost from get-go that it was illegal to accept advance fees from people in foreclosure”.
So far, authorities have seized $257,000 of the pair’s ill-gotten gains, but Fitzsimmons said he expects an order for full restitution to be part of their sentence. Alvarez and Ortega are set to be sentenced on May 21.
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