A San Diego businessman will spend the next nine months in prison after being convicted for his role in a fraudulent mortgage loan modification business that presented itself as a “law firm” in order to con more than 1,000 struggling homeowners out of more than $3 million total.
According to a release from the U.S. Attorney’s Office for the Southern District of California, Michael Nazarinia worked as the manager of a “predatory loan modification law firm,” which promised loan modifications in exchange for money but did not deliver on its promises.
The U.S. Attorney’s Office said that Nazarinia worked as the manager of “Haffar & Associates,” which was owned by figurehead attorney Mohamed Haffar, and recruited new customers using telemarketers who lied to clients in order to induce more than 1,000 people to sign up to pay more than $3.5 million in total.
According to the release, Nazarinia supervised Haffar & Associates “case managers,” who submitted loan modification applications and negotiated with the banks on behalf of clients.
But, despite representations to the contrary, Haffar did not directly supervise Nazarinia’s case managers, and instead, Nazarinia and the case managers provided legal services to clients without Haffar’s input or direction.
Haffar also rarely reviewed the clients’ files and almost never provided direction to the case managers.
Instead, court documents showed that Haffar, Nazarinia, and another co-conspirator, Charles Rose, all understood that Haffar’s fees were his compensation for the risk he took in allowing Nazarinia and Rose to use his name, bar license, and law firm, and not for any actual work Haffar did on loan modification cases.
According to the U.S. Attorney’s Office, Rose and Nazarinia trained telemarketers on how to call potential clients and convince them to use the services promised by Haffar and Associates, by making false statements like:
- “Haffar & Associates has a 98% success rate.”
- “Haffar & Associates has never lost a home to foreclosure.”
- “We have had no complaints with the California state bar.”
- “When you sign up with Haffar & Associates you will be represented by a law firm, and an attorney will negotiate on your behalf.”
- “Once you sign up, you will be protected by the power of the law firm and the bank cannot foreclose on your home.”
While Haffar & Associates’ team members made big promises, they did not deliver on those promises, the U.S. Attorney’s Office said.
According to the U.S. Attorney’s Office, Haffar & Associates did not have any special connections with banks or the legal departments of banks. The business also did not have sufficient numbers of staff or staff experienced enough to successfully complete loan modifications. And many dissatisfied customers never received refunds they requested. Although existing clients were not getting loan modifications, the telemarketers were encouraged to keep selling.
The U.S. Attorney’s Office also stated that Nazarinia generated a fraudulent lease agreement, which was used to fraudulently delay eviction after Haffar & Associates failed to negotiate a modification for a client. Nazarinia also admitted to filing a false 2010 income tax return, omitting almost $100,000 in illegal income from Haffar & Associates.
Additionally, after Haffar & Associates stopped doing new business, Rose and Nazarinia started a new company, called “REST Report Matters,” selling a product they claimed would facilitate mortgage lenders’ review of homeowners applications for loan modifications.
According to the U.S. Attorney’s Office, Rose admitted as part of his guilty plea that he made false representations to potential clients in order to induce them to sign up and pay their fees. They told homeowners that the product was the only available tool that could definitely tell homeowners the modification terms their lenders would provide.
“Michael Nazarinia preyed on others’ misfortune to line his own pockets,” said Federal Housing Finance Agency – Office of Inspector General Special Agent in Charge Leslie DeMarco. “The sentence he received today provides justice and will hopefully act as a deterrent to anyone else who might be tempted to engage in similar conduct.”
For their parts, Haffar was formally disbarred in June 2012, and obligated to pay over $192,000 to reimburse former Haffar & Associates clients. Haffar pleaded guilty to the federal criminal charge in August 2014, and was sentenced to three months in prison in January 2015.
And Rose is scheduled to be sentenced on April 11, 2016.