MortgageReal Estate

Brazen leader of massive mortgage modification scheme gets 20 years

Two co-conspirators sentenced to combined 19 years

Three California residents will spend a combined 39 years in prison after being convicted for their roles in a nationwide, multi-year mortgage modification fraud scheme that scammed thousands of distressed borrowers out of at least $11 million.

According to the Special Inspector General for the Troubled Asset Relief Program, Sammy Araya received a sentence of 20 years; Michael Henderson was sentenced to 12 years; while Jen Seko received a sentence of 7 years in prison.

Earlier this year, a federal jury convicted Araya, Henderson, and Seko of multiple counts of mail fraud, wire fraud, and conspiracy to commit mail and wire fraud.

According to SIGTARP Christy Goldsmith Romero, Araya, Henderson, and Seko participated in a fraud scheme that preyed on more than 3,000 distressed homeowners.

Araya acted as the scheme’s ringleader and used much of the money taken from distressed borrowers to lead an extravagant lifestyle, which included purchasing expensive vehicles, a racehorse, and a variety of luxury goods.

Araya also used the money to fund his personal travel and a reality television show he produced called “Make It Rain.TV.”

Court documents showed that from at least March 2011 through September 2014, Araya and his co-conspirators targeted struggling homeowners and convinced them to provide thousands of dollars each in exchange for “mortgage modification” assistance. But no assistance came.

Court document also showed that Araya and his co-conspirators lured vulnerable victims into the scam through targeted mass mailers sent to homeowners facing foreclosure by Seko’s company, Seko Direct Marketing.

The mailers were followed up by phone calls, in which Araya and his co-conspirators falsely presented themselves either as representatives of a non-profit organization or that they were affiliated with the government’s Home Affordable Modification Program.

Henderson acted a “customer service representative” in the scam and convinced victims to send “reinstatement fees” and “trial mortgage payments,” under the false pretenses that the funds would be used to modify their mortgages.

But in reality, Araya and his co-conspirators actually did nothing to help modify any mortgages.

According to SIGTARP, the scheme had “devastating consequences” for the victims, all of whom were already facing potential foreclosure.

SIGTARP added that many of the victims suffered “substantially greater financial hardship” than they were already facing because they entered into the bogus agreements with the fraudsters.

In many cases, lenders foreclosed on the victims’ homes nonetheless, because the victims made their “trial mortgage payments” Araya and his co-conspirators rather than to their lenders.

“For Sammy Araya, Michael Henderson, and Jen Seko, the financial struggles of more than 3,000 homeowners were an opportunity for theft,” Goldsmith Romero said.

“Home Affordable Modification Program crime is particularly despicable because it targets vulnerable homeowners at risk of foreclosure,” Goldsmith Romero added.

“The scheme of ringleader Araya and his co-conspirators Henderson and Seko involved mailing to homeowners that faced foreclosure hundreds of thousands of deceptive and misleading mass mailers that touted help with the HAMP program,” Goldsmith Romero continued.

“They took more than $11 million, yet only provided empty promises of admission into HAMP,” Goldsmith Romero concluded.  “Araya bragged about obstructing the criminal investigation and when caught, all showed no remorse or contrition for the crimes they committed and the victims they defrauded.”

All in all, 12 of the conspiracy’s participants have received jail time so far, with the sentences ranging from 60 months to Araya’s 20 years.

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