Federal prosecutors have indicted two San Diego men featured in an ABC News investigation for their role in allegedly defrauding desperate homeowners trying to modify their mortgages.
Glenn Rosofsky and Michael Trap, who ran a business called Nations Housing Modification Center, are charged with duping homeowners who were falling behind on their mortgages into paying $2,500 to $3,000 for loan modification services. The men were charged in separate indictments Tuesday, and Trap pleaded guilty to conspiracy and money laundering on Wednesday.
The defendants allegedly tried to create the false impression that they were operating from an address near the White House, and sent letters marked with the seal of the U.S. Capitol to prospective customers. They also allegedly told customers that they had forensic accountants and lawyers on staff to provide assistance. The firm actually operated out of Southern California and had no accountants or lawyers on staff, according to Rosofsky's indictment.
"The letters were mailed throughout the country to individuals behind on their mortgage payments," said a statement from Karen Hewitt, the U.S. Attorney in San Diego, "and encouraged them to call a toll-free number to purchase loan modification services." Prosecutors allege that the telemarketers read from a script drafted by Rosofsky, and that Rosofsky and Trap used $900,000 in customer funds to pay themselves and to run the business.
As detailed in earlier reports by ABC News, Nations Housing Modification Center boasted a prestigious Capitol Hill address, right on 611 Pennsylvania Avenue in Washington, D.C. According to NHMC's mail solicitation, the company's staff of "attorneys, forensic accountants and lender specific negotiators" could help homeowners lower the principal on their loans and reduce their mortgage rates "as low as 2%."
However, ABC News found that the firm's Washington address was really a mailbox at a UPS Store. NHMC was actually located in a nondescript office building in San Marcos, Calif., where, as part of a "boiler room" operation, telemarketers read from a script tailored for anxious homeowners, according to a former Nations employee-turned-whistleblower.
"They're convincing people to give them money in advance, promising to do something that they're not doing, that they don't even have the resources, capabilities, knowledge or manpower to do," former NHMC employee Tom Fatica told ABC News. Fatica said he was fired after he began to question the absence of the lawyers and accountants who were supposedly hired to help the homeowners. "How can you modify 500 loans with two clerical people that probably never talked to the bank before?"
"I thought I was helping people save their houses and then it turned into a nightmare where I was helping those guys steal money from people that barely could afford to give it to them," said Fatica.
Trap, Rosofsky and a third man running NHMC were well known to law enforcement authorities for their previous activities. Rosofsky and Bryan Rosenberg were convicted by federal prosecutors in 2003 of charges connected to a mortgage fraud scheme in Baltimore. Both men received jail sentences for their role in the fraud.