Sean McConville, 30, Austin, Texas, president and co-owner of ALG Capital, Inc., a now defunct mortgage brokerage, was arrested at his residence. He is being held at the Travis County Jail in Texas pending extradition. He was previously convicted of robbery in November 1997.
Matthew Bourgo, 27, Thousand Oaks, California, who posed as a licensed notary for the brokerage, was arrested at his residence. He is being held in Ventura County Jail in California and will be transferred to Los Angeles County.
Joseph Nguyen, 37, Woodland Hills, California, a former loan officer for the brokerage, was also arrested at his business, where he worked as a chiropractor. He is being held by authorities in Los Angeles County.
The suspects are each being held on $29.5 million bail.
The investigation was initiated in October 2008 in response to more than 70 complaints against the defendants and their mortgage brokerage business, ALG Capital, Inc. The brokerage operated out of Calabasas, California, from early 2006 until late 2007 and then moved to Mission Hills, California, until it shut its doors in 2008.
The investigation found that from April 2007 to October 2008, the owners and their associates lured dozens of borrowers into refinancing home loans by falsely promising low interest rates, minimal broker fees and other attractive terms. The brokerage then negotiated different terms with lenders.
When homeowners were presented with closing documents, they bore the terms promised, but which the lenders never approved. After homeowners signed the closing documents, key pages were removed and replaced with pages bearing the terms that the lender had actually agreed to. The homeowners’ signatures were then forged on the replacement pages, and ALG forwarded the forged documents to the escrow company.
Homeowners only discovered they had been defrauded when they received the final loan documents with the true terms and their signatures forged on closing cost disclosures, Truth-in-Lending disclosures, loan applications and other documents.
Additionally, ALG collected almost $1 million in undisclosed fees, charging homeowners up to $57,000 in broker fees. In total, dozens of homeowners were locked into almost $30 million in loans with terms they did not agree to.
As a result of this scheme, many homeowners were forced to sell their homes, come out of retirement, or tap retirement savings. Others paid significant prepayment penalties, including over $21,000 in one case. Borrowers also rarely received the large cash-outs they were promised as part of the refinance.
In a continuing probe into a defunct Southern California mortgage brokerage, Attorney General Edmund G. Brown Jr. announced the arrests of the president and co-owner and his two associates who used “deceptive promises and forged documents” to steal almost $1 million from homeowners falsely guaranteed attractive home loan refinancing packages.
“These criminals employed a classic bait-and-switch in their refinance scheme,” Brown said. “With deceptive promises and forged documents, they maliciously cheated homeowners who trusted them and just wanted a fair deal.”
In September 2009, Brown’s office arrested three others involved in the bait-and-switch scam, including Michael McConville, 32, Simi Valley, California, Sean‘s brother and co-owner of the brokerage, Alan Ruiz, 29, Huntington Beach, California, a former loan officer and Garrett Holdridge, 24, Palmdale, California, who was convicted of seven felonies in March 2010 for his involvement in the scam.
Investigators located victims in dozens of California cities, including: Auburn, Altadena, Arroyo Grande, Azusa, Bakersfield, Berkeley, Burbank, Calabasas, Castro Valley, Chino, Compton, Corona, Fairfield, Fontana, Fremont, Fresno, Garden Grove, Glendale, Hemet, Highland, Huntington Beach, La Habra! , La Mesa, La Mirada, La Quinta, Lancaster, Livermore , Los Angeles, Lo! ng Beach, Manteca, Martinez, Monterey, Murrieta, Nice, Northridge, Oakland, Ontario, Palmdale, Pasadena, Perris, Petaluma, Pomona, Quartz Hill, Rancho Cucamonga, Redlands, Reedley, Rialto, Sacramento, San Clemente, San Diego, San Jose, Santa Rosa, Sierra Madre, Spring Valley, Stanton, Temecula, Whittier, and Winnetka.
The complaint, filed in Los Angeles County Superior Court, includes the following charges: 38 counts of grand theft, 19 counts of forgery, three counts of elder abuse, and one count of conspiracy to commit grand theft.
Brown also filed suit against the McConville brothers in May 2009 for running a property tax reassessment scam which targeted Californians looking to lower their property taxes. The brothers billed tens of thousands of homeowners throughout California nearly $200 each for property tax reassessment services that were almost never performed and are available free of charge from local tax assessors.