Christopher Lee Diener, 42, a former attorney, Stefano Joseph Marrero, 40, his business partner, and Terrence Green Sr., 43, all of Ladera Ranch, California, have been charged with defrauding over 400 victims in a $1.25 million loan modification scam that targeted distressed homeowners. They have been charged with one felony count of conspiracy to commit grand theft and 97 felony counts of grand theft by false pretense with sentencing enhancements for white collar crime and excessive taking. If convicted, the defendants face a sentence ranging from probation up to 70 years in state prison.
Beginning in March 2008, the defendants are accused of defrauding hundreds of victims by targeting distressed homeowners and offering loan modification services in exchange for advance payment. Marrero and Green were business partners and Diener acted as attorney for their businesses. The three defendants are neighbors in Ladera Ranch, California and are accused of operating loan modification businesses under the names Home Relief Services, LLC, US Loan Mod Processing, HRS Communications, The Diener Law Firm, and Diener Law Group.
The defendants are accused of making false statements to entice customers to use their loan modification services by stating that they could guarantee loan modifications, negotiate lower interest rates with lenders and reduce the principal owed on a customer’s mortgage, have second mortgages eliminated or forgiven, and have late fees forgiven by the lenders. They are accused of falsely stating that they could complete the loan modification process in less than 90 days, claiming to have a 90 percent success rate in modifying loans, and offering a 100 percent money-back guarantee if the loan could not be modified.
The defendants are accused of requiring their customers to pay in advance prior to rendering any service and failing to provide the services offered. In total, they are accused of fraudulently taking $1.25 million, including over $350,000 to credit card companies who had to refund cardholders to compensate for the fraud.
The defendants are also accused of soliciting the referral of clients in exchange for payment by approaching local and national real estate brokers and professionals and promising to pay them referral fees for each customer referred. They are accused of traveling to a mortgage bankers’ convention in Las Vegas to solicit referrals from industry professionals with the promise of payment.
As a result of the loan modification scam, the California Department of Real Estate took action against Marrero and Green in February 2009, issuing a desist and refrain order related to soliciting clients. In October 2009, Diener was involuntarily enrolled as an inactive member of the State Bar of California after the state bar found that his conduct posed “a substantial threat of harm to his clients or the public” stemming from this loan modification scam. The California Attorney General filed for civil penalties against the three defendants related to this scam, seeking restitution and an injunction from further illegal practices.
Diener and Green were arrested and are being held on $1.5 million bail each. They must prove the money is from a legal and legitimate source before posting bond. They are expected to be arraigned Tuesday, January. 26, 2010, in Department CJ-1, Central Jail, Santa Ana, California. A $1.5 million warrant has been issued for Marrero.
This case has been a collaborative effort between the Orange County District Attorney’s Office, the State Bar of California, the Department of Real Estate, and the California Attorney General’s Office.