The continuing probe into a defunct Southern California mortgage brokerage is rounding up more suspects.
Attorney General Edmund G. Brown Jr. has announced the arrests of president and co-owner Sean McConville and 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."
The investigation began 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 from early 2006 until late 2007 and then moved to Mission Hills until it shut its doors in 2008.
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 discovered they had been defrauded only after 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 to which they did not agree.
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.
Sean McConville, 30, of Austin, Texas, president and co-owner of the brokerage, Matthew Bourgo, 27, of Thousand Oaks, who posed as a licensed notary for the brokerage and Joseph Nguyen, 37, of Woodland Hills, a former loan officer for the brokerage, are each being held on $29.5 million bail.
In September 2009, Brown's office arrested three others involved in the bait-and-switch scam, including Michael McConville, 32, of Simi Valley, Sean's brother and co-owner of the brokerage, Alan Ruiz, 29, of Huntington Beach, a former loan officer and Garrett Holdridge, 24, of Palmdale, who was convicted of seven felonies in March for his involvement in the scam.
Investigators located victims in dozens of California cities.
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.