(CN) — The owner and operators of a network of third-party debt relief businesses which targeted over 19,000 student loan borrowers nationwide face a host of fraud charges, according to an indictment announced by California Attorney General Rob Bonta on Tuesday.
Angela Mirabella of Orange County ran multiple student loan debt relief companies including Mirabella Group, Student Renew, My Financial Solutions and Zero Dollar Payment Financial where she employed managers and sales agents to operate multiple call centers that contacted student loan borrowers and promised to reduce or eliminate their federal student loan debt for a fee.
But legitimate federal loan servicers don’t charge fees to qualify borrowers for loan forgiveness programs or make changes to repayment plans including lowering monthly payments, consolidating multiple loans, postponing payments or getting loans out of default.
In less than three years, Mirabella and her employees are accused of pocketing $6.13 million from more than 19,000 victims, including 3,000 Californians. She is scheduled to be arraigned Wednesday on 87 counts including grand theft, computer access fraud and unauthorized use of personal identifying information as well as special allegations of money laundering over $2.5 million and aggravated white collar crime.
“Millions of Californians — myself included — know what it’s like to finish your education, only to start the often decades-long journey of paying off your student loans,” Bonta said.
He added: “Life happens, and whether it be because a person is out of work, faces an unexpected medical bill, or other life change, many struggle to make those monthly payments. When greedy companies prey on vulnerable individuals and use misleading tactics to steal from them, they must be held accountable. I’m thankful to our local and federal law enforcement partners for their work in this investigation. Now, the work begins to bring to account those responsible for these alleged actions.”
On average, each student loan borrower paid about $1,000 in upfront and additional monthly fees they believed were being applied by the third-party debt relief businesses toward their student loan debt.
But when borrowers found the fees were not being used to pay down their student loans, some of them stopped making payments on the actual loans — resulting in late payment notifications or increased loan balances. Some borrowers went into default, Bonta said during a press conference Tuesday.
According to the indictment, between 2017 and 2020 sales agents working for Mirabella called an estimated 380,000 student loan borrowers claiming to be associated with the U.S. Department of Education and offered to enroll borrowers in programs that would lower monthly loan payments and result in loan forgiveness.
They used “pressure tactics,” Bonta said, to get student loan borrowers to enroll including citing fake deadlines or saying “there was no other way” to reduce payments.
Based on that representation, borrowers divulged their account access or log in information for their student loan accounts to the sales agents who used the information to make changes to the Federal Student Aid accounts without the borrowers’ knowledge.
Mirabella’s employees are accused of changing the passwords and mailing addresses on the accounts of some Federal Student Aid borrowers, according to the indictment. And some borrowers unknowingly signed third-party authorization forms or power of attorney agreements giving the third-party debt relief companies authorization to make decisions on their behalf, state prosecutors say.
Other defendants include Cesar Sandoval-Vilchis, Stephen Gamboa, Briana Graham, Matthew Walsh, Teresa Lovato and Paulina Pacheco.
The case, which was investigated by the Orange County Sheriff’s Department, the U.S. Postal Inspection Service and U.S. Department of Education’s Office of the Inspector General, will be handled by the California Department of Justice's e-crime unit.Follow @@BiancaDBruno
Read the Top 8
Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.