SAN DIEGO (CN) - Saying, "You should be ashamed of yourselves," a federal judge on Tuesday sentenced three mortgage modification scammers to multi-year prison terms.
Gary Bobel, Scott Thomas Spencer aka Thomas Cole, and Travis Iverson were sentenced for stealing more than $11 million from more than 4,000 "desperate homeowners" who were trying to modify their mortgages, the U.S. Attorney's Office said in a statement.
A fourth defendant, Mark Andrew Spencer aka Mark Andrews had his sentencing continued until Feb. 5, 2013.
The men ran their telemarketing scam through an Oceanside company called 1st American Law Center. Bobel set it up to 2008 and hired telemarketers to prey upon distressed homeowners. The Spencers were two of his top telemarketers; Iverson ran a separate call center in Riverside, prosecutors said.
"1st American Law Center's telemarketers were encouraged to say virtually anything it took to close the deal," prosecutors said: that they had a 98 percent success rate in getting loan modifications, that they had been in business for 20 years, "that clients' fees would be deposited into a client trust account and remain untouched until the client was satisfied, and that there was a money-back guarantee. Sadly, the telemarketers even persuaded homeowners to pay the company's fees instead of using their limited funds to stay current on their mortgage payments."
The 1st American Law Center did hire an attorney, but dished him off just $100 or $125 for each case, "out of the thousands of dollars charged to the client as an attorney retainer fee," the U.S. Attorney's Office said. "As suggested by that token amount, the attorney did not pre-screen all of the applications, work on clients' loan modification cases, or negotiate with lenders."
Bobel took the money in the so-called trust accounts and spent it however he liked, prosecutors said.
In a previous hearing, the men's victims testified to the damage the scam wrought in their lives. One woman paid the scammers $1,750 to save her home of 11 years, and got nothing. A man and his wife lost their home of 17 years, paid 1st American $4,000, and got nothing for it. Another couple finally acceded to 1st American's dunning calls and paid them $3,500, for which 1st American stopped returning their calls.
"You took advantage of people who were desperate to save their homes," U.S. District Judge Roger Benitez told the men at their sentencing. "You should be ashamed of yourselves."
Bobel, 59, of Carlsbad, was sentenced to 92 months in prison.
Scott Spencer, 35, of Del Mar, got 30 months.
Iverson, 35, of Riverside, got 2 years.
A restitution hearing was set for March 5, 2013.
The court will set up a website soon for victims to document their claims before the restitution hearing.
Victims of the scam should call the U.S. attorney's witness coordinator Polly Montano, at (619) 546-8921.
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.