On February 27th, 2014

Seven Arrested in $6.2 Million Mortgage Fraud Scam

SAN BERNARDINO -- Seven suspects have been arrested and charged in a mortgage fraud scheme that defrauded more than 1,550 Inland Valley homeowners seeking loan modification services during California’s foreclosure crisis.

Arrested was Nehad “Nick” Ayyoub Ayyoub, 57, of San Bernardino,  president of The Firm Loans, Insurance and Investments Inc. and First Choice Debt Solutions Inc.

Also arrested were six of Ayyoub's colleagues:

  • Ghydan Ayyoub Rabadi, 38, of Los Angeles
  • Zaid Rabadi, 49, of Los Angeles
  • James Clemons, 55, of Riverside County
  • Wissam Ismail, 32, of Riverside County
  • Eddie Mercado, 57, of San Bernardino
  • Majid Safaie, 60, of Orange County

The seven suspects are accused of deceiving  homeowners by illegally charging up-front payments for loan modification services and lying about the services they provided.

“These individuals profited from the fear and desperation of hard working Californians who were simply fighting to keep their homes during the height of our state’s foreclosure crisis,” Attorney General Kamala Harris said. “This kind of predatory activity is reprehensible.”

The suspects are charged in a 24 count complaint of felony grand theft, personal and corporate income tax evasion and conspiracy. According to court filings, Ayyoub and his colleagues took advantage of homeowners who were desperate to lower their mortgage payments by selling them home loan modification services and requiring payment of up-front fees.  Homeowners were falsely told that attorneys would be negotiating their loan modifications, that they would get a loan modification with no risk of failure, that they would receive a refund if they were dissatisfied and that the suspects had special contacts with lenders, which would give them an advantage in obtaining lowered monthly payments.

Homeowners were instructed to stop paying their mortgage and to instead give the money to Ayyoub and his colleagues to ensure that they would obtain a loan modification, causing many victims to default on their home loans without obtaining a modification, according to court filings.

The suspects operated this scam from January 2007 to March 2010, according to court filings. Attorney General Harris’ Mortgage Fraud Strike Force began investigating this case in 2010 yet business records were immediately sealed until September 2012 when Safaie’s claim of attorney client privilege was overruled.

"This was a  lengthy and complex investigation by DOJ Bureau of Investigations special agents and investigators with the State Franchise Tax Board," said Alan Barcelona, president of the California Statewide Law Enforcement Association (CSLEA) which represents agents and investigators in both departments.  "Because of their commitment, dedication, and investigative skills,  these suspects will be brought to justice.  I can only imagine the anticipation the victims must be experiencing as they await conviction and sentencing."

Ayyoub is facing up to 12 years in prison.   His colleagues are facing up to eight years.

Mortgage Fraud Complaint

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