The California Attorney General’s office has announced the arrest of two insurance agents on 57 counts of grand theft, elder abuse, burglary, conspiracy and securities fraud. Officials connected to the case state that two men, Edwin Salazar of Downey and Michael Zuniga of Fullerton ran a two year $1.3 million Ponzi scheme targeting Hispanic investors, many of whom were senior citizens.
Investigators from the Department of Justice and the California Department of Insurance say that the pair operated throughout Los Angeles County under the banner of Omega Investment Group. The pair found most of their potential victims through their insurance business.
The scam, which officials say lasted between January 2007 and December 2008, consisted of Salazar and Downey selling one-year promissory notes to gullible investors as a “risk-free” real estate investment. The pair guaranteed a 15 percent annual return to investors, saying their company, Omega Investment Group, had a profitable business buying and selling homes in foreclosure. They even went as far as helping some investors refinance their homes to raise the money needed to take part in the scheme.
Subsequent investigations have shown that Omega was never a profitable business and did not buy or sell a single home – all funds were diverted to Salazar’s and Zuniga’s personal accounts. Moreover, money raised from new investors was used to pay interest to previous investors – a classic Ponzi scheme.
The Attorney General’s case against Edwin Salazar and Michael Zuniga represents the tip of the iceberg when it comes to real-estate related fraud targeting Latino communities all over the country. Hispanics have been hardest hit by the downturn in the housing market; many families are struggling trying to maintain their monthly mortgage payments. The ever-present threat of foreclosure make many homeowners in Hispanic communities highly susceptible to promises of easy fixes from unscrupulous real-estate agents and lawyers.
Immigrants from south of the border, many of whom are first-time homeowners and have a limited grasp of English, are easy targets for these scam artists.
Here are just a few high profile cases of mortgage fraud targeting Latinos:
Gustave Anaya – arrested on March 2012, facing criminal charges of criminal theft and mortgage fraud from the Nevada’s Attorney General’s office. Anaya heavily advertised his mortgage loan modification services on Spanish speaking radio and TV channels to Latino communities throughout Arizona and Nevada.
Juan Rangel – a Mexican national living in the US was sentenced 22 years in federal prison for running a Ponzi scheme that took more than $30 million from around 500 victims. Rangel also ran a 2 year mortgage fraud scheme that stole equity and even the property titles from homeowners who had defaulted on their mortgages but still had equity in their homes. Rangel’s company focused primarily on working-class, Spanish-speaking homeowners in Los Angeles with Spanish-language newspaper and magazine ads, radio spots, television infomercials, and investment seminars.
The offices of United Law Group, an Orange County based law firm specializing in mortgage loan modifications were raided by the FBI, Irvine Police and several other government agencies in March 2011. The law firm has been shut down and its two attorneys disbarred for ripping off vulnerable homeowners facing foreclosure. Spanish speaking representatives from United Law Group cold-called Latinos facing foreclosure, promising to negotiate with lenders and provide legal help to save their homes – but disappeared without offering any services after collecting a hefty up-front fee. United Law Group operated all over the country, including several states where they were not licensed to practice law.
The vast majority of real estate scams targeting Latinos masquerade as ‘mortgage relief programs’ and ‘loan modification services’. If you think you may be the victim of such a scam, seek help with the California Attorney General’s Office:
Online form to file,
Consumer Alerts and Info
Or call (toll-free) 800-952-5225
Don’t be a victim and take action if you feel like you or someone you know is being taken for a ride.