State and local prosecutors said Tuesday that they had shut down a mortgage fraud ring that allegedly victimized thousands of seniors and others, some of whom lost their homes.
The San Bernardino County district attorney's office arrested five people and were waiting for two more to surrender to face charges of conspiracy, grand theft and elder abuse as part of a crackdown on alleged sub-prime mortgage lending scams with the California Department of Justice.
A related lawsuit filed in Los Angeles County Superior Court accuses six companies of using predatory lending practices to trap homeowners in illegal and expensive loans.
"As the mortgage crisis worsens, a growing number of fly-by-night companies are employing utterly brazen tactics to push homeowners into illegal and unconscionable loans," California Atty. Gen. Jerry Brown said. "The illegal sales practices of these companies . . . included psychological pressure, forgery and outright lies."
The companies used bait-and-switch tactics to take advantage of thousands of consumers, Brown said. On Monday, he received a court order freezing the firms' bank accounts and forbidding them from engaging in predatory lending practices.
The six companies -- Lifetime Financial Inc., Nations Mortgage Inc., Greenleaf Lending Inc., Virtual Escrow Inc., Olympic Escrow and Direct Credit Solutions Inc. -- were operated by Eric Michael Pony, 25, of Tarzana and family members, the lawsuit said.
In a coordinated action, San Bernardino Dist. Atty. Michael A. Ramos announced that Pony, a former real estate salesman, was expected to turn himself in to authorities Tuesday. Pony gave up his state license in September after an investigation by regulators. If convicted, Pony could face 24 years in prison, Ramos said.
Also expected to surrender was his sister, Paulette Pony, 23, of Tarzana, a notary public for Lifetime Financial. The California secretary of state's office lifted her license in December in connection with felony conspiracy charges and for failing to disclose a forgery conviction.
Five other company employees were arrested and hit with criminal charges. Most were held in lieu of $2 million bail.
At a news conference Tuesday in San Bernardino, Ramos said he believed the Pony siblings to be the ringleaders of the operation, describing them as "the worst of the worst" among predatory lending abusers.
