The scam is a straightforward pitch to help people get out of debt and put money in their pockets. It was made though BOP FOLP advertisements in local papers and signs nailed to street posts. BOP FOLP – Back of paper/front of lamp post – are two of our favorite credentials for financial services.
When you came to a meeting there were real people standing up and extolling the benefits of how Mr. X had helped them with their debt problem, and how he was able to help them refinance their house to put $10,000, $20,000, or even $30,000 cash into their hands.
There was a $200 dollar sign up fee, plus 30% of any new cash Mr. X put into your pocket. He promised that for this $200 he would help you get out of debt. A few people there did sign with Mr. X, and we asked to see the contract. It looked all nice and pretty, but did contain a paragraph about disclosure. If the client were to disclose the methods used, he could be subject to a contractual debt for this disclosure of $5,000 or 70% of the newly acquired cash-in-hand.
Over the next three weeks we followed two couples through the process that Mr. X proposed. The first thing he instructed them to do was to file notice of lien satisfaction with the appropriate courts for all of the outstanding judgments they may have had, and to file the same notices with the county recorder’s office. Concurrently, a number of fictitious loans and repayments were reported to various credit bureaus through Mr. X’s companies, so the client looked as if they had borrowed and repaid large sums of money. Thus, they have appeared to have repaired all of their debts (when they had not), and now appeared to be a good credit risk (which they were not).
Mr. X was then able to get many of them new loans on their homes and collect 30% of that new cash. If they did not have enough equity in the home, no problem: He helped them file papers showing their lien was paid off, and got them new loans.
Mr. X was not doing anything illegal. Well of course not! All of the people were filing the fictitious releases, not him. He was just helping people pay their bills and find new money. In the end, Mr. X turned out to be a convicted felon, and now all of the people he was helping also face the real prospect of becoming felons too.
By the way, Mr. X immediately filed suit in federal court against those good folks who ratted on him, claiming breach of contract. He obtained a number of 5K judgments against these people (you can’t make this stuff up). Since Mr. X already knew where they banked, he was able to garnish what little these poor saps had left, even as they were trying to deal with the county accusing them of fraud and their creditors coming after them.