SANTA ANA, CALIF.
Three Southern California men were indicted on federal mail fraud charges that allege they solicited homeowners on the verge of foreclosure with bogus promises of loan modifications with interest rates as low as 2 percent, according to authorities.
The three men charged – Michael Paul Paquette, 34, of San Juan Capistrano; Allan Jessie Chance, 34, of Temecula; and Dennis Edward Lake, 59, of Costa Mesa –were arrested last week were named in an eight-count indictment returned by a federal grand jury on Dec. 20.
Paquette, Chance and Lake were arraigned on the indictment yesterday afternoon in United States District Court, where they all entered not guilty pleas and were ordered to stand trial on March 6. All three defendants were released on $15,000 bonds.
According to the indictment, Paquette and Chance operated under aliases and told distressed homeowners that they worked for the Laguna Hills-based HAMP Services – which sounded similar to the Home Affordable Modification Program or HAMP, a legitimate government program which permanently reduced mortgage payments to affordable levels for qualifying buyers.
Paquette and Chance told victims that they were approved for a government-affiliated loan modification, but they needed to make three “trial payments” before the loan would be modified, according to the indictment.
They also falsely told the victims that their money would be held in a trust or escrow account.
Chance falsely claimed that he had experience in getting home loans modified because he had worked at Bank of America.
After victims began making “trial payments,” their files were referred to Lake, who ran a Newport Beach-based business called JD United.
The indictment alleges that Lake and his employees told victims that they were working on loan modifications, furthering hope that the loan modifications promised by Paquette and Chance were coming and that there was no need to contact law enforcement about the “trial payments” that had been paid.
When being pitched on the loan modification service, the victims were never told that $800 of the “trial payments” went to JD United, and that Paquette and Chance received commission payments taken directly from the accounts where the “trial payments” were deposited.
The indictment further alleges that none of the victim money went to the lenders or a government agency for a loan modification.
Investigators believe that over 500 victims nationwide paid at least $2.5 million dollars to the defendants and others in “trial payments.”
The scheme allegedly ran from the beginning of 2014 through April 2015. Paquette and others originally started soliciting victims claiming that they worked for Hope Services. After victims made many complaints about Hope Services, new victims were solicited using the name HAMP Services starting in late 2014.
Two other defendants involved in the scheme have pleaded guilty to federal charges and are pending sentencing.
Paquette, Chance, and Lake are charged with conspiracy to commit mail fraud. Additionally, Paquette is charged in three substantive mail fraud counts, Chance in four mail fraud counts, and Lake in six mail fraud counts.
If they were to be convicted, each defendant is facing up to 30 years in federal prison for each count, according to officials.
The defendants are presumed innocent unless proven guilty.