SANTA ANA, California
A former Long Beach resident pleaded guilty Monday to a federal criminal charge for leading a telemarketing scheme in which boiler room tactics were used to scam dozens of timeshare owners out of more than $3.5 million by giving them false promises of financial relief, officials stated.
Michael McDonagh, 42, currently residing in Lowell, Massachusetts, plead guilty to one count of wire fraud. The other four defendants charged along with McDonagh, also have pleaded guilty to one count of wire fraud,
McDonagh, this criminal case’s lead defendant, founded and/or controlled several telemarketing companies – Irvine-based Global Transfer Inc., Costa Mesa-based Global Transfer SoCal Inc., Santa Ana-based Nationwide Transfer Inc., and Signal Hill-based Nationwide Exit Specialist Inc. – that purported to offer timeshare relief.
Once one telemarketing company became inundated with consumer complaints, McDonagh formed a new company to perpetuate the fraud.
According to court documents, from 2015 to May 2019, “openers” who worked for the McDonagh-controlled telemarketing companies contacted timeshare owners and offered to help them terminate their timeshare interest for a fixed fee.
If the timeshare owner expressed interest in the telemarketing companies’ services, the call was transferred to a “closer” who convinced victims to sign contracts with the telemarketing companies to get them out of their timeshare for a “one-time fee.”
Within weeks of the victim paying the fee, the victims were contacted and told a series of lies to induce them to pay more.
For example, some victims were falsely told that they would obtain a large settlement payment for an additional fee based on purported litigation against the victim’s timeshare company.
McDonagh and his co-schemers also made false promises of securing – for an additional fee – a large “restitution” payment from the victim’s timeshare company because the company had purportedly rented out the victim’s timeshare property without the victim’s permission.
McDonagh admitted in his plea agreement that more than $3.5 million in actual losses were caused by him or his co-schemers employed at his telemarketing companies.
U.S. District Judge David O. Carter scheduled an Oct. 30 sentencing hearing. McDonagh faces up to 20 years in federal prison.
The U.S. Secret Service and the Huntington Beach Police Department investigated this matter.
Assistant U.S. Attorneys Thomas F. Rybarczyk of the Public Corruption and Civil Rights Section and Ian V. Yanniello of the General Crimes Section are prosecuting this case.