Four Southland residents were sentenced Monday to federal prison terms for operating bogus debt relief firms that offered to settle credit card debts but instead took victims’ cash as undisclosed up-front fees.
The scam’s ringleader, Jeremy Nelson, 31, of Dana Point, was sentenced to 87 months behind bars and ordered to pay more than $4 million in restitution, according to the U.S. Department of Justice.
Nelson and his co-defendants portrayed the debt relief companies as law firms and attorney-based companies that would negotiate favorable settlements with creditors.
Clients made monthly payments, expecting the money to go toward settlements. Instead, the defendants took at least 15 percent of the total debt as company fees, with the first six months of payments going almost entirely toward undisclosed up-front fees, court papers show.
Co-defendant Elias Ponce, 30, of Santa Ana, was sentenced to 42 months in prison and ordered to pay more than $2 million in restitution. Ponce worked in the “customer service” department and handled complaints.
Christopher Harati, 33, of Long Beach, was sentenced to 27 months in prison and ordered to pay more than $400,000 in restitution. Harati worked with Ponce in customer service at the companies.
Athena Maldonado, 32, of Lake Forest, was sentenced to a month in prison and six months of home confinement. The woman — who handled complaints and held herself out as the vice president of the company’s “legal department” — was ordered to pay $130,000 in restitution.
A fifth defendant, John Vartanian, 57, of Newport Beach, pleaded guilty to conspiracy in July in connection to his role as a salesman at the companies. He is scheduled to be sentenced next Monday.
“Pretending to operate as a law firm, these defendants falsely promised hope to struggling debtors,” said U.S. Attorney Eileen M. Decker. “But the promises were empty as the `debt relief’ firm was nothing more than an advance fee scheme designed to line the pockets of the defendants.”
The four defendants all previously pleaded guilty before U.S. District Judge Dale Fischer to their roles in the scheme, which ran from February 2010 to September 2012.
In September 2012, the Federal Trade Commission brought a civil case against Nelson and the companies, alleging that the defendants misrepresented debt relief services offered to consumers.
The case was settled by entry of a consent decree in August 2013.
–City News Service