An Orange County man went before a federal judge Monday and admitted operating bogus debt relief firms that offered to settle credit card debts but instead took victims’ payments as undisclosed up-front fees.
John Vartanian, 57, of Newport Beach pleaded guilty to one federal count of an indictment alleging conspiracy to commit mail fraud and wire fraud involving companies known as Nelson Gamble & Associates and Jackson Hunter Morris & Knight.
Vartanian and his four 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, Vartanian and his co-conspirators 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, according to the U.S. Department of Justice.
“Debt relief scams prey on vulnerable consumers trying to climb out of tough financial situations,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the DOJ’s civil division.
“The Justice Department will continue to investigate those who take advantage of consumers facing hard times, and prosecute unlawful schemes that bleed desperate consumers of their remaining resources,” Mizer said.
Vartanian faces up to 20 years in prison when he is sentenced on Oct. 17 in Los Angeles federal court.
Four co-defendants previously pleaded guilty in connection with the scheme. Jeremy Nelson of Laguna Niguel, Elias Ponce of Santa Ana, Christopher Harati of Anaheim and Athena Maldonado of Lake Forest have not yet been sentenced. Vartanian admitted that he did not tell customers during sales calls that the companies charged significant up-front fees. Additionally, he conceded that he falsely told customers that the companies were backed by a law group and that money would be refunded if customers were not satisfied.
The name of the company was changed from Nelson Gamble to Jackson Hunter in 2011 because of customer complaints, but Vartanian continued to make the same pitch without disclosing that the new company was essentially the same as the old company, prosecutors said.
In speaking with unhappy customers, the conspirators at Jackson Hunter blamed past problems on Nelson Gamble and denied requests for refunds, according to federal prosecutors.
–City News Service