California’s Attorney General has shut down six companies, each of which is accused of predatory lending practices that pushed homeowners into illegal and unconscionable loans. “As the mortgage crisis worsens, a growing number of fly-by-night companies are employing utterly brazen tactics to push homeowners into illegal and unconscionable loans,” Attorney General Jerry Brown said. “The illegal sales practices of these companies, run by Eric Pony and his family, included psychological pressure, forgery, and outright lies.”
The six companies…
- Direct Credit Solutions
- Greenleaf Lending
- Lifetime Financial
- Nations Mortgage
- Olympic Escrow
- Virtual Escrow
…ran a complex predatory lending scheme using bait and switch tactics that victimized thousands of consumers in California, many of whom have since lost their homes.
Earlier this week, the Los Angeles Superior Court, at the request of the attorney general, froze all six companies’ real estate and bank accounts and enjoined them from engaging in further predatory practices. The freeze order also covered expensive cars and millions of dollars in private real estate owned by Eric Pony. The State of California is also seeking an estimated $20 million in penalties and restitution.

(above: San Bernardino County authorities announce arrests involving the mortgage fraud ring. With the prosecutors are photos of Eric Pony and his sister Paulette Pony… photo courtesy of Los Angeles Times.)
In the coming weeks, the state’s attorney general intends to bring additional legal actions, both civil and criminal, against other mortgage lenders and foreclosure consultants who are taking advantage of homeowners across California.
Here’s how the scam worked:
Lifetime Financial, Nations Mortgage and Greenleaf Lending operated predatory lending schemes to cheat homeowners by promising unrealistically low mortgage payments and then switching them to loans that do not match the original agreement. Telemarketers lure consumers by telling them that they are preapproved for a fixed rate loan of 5% to 6% which could lower monthly payments by hundreds of dollars.
Although the exact number of victims is unknown at this time, Eric Pony, the president of Lifetime Financial, claims to have arranged thousands of loans. During the investigation that led to the lawsuit, the California Attorney General’s Office took declarations from more than twenty people who had been scammed by these companies.
Lifetime Financial arranged loans with hidden fees of up to $20,000. In addition to these fees, homeowners end up with loans that have worse financial terms than their original mortgage. In some cases, homeowners were saddled with monthly payments that exceeded their entire monthly income. Many have either lost their homes to foreclosure or are facing foreclosure as a result of engaging in these transactions.
Telemarketers would initially request only a nominal payment for a home appraisal. Appraisers then inflated home values to qualify the homeowners for much higher loans than were necessary. The companies never provide copies of theses appraisal reports to consumers.
Next, a salesperson would show up at the victim’s house, sometimes as late as 11:45 p.m., with documents that were incomplete or contained terms that are vastly different from those originally promised. If the homeowners complain about the terms, the salespeople would tell them that there is a mistake but they should just sign the paperwork to keep the deal in place.
If a homeowner refused to sign the documents, company employees would simply forge the customer’s signature. In some instances, the forgeries are said to be so blatant that the victims’ names have actually been misspelled.
As a result of these tactics, the final mortgage documents always contained extremely unfavorable terms that are substantially worse than originally promised by the telemarketers. Other fraudulent and unlawful practices include the following:
- Offering thousands of dollars in cash back without disclosing that the money would be used to cover high fees
- Falsely promising to reimburse prepayment penalties from the victim’s current lender
- Pressuring victims to sign inaccurate loan documents by promising to correct excessive fees
- Failing to provide copies of signed documents
- Forging victims names and signatures on loan documents
- Falsifying income information on loan applications and creating fake references
- Refusing to honor written demands to cancel loans
If a homeowner tried to back out of the transaction, the companies would promise to waive thousands of dollars in processing, application, origination and underwriting fees. If the customer agreed, sales representatives would provide a new statement but then resubmit the original forms, ultimately charging the same excessive fees.
Some of the key players involved in companies’ conspiracy to rip off homeowners include:
- Eric Pony, 25, a real estate agent until he surrendered his license in September 2007 following an investigation by the California Department of Real Estate.
- Paulette Pony, 23, Eric’s sister and a notary public for Lifetime Financial until her license was revoked in December 2007 by the California Secretary of State for felony conspiracy charges and failing to disclose a 2003 forgery conviction.
- Wilma Pony, 58, the pair’s mother, who also worked as a notary for Lifetime and is the President and CEO of Nations Mortgage, Inc. and Direct Credit Solutions, Inc., organizations which are also being sued by the attorney general.
- Eli Hassine, 25, who was appointed a notary public in January 2005.
- John Nielsen, a.k.a. Doo Hyun No, a licensed real estate broker for Nations Mortgage and Green Leaf Lending, Inc.
- Carol Pencille, 57, an escrow officer and the President and Chief Executive Officer of Olympic Escrow, a company involved in a kickback scheme with Lifetime whereby $2,700 in fees was taken from escrow proceeds through falsified amendments to loan documents.
- Sibpun Ampornpet, 31, an escrow officer, notary public, and principal of Olympic Escrow.
- Dean Storm, a licensed real estate broker until a California Department of Real Estate investigation led to the revocation of this license in September 2007.
At various times, Pencille and Ampornpet also worked for Virtual Escrow, Inc. and Olympic Escrow, companies that operated in Glendale, Encino and North Hollywood, California. The attorney general suspects that there are other people involved in these companies’ conspiracy to cheat homeowners and will amend the state’s lawsuit when these persons are identified.
If you’re wondering how the scam specifically impacted homeowners, wonder no further:
In 1996, Ron and Barbara Fitzgerald moved into their home in Lancaster, California. Ron is retired and his wife Barbara has been bedridden for several years due to a serious medical condition. In October 2006, Lifetime Financial offered the Fitzgeralds a 4.5% fixed rate with $800 monthly payments. The telemarketers offered to meet Ron at a nearby cafe to review paperwork.
During the meeting, Ron discovered that the paperwork did not conform to the terms that were discussed by the telemarketers. The sales agent told Ron that the paperwork was a mere formality and everything would be taken care of. Ron decided not to sign all the paperwork.
Later that month, the Fitzgeralds were stunned to find that their loan had been processed even though Barbara Fitzgerald did not, and could not have, signed any loan documents due to her medical condition. Investigators later determined that all the signatures and initials on the loan documents were forged.
The Fitzgerald’s mortgage went from $189,000 at an adjustable rate of 8.04% with monthly payments of $1,100, to now owing $244,000 at an adjustable rate of 8.5% with payments of $1,788.
Luis Garcia, a 75-year-old disabled senior from Peru, has limited understanding of English. Lifetime Financial contacted Garcia in Spanish and promised to refinance his mortgage into a low, fixed rate. Garcia agreed to a 50-year loan with $1,000 monthly payments and was shocked when he received a letter from New Century Mortgage stating that his new loan rate was 7.95% and his initial monthly payment would be $2,254. All the paperwork provided to Garcia was written in English.
With help from translators and family, Garcia discovered that Lifetime Financial had falsified almost all of Garcia’s information including his monthly income and work history. Garcia was unable to afford the extremely high monthly payments and ultimately lost his home.
California’s attorney general is seeking civil penalties of $2,500 for each violation and full restitution as well as a permanent injunction against operation the six businesses. Penalties and restitution are estimated to exceed $20 million.