Fraud Suspect’s New Loan Firm Is Target of Customer Complaints
A man facing trial for allegedly defrauding renters is running a San Fernando Valley-based telemarketing firm that customers say took hefty fees for loans that were never made.
State officials said the firm, Gold Star Group-- which reaches out to credit-hungry consumers nationwide from a dingy, signless office in Reseda-- lacks the license required by California law to arrange consumer loans. And despite a new federal regulation that bars telemarketers from charging fees in advance of providing loans, Gold Star’s phone bank was still humming this week.
The head of the firm, Joseph E. Perez, was arrested in November and charged with running a scam that targeted low-income renters. Unknown to authorities, Perez at the time of his arrest had already launched Gold Star, which customers say promises loans to consumers who mail in a $269 processing fee.
The operation has triggered more than 140 inquiries to the Better Business Bureau.
“We’ve had substantial problems in the past dealing with companies that charge advance fees for loans,” said Dan Spiro, a senior attorney with the Federal Trade Commission, which developed the new telemarketing rule that took effect this year. “We have found in some cases that the consumers do not receive the loans they are promised.”
Visited this week at his office in the 18500 block of Sherman Way, Perez, 33, said he was “not interested” in talking and asked a reporter to leave.
On the sidewalk outside the office, a Gold Star employee who would not give his name said the firm takes loan “applications and we just send them to the bank. That’s all we do.”
In newspaper ads that have run in New York, New Orleans, San Antonio and other cities, Gold Star provides an 800 number to call.
Customers who call the number say they are asked a few questions--such as name, address, employer and income--and are told to wait a few hours for a decision on their loans. When they call back, customers say they are told their loans have been approved and are instructed to send a $269 fee by overnight mail.
The payments are directed to Gold Star at “Suite 304” at an address in the 3700 block of Foothill Boulevard in La Crescenta. However, the address is a mail drop called The Home Office, where Gold Star rents box No. 304.
Wanda Dudley’s encounter with Gold Star has left her demoralized and financially drained. A New Orleans gas station cashier, Dudley wanted a small loan to pay a few bills and buy Christmas gifts for her three children. Dudley said she sent the $269 processing fee after a Gold Star representative said her loan had been approved.
When the money didn’t come and Dudley began to worry that she had been duped, she devised a little test. She got her sister to apply, but with bogus information--from a phony address and phone number to a fictitious Social Security number. A few hours later, when her sister was told her loan had been approved, Dudley said she figured she had been had.
“I don’t make much money,” Dudley told The Times. “To know this kind of money is gone--it really hurts.”
Perez was arrested by Los Angeles police in November and charged along with two associates with grand theft and other crimes. The criminal complaint involved the activities of Express Homes, a Van Nuys firm operated by Perez that charged fees to renters for lists of houses and apartments.
According to prosecutors and customers, Express Homes cheated clients by lying about its services and refund policies. Perez is charged with 16 misdemeanors in the case. He has pleaded not guilty.
Local, state and federal authorities--including postal inspectors and Federal Trade Commission--said they were not aware of Gold Star prior to inquiries by The Times.
Prosecutors in the Los Angeles city attorney’s office, who filed the charges against Perez in the Express Homes case, also said they were not familiar with Perez’s other business.
But authorities said that in California, it is illegal to offer to arrange loans without obtaining a license from the state Department of Corporations or registering with the state attorney general as a credit services organization.
Officials at those agencies said that Gold Star is neither licensed nor registered.
Although charging fees prior to funding loans may be permitted in rare instances, “a fee charged in advance by a nonlicensed institution is illegal in California,” said Deputy Atty. Gen. Dennis Dawson.
Victims of advance-fee operations often are poor, and that “makes my blood boil,” said Spiro of the FTC. “You can be taking literally somebody’s life savings away from them, even though it’s only a few hundred dollars.”
Gold Star’s 800 number can only be reached by out-of-state callers. And authorities said advance-fee operations often target them in the belief that local authorities--busy with complaints from their own constituents--will turn a blind eye to out-of-state complaints.
Authorities urged consumers to use caution in responding to offers like those of Gold Star. They noted that people who do not qualify for loans locally are unlikely to get help from far away.
Consumers “have to be very skeptical about paying upfront, advance fees,” said Dawson. “Even if it were legal, would a stranger loan you a substantial amount of money based on a cursory taking of just a brief amount of . . . information?”
