‘Credit-Repair’ Firms Raided in Riverside
Law enforcement officials on Friday raided four Riverside locations and seized 100 boxes of evidence in what the Riverside County district attorney’s office called a scam by companies that claim to help homeowners out of financial trouble.
Targeted with search warrants were the headquarters of New England Financial Corp. and its affiliate, Western Pacific Legal Services, and the office and home of Andrew M. Smith, 48, a lawyer suspended three times by the state bar who, authorities said, is chief counsel to New England Financial.
Western Pacific purportedly provides “credit-repair” services, officials said.
Jay Orr, Riverside County’s supervising deputy district attorney, said authorities believe that New England Financial has victimized hundreds of Californians whose homes are worth less than they owe on their mortgages. For a fee of 1% of the original mortgage amount, Orr said, the firm promises to take title to the properties, allowing clients to walk away from their mortgages without adverse tax consequences or harm to their credit records.
However, he said, the company often fails to provide any services, leaving many clients with credit records stained by foreclosure. In cases where the firm negotiates a “short-pay”--selling the home and paying the creditor less than the full amount of the loan--clients may owe high taxes on the unpaid portion, Orr said.
No charges have yet been filed, but Orr said the criminal probe focuses on Smith and the two principals of New England Financial, William John Williams, 43, and Mark Scott Kraig, 40. Williams and Kraig are awaiting trial on unrelated felony charges of diverting construction funds, Orr said. None of the three could be reached for comment Friday.
The California Employment Development Department is also involved in the probe because former New England Financial employees allege that the firm failed to make required contributions for unemployment compensation in their behalf, Orr said. Another firm advertising similar services for troubled homeowners, Boston Harbor Corp. of San Diego, reached a settlement last month in a lawsuit brought by the California state attorney general’s office that accused the company of making false and misleading claims.
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