Lake Arrowhead Lifestyles Blog

Christopher Lee Diener, once a practicing attorney in Orange County, California, was arrested in January on charges that include one count of conspiracy to commit grand theft, and 97 felony counts of grand theft by false pretenses, with sentencing enhancements for white collar crime and excessive taking.  Diener and his partners are said to have defrauded 400 homeowners in a $1.25 million loan modification scam.  If convicted, defendants face up to 70 years in state prison.

This appears to be the first criminal prosecution of an attorney offering loan modification services, that has resulted from the collaborative effort of the Orange County District Attorney's Office, working with the State Bar of California, the Department of Real Estate, and the California Attorney General's Office.

Diener's business partners, Stefano Joseph Marrero and Terrence Green Sr., were also similarly charged, but a $1.5 million warrant for Marrero has been issued and he remains at large.  Diener and Green are being held on $1.5 million bail each, and assuming either of the defendants were able to post such a bond over the weekend, the money posted as bail must be proven to have come from legal and legitimate sources, which means that the they could not use any of the proceeds of their alleged fraud.

According to the OC District Attorney's Office, the pair will be arraigned on Tuesday, January 26, 2010 in Department CJ-1, Central Jail in Santa Ana.

The defendants are accused of targeting homeowners at risk of losing their homes and offering loan modification services that required an upfront fee.  All three are in their early 40s and are neighbors in the upscale Ladera Ranch community, east of the 5 freeway as it passes through Mission Viejo.  They are accused of operating loan modification businesses under a list of names that include: Home Relief Services, LLC, US Loan Mod Processing, HRS Communications, The Diener Law Firm, and Diener Law Group.

According to the OC District Attorney, the defendants made "false statements" and "enticed" homeowners to hire them by saying they could "guarantee loan modifications, negotiate lower interest rates with lenders, reduce the principal owed on a customer's mortgage, have second mortgages eliminated or forgiven, and have late fees forgiven by the lenders".   They are also accused of promising to complete a homeowner's loan modification in "less than 90 days," and claimed a 90 percent rate of success.

It should go without saying that they promised a 100% money back guarantee if not successful, and required homeowners to pay 100% of their fee in advance of any work being completed.  The new state law in California, signed by the governor last October, prohibits attorneys that offer loan modification services from accepting payment until services contracted for have been provided.  Real estate brokers cannot accept payment in conjunction with a loan modification until all services have been provided and a loan modification has been granted by the lender or servicer.

They are also accused of soliciting referrals in exchange for payment from real estate and mortgage brokers, and are even said to have attended a mortgage banker's convention in Las Vegas to promote such referral programs.