Mission Viejo Man Convicted in Loan Mod Scam

Andrew Michael Phalen of Mission Viejo pleaded guilty Wednesday to felonies related to several loan modification scams targeting distressed homeowners, Deputy District Attorney Megan Wagner said.

Phalen, 25, pleaded guilty to two felony conspiracy charges. He had faced eight felonies, and four codefendants continue to await trial.

Under the terms of his plea deal, Phalen will likely serve one year in jail and five years in formal probation, Wagner said. She said he will not be allowed to approach homeowners with loan modification requests under the terms of his probation.

Prosecutors say Phalen and the others sent letters throughout the country to distressed homeowners promising a 100 percent success rates for loan modification assistance. The letters also claimed to offer a full refund if loan modifications were not granted.

When people sent in money, they weren't repaid or refunded, the D.A. says.

The D.A. accused the men of "regularly changing the names, phone numbers, and addresses of the companies" set up for loan modification assistance.

Wagner says the scheme targeted vulnerable homeowners.

"The folks who responded to their advertising and believed the promises that were made to them were desperate," she said. "It’s a bad economy for a lot of us, and these folks were trying hard to save their homes and get their heads above water. Under those circumstances they were particularly vulnerable."

Although Phalen could have served more jail time had he been convicted of all eight felonies, Wagner says the prosecution is satisfied with the plea agreement.

"It’s one thing to lock somebody up for awhile," she said. "But if they can come back and do what they were doing, all you’ve done is postponed the same activities from happening again. Hopefully under the terms of this agreement, Mr. Phalen will find a different way to make a living. Other homeowners won’t have to suffer from the same scheme."

Phalen's sentencing was postponed to June 6 to give victims the opportunity to speak. Sentencing is set for 8:30 a.m. in Dept. H4, Harbor Justice Center, Newport Beach.