On December 1, 2006 the Montana Division of Banking and Financial Institutions issued the following consumer alert to the Montana press corps and consumers warning them about an entity identifying itself as Northbay Alliance Group or Northbay Alliance (“Northbay Alliance”).

The Division of Banking and Financial Institutions has received information that an entity or person representing itself as Northbay Alliance has been targeting consumers in an “advance fee” scam. Northbay Alliance has stated to consumers that it does business at 300 Central Avenue in Great Falls, Montana. This location is a US Bank building, which has no association or knowledge of thefraudulent entity doing business as Northbay Alliance.

“Advance fee” scams entice consumers with the promise that they will be approved for a loan if they pay the lender an up-front fee. The loan never materializes and it is then that the consumer learns that the loan was just a bogus offer.

“This is apparently an attempt by a person or entity to otherwise illegally part Montanans from their money,” said Annie M. Goodwin, Commissioner of the Montana Division of Banking and Financial Institutions. “Consumers should be suspicious of any lender requesting advance fees with the promise of making a loan.”

Consumers have reported that Northbay Alliance operated a website at www.northbayalliancegroup.com in order for consumers to provide contact information if they were interested in obtaining a loan. After providing contact information on this website, the consumers were later called by a representative from Northbay Alliance. This representative would request that an advance fee be paid in order to obtain a loan.

Northbay Alliance does not hold any license issued by the City of Great Falls or the State of Montana. Anyone who questions the authenticity of an entity or person who represents itself as a financial institution doing business in Montana should contact the Division of Banking and Financial Institutions at (406) 841-2920.

The following entry is taken from the website of the Better Business Bureau of Western Michigan which reports that advance fee loan scams are appearing more often and warns about the activities of the following company:

Newlann Financial Alliance
393 Oak Street, 4th Floor *
Cedar Springs MI 49319
Toll Free # 1-800-975-3102
Local # 810-320-9558
www.newlannfinall.com

A search of The US Postal Service website reveals that the above address is “non-deliverable”. Click here to view the search results. 411.com does not have a phone listing for Newlann Financial Alliance and a reverse search of the phone number reveals it to be a landline still allocated to a telephone company.

I have reviewed the website mentioned and they purport to offer Mortgage loans. Their application page asks for a lot of personal information, including SSN, in fact just enough information to steal your identity. They even ask for your opinion of your credit grade.

What they DO NOT ask are questions about the property you want to buy, the size of any down payment, the purchase price – information required by many lenders websites and certainly by the uniform mortgage application (1003).

The BBB reports that if you are able to get through on a phone call (they don’t answer the phone, just say leave a name & number and we will get back with you) you receive a generic message. The supposed person calling you back is NANCY ANDERSON, and she states in order to secure a loan you must first purchase insurance from SPRUCEMED INSURANCE GROUP. They then fax Sprucemed “loan insurance” forms and require $1,800.00 to be paid before approving your loan.

They go onto to say that this is a typical scam format, difficult to contact; forms faxed, fake address, probable cell phone only for contact and evasive people. Neither Newlann nor Sprucemed exist in the national BBB database which has over three million names.

Ken Vander Meeden, BBB President tried to call, left messages, reviewed the generic web site www.newlannfinall.com and stated:
“If this isn’t a scam then I’m a Russian Cosmonaut. Once again, advance fee loans are harming people all over the USA from a fake Cedar Springs address. NewLann also requires two pieces of identification when paying them $1,800 in advance, so they are probably also involved in identity theft as well. Unfortunately, law enforcement at local and state levels rarely address these types of scams in a timely fashion so the public must be more aware of “bad offers”.

The BBB advises: 
Check out ALL offers for loans at the BBB, State Attorney General and any other licensing agency. 
Never send identification or general information to unknown offers that don’t have a valid address and approach you via e mail or phone.
You can contact the BBB at www.westernmichigan.bbb.org .

The Ohio Department of Commerce’s Division of Financial Institutions is warning Ohioans (and anyone else) to be on guard against newspaper advertisements that promote the availability of loans but fail to identify the name of the company and its mortgage broker registration number. The ads only provide a toll-free telephone number.

In Ohio, advertisements have recently been placed in the Lorain Morning Journal and possibly other newspapers promoting the availability of first and second mortgage loans, car loans and debt consolidation for persons with “bad credit and bankruptcy.” The ads promise “no upfront fees and fast results.”

The toll free number listed in the ad tracks back to Canada. Even though the ad doesn’t mention a company name, calls to the toll-free number have been answered under the name Peach State Financial Services, but it could be operating under other names. While there is a licensed mortgage broker with that name in Cumming, Georgia, this business does not solicit or conduct business in Ohio. The Georgia company and the Division of Financial Institutions have reported this apparent identity theft and advance fee loan scam to Canadian authorities.

In a typical advance fee loan scam, phony businesses place classified ads to lure people who are having difficulty finding a loan due to past credit problems. The ads typically urge the consumer to contact the business at a toll-free long distance telephone number in another state or in Canada.

After soliciting financial information from the caller, they claim that they can find a private lender to finance a loan. However, before the loan can be processed, they say that the consumer needs to make a down payment or purchase special mortgage insurance. The consumer is then instructed to send between $400 and $2,000 to cover those costs by sending a money order out of state or to Canada. In connection with this ad, an Ohio consumer was instructed to send $1,245.52 to purchase an insurance policy to secure the proposed mortgage loan.

“When a mortgage broker demands money (except for small amounts for credit or appraisal reports) before providing services, this should raise an immediate red flag for every borrower,” said F. Scott O’Donnell, Ohio’s Superintendent of Financial Institutions. “Legitimate brokers get paid at the time of the loan closing. Do not send money to a mortgage broker in advance of receiving a loan. In all likelihood, it will be the last time you see that money or hear from the so-called mortgage broker.”

Ohio law requires mortgage brokers operating in the state to be registered through the Division of Financial Institutions and to include their registration number in any advertisement. “We strongly encourage Ohioans to first check with the Division to learn if a mortgage broker is registered in Ohio. This can be done by conducting a search of mortgage brokers on the Division’s web site at www.com.state.oh.us/odoc/dfi or by calling the Consumer Hotline toll free at 1-866-278-0003,” Superintendent O’Donnell said.

To avoid being victimized in the lending process, Superintendent O’Donnell encourages potential borrowers to “Think first, borrow smart.” “Do not fall for the advance fee loan scam,” he said.

Missouri Attorney General Press Release – January 14, 2005

Attorney General Jay Nixon announced a Staten Wide crack down on advance fee and credit repair scams. He announced that 9 law suits had been filed, below are three of them.

 Jackson County Circuit Court: A lawsuit filed against Jason E. Branch Sr. and Karen Weathers, both of Kansas City, doing business as J.E. Capital Group, Global Funding Group and Covenant Ministries International. The two are alleged to have offered, for a fee ranging from $1,995 to $20,000, to arrange a line of credit or approve mortgage financing to help consumers create wealth through real estate investments. The lawsuit says pair refused to issue refunds after failing to deliver on their promises.

Adair County Circuit Court: A lawsuit filed against Willadean Walker, of Kirksville, and Mervin J. Walker, of Greentop, and their business, Walker Mobile Home Sales, located in Kirksville. The lawsuit states that consumers who intended to purchase mobile homes from the business paid deposits ranging from $1,000 to $11,000 and would then seek financing. Consumers who were unable to obtain financing for the rest of the purchase often found that the defendants refused to refund the deposits.

St. Louis County Circuit Court: A lawsuit filed against Ricks Galloway, of Florissant, and Wayne A. Brown, of St. Louis County, doing business as Ricks Galloway the Mortgage Man, First Finance Mortgage and Maverick Capital Finance. The two are alleged tohave misrepresented the fees they required consumers to pay for securing home mortgages, home refinancing, and for sale of real estate; failed to provided services as promised; and engaged in deceptive advertising.

Click here to read the full press release

The Philadelphia Enquirer - January 11, 2005

The Philadlephia Inquirer repors that a Mount Laurel woman, accused with her husband of defrauding homeowners whose properties were in foreclosure, was warned by a Superior Court judge yesterday to hire an attorney or be forced to represent herself.Judge John A. Sweeney gave Sandra Rogers a month to find a lawyer. He advised her that the charges carry “substantial and significant” penalties.

Rogers and her husband, Peter, both 61, are charged with using his debt consultation business to illegally take $355,000 from homeowners as well as from mortgage insurance and risk-management companies.Peter Rogers made agreements with homeowners to represent them while attempting to renegotiate, refinance or reassign their mortgages. He unlawfully represented himself as a lawyer and, through his business, was able to fraudulently obtain $250,000 from insurance and risk-management companies.

The indictment alleges that between May 1998 and August 2004, Peter Rogers, using the business name Express Consolidation Refinance & Mortgage Consultation Inc., contacted 77 people whose homes were being foreclosed and offered his help. He is alleged to have collected fees ranging from $400 to $3,700 without providing a service. The indictment says that homeowners were defrauded of $105,000 in total, with the rest of the money obtained from the mortgage insurance and risk-management companies.

Read the full article by Joel Bewley here

Nashua Telegraph and  USDOJ Press Release -  November 3, 2004

BOSTON (AP) - A Florida man was sentenced to 27 months in prison for a mortgage brokerage scheme that defrauded hundreds of people of more than $1 million, prosecutors said. Steven D. Mueffelman, 60, of Palm Harbor, Fla . , was sentenced Monday by U.S. District Judge Nancy Gertner, who also ordered him to serve two years of supervised release.

Mueffelman was convicted in March of 13 counts of mail fraud for an advance fee scheme that operated in Massachusetts and elsewhere.

Mueffelman was president of Commonwealth Capital Funding Corp. from September 1996 to August 1997, when the company closed down after the state attorney general’s office filed a civil injunction against it for unfair and deceptive trade practices.

Finger Lakes Times - October 10, 2004

GENEVA — An advance-fee loan fraud bilked a local woman out of $1,100 recently.

Advance-fee frauds promise victims some payout, loan or other benefit — if only they’ll send money first to cover administrative fees. The most well-known example is the infamous Nigerian e-mail, which offers a large share of a deposed or deceased leader’s fortune in exchange for laundering the money into the United States.

Amy Gay, of North Exchange Street, was not interested in a windfall. The divorced mother of a 12- and 17-year-old said she just wanted to improve her credit rating when she saw an advertisement for Paragon Financial Group Sept. 12 in the The Week Ender of Geneva. The ad offered personal, home, business and debt consolidation loans to people with “damaged” credit.

The ad ran Sept. 3, 10, and 17. Editor Chris Pruzenski stopped the ad’s fourth appearance after he received a complaint about it. The Times does not print such advertisements.

Gay called the ad’s phone number and spoke with a person who instructed her to wire money to an individual in Canada through Western Union to buy insurance on the loan. Although that seemed strange to her, she said the representative had a reasonable-sounding answer for each of her objections. Gay felt even more reassured after she investigated the company by visiting the Web site listed in the ad, Bogus Paragon Financial site , and she wired the money Sept. 30.

“It looks like a legitimate Web site,” she said, noting that it features the Merrill-Lynch bull trademark and FDIC logo, “but it is a total fabrication.”

Her loan was supposed to be wired to her account Oct. 1, but there was still no money on Oct. 4. Gay called the Better Business Bureau, got another phone number for Paragon and spoke with Lakisha Gilmore-Atherton .

The real deal

It’s a call that has become too common for Gilmore-Atherton, an administrator for the real Paragon , located on Walt Whitman Road — not ” Valt ” Whitman Road , as the ad states — in South Huntington, Suffolk County.

“Obviously, everyone who calls here is looking for their money, and all we can give them is a phone number,” she said, adding that the scam is hurting her company’s reputation. “As far as our company, it’s been going on for at least two months. What they’ve done is they’ve literally stolen our identity.”

Principal Brian McDonnell said the situation has become incredibly frustrating, noting that he spent 20 years building his company on doing the right thing even when the wrong thing was technically legal. Now, a ring of criminals is damaging that tradition.

“It drives me insane that we can’t shut down this Web site,” he said, adding that government agencies and law enforcement officials seem unwilling to address the problem.

He’s heard many reasons — international jurisdictional issues, the difficulty of finding and prosecuting the con artists, the light penalties in Toronto for those caught, and the sheer size of the problem. McDonnell said the lead investigator in Toronto told him these scams took in $52 billion last year, with most of the money leaving Canada.

That’s scary news for McDonnell, who worries what the money is funding in today’s world.

That concern — bolstered by a three-inch folder growing daily and workers spending half their day combating the scam — have prompted McDonnell to go on the offensive. He’s trying to get newspapers to agree not to print the ads and wire services to warn people sending money to Toronto.

“If we can get a combination of the two, maybe we can slow this activity down,” he said, adding that unbridled success will only encourage more advance-fee fraud.

More scams, more victims

Criminals seem to be aware of the gold-rush potential of these scams. Authorities are investigating another “Paragon” Web site, www.paragonfinancial.net, and the scammers have hijacked the name of another legitimate company, Continental Funding of New York City.

“This is really getting out of control. It’s crazy. It’s absolutely crazy,” said Gilmore-Atherton, whose company’s real Web site is www.todaysbestrate.com .

Week Ender editor Pruzenski noticed the misuse of Continental’s name Sept. 28, when he received a suspiciously familiar request for advertising rates from a company claiming to be Continental Funding.

“It looks identical to the original fax from Paragon,” he said.

Both faxes, which Pruzenski shared with the Times, are printed in the same unusual font and worded identically. Only the business names, contact information and sample ads differ.

Concerned, Pruzenski called the toll-free number of the new company’s Massachusetts office. They never responded to him, so he did not run the ad.

Peter Janoff, president of the real Continental Funding, was shocked Thursday afternoon to learn con artists had tried to place an ad in his company’s name. The proposed ad featured Continental’s real Web site, www.continentalfunding.com, but a false phone number. Janoff said his company has never done business in this area and has no out-of-state offices.

The company is listed on the state Banking Department’s Web site, www.banking.state.ny.us, as a mortgage bank. Janoff said he planned to file complaints with the department and other authorities immediately.

The Banking Department Web site has a warning about a similar scam being run in the name of Heartland Credit Union with an Amsterdam, Montgomery County, address. A real Heartland Credit Union is located in Madison, Wis., and is not involved in the scam, the warning notes. It also asks consumers and media outlets to report any such ads to the department’s Criminal Investigations Bureau at (212) 709-3540.

Calls placed to the Paragon and Continental advertisements’ phone numbers were not returned.

Another victim, Trisha Jones of Williamsburg, Ohio, called the Times Wednesday after speaking with Gilmore-Atherton. She wired $1,900 to Toronto Monday to insure a $100,000 debt consolidation loan she never received. She borrowed the money from her church and can’t repay it; she and her husband had already been afraid of losing their house.

“I have a financial issue, obviously. That’s why I called this place, and I thought it was real,” she said, adding that she has six children, ages 1 to 11.

Jones reported the fraud to the FBI, Western Union Fraud Department and an attorney, but authorities told her the money is not usually recovered.

Gay also contacted authorities, filing a report with the Ontario County sheriff’s department. Investigator Dennis Crouch said Thursday he reported her case to the Secret Service, which is already investigating these scams. He said he knew of no other local victims.

Secret Service agents in Rochester said they could not comment on the investigation.

Protecting oneself

“There are a lot of warning signs that people have been missing in this scam,” said Teresa A. Santiago, chairperson and executive director of the state Consumer Protection Board, in a June press release about a similar scam offering start-up loans for small businesses.

Victims then were losing $500 to $2,400 to a Canadian crime ring advertising under the names Empire State Financial Services, Mortgage Expo and Crown Financial.

Santiago warned that con artists keep changing the company names and phone numbers, so consumers can’t protect themselves by memorizing a list. Instead, before sending money anywhere, consumers should investigate a company by visiting such Web sites as www.Ripoffreport.com and www.BBB.org or calling her agency at (800) 697-1220.

Lending institutions can also be verified through the state Banking Department at www.banking.state.ny.us/simbanke.htm .

McDonnell said newspapers receiving suspicious ads — and consumers reading them — should call Information to get a local phone number for the company and call it to make sure the ad or offer is legitimate.

Santiago also said people should verify the address in the ad is for the business in question. Empire was using a New York City school’s address.

“Sending money via Western Union to a Canadian address is another tip-off,” she continued. “You should never send money before you receive a product or service and no transaction is safe unless you know for sure that you’re dealing with a legitimate firm.”

Santiago also said “loan insurance” fees should be a red flag for potential borrowers .

“Legitimate lenders usually don’t usually ask for a fee up front,” said Santiago, noting that legitimate fees are usually quite small.

Jon Sorensen, the Consumer Protection Board’s director of marketing & public relations, agreed and added that consumers shouldn’t look for loans through newspaper ads.

“It’s always dangerous to put money up front or to wire money,” he said. “It’s not the w ay legitimate companies do business.”

The state Consumer Protection Board is working with U.S. and Canadian agencies to find those responsible for this scam. Complaints may be filed with the board at (800) 697-1220 or via the Internet at www.nysconsumer.gov .