A Newport Beach man was sentenced Monday with a fraudulent debt relief firm.
The Justice Department and U.S. Postal Inspection Service said John Vartanian, 57, worked at Nelson Gamble and Associates and Jackson Hunter Morris and Knight, companies that offered to settle credit card debts.
Instead, he took victims’ payments as undisclosed up-front fees.
A federal judge sentenced Vartanian to serve 2 years and three months in prison and ordered him to pay $1.2 million in restitution, according to authorities.
Vartanian admitted to selling the firm’s fraudulent debt relief services through telephone calls with consumers nationwide.
“These scams take advantage of consumers already struggling with debt,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “The Department of Justice will continue to work with its law enforcement partners to protect consumers from fraud, especially when they are targeted based on their financially vulnerable conditions.”
“We are gratified by today’s sentencing, on behalf of the many unsuspecting victims who sought financial relief, only to be further burdened by these criminals,” said Inspector in Charge Regina L. Faulkerson of Criminal Investigations, U.S. Postal Inspection Service. “We applaud the work of the Justice Department’s Consumer Protection Branch in bringing this fraudulent credit repair salesman and his accomplices to justice.”
Vartanian pleaded guilty to one count of conspiracy to commit mail and wire fraud. Four other defendants also pleaded guilty and were sentenced last week in connection with the fraudulent scheme.
Vartanian and other members of the conspiracy at times portrayed Nelson Gamble and Jackson Hunter as law firms or attorney-based companies.
Clients were told the companies would negotiate favorable settlements with creditors. Clients made monthly payments expecting the money to go toward settlements, according to officials.
The conspirators instead took at least 15 percent of the total debt as company fees, with the first six months of payments going almost entirely toward undisclosed up-front fees.
Officials said the scheme ran from February 2010 to September 2012 and, in 2011, changed names from Nelson Gamble to Jackson Hunter.
Conspirators told victims that Nelson Gamble had gone bankrupt and that Jackson Hunter was an unrelated company that had taken over some of the accounts.
Participants in the scheme blamed past problems on Nelson Gamble and denied requests for refunds of money paid to Nelson Gamble.
Some victims who previously demanded refunds accepted the explanation that Nelson Gamble was bankrupt and did not pursue complaints against Jackson Hunter.
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