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Riverside Man & Office Manager Indicted on Federal Charges

James Diamond – Courtesy photo

A man and woman who operated a fraudulent debt-elimination scheme to target distressed homeowners were charged in a federal grand jury indictment, it was announced today by Nicola T. Hanna, the United States Attorney in Los Angeles, and Paul D. Delacourt, the Assistant Director in Charge of the FBI’s Los Angeles Field Office.

James Ignatius Diamond, 68, of Riverside, and Tricia Mae Gruber, 42, of Riverside, were named in a thirty-count indictment returned by a federal grand jury in Los Angeles on June 6, 2018.

The indictment outlines how Diamond and his co-defendant Gruber and their co-schemers operated the scheme and highlights thirty instances of wire and mail fraud affecting a financial institution throughout the scheme.

Diamond was arrested at his residence without incident. Gruber, a notary public and office manager, will be summonsed to federal court at a future date.

Around 2010 and continuing to about September 2014, defendants Diamond and Gruber, and other co-schemers, knowingly participated in a scheme to defraud distressed homeowners, which also affected financial institutions to which they were indebted.

When targeting victim homeowners with at least one of his pitches, Diamond described a loophole in the Uniform Commercial Code regarding real estate ownership in which the homeowner could become the creditor and the financial institution creditor/lender would become the debtor, according to investigators. The programs purported to eliminate the victims debts altogether. After enrolling in the programs, Diamond and his co-schemers would collect from victims an advance-fee, followed by periodic program fees, and notary fees totaling hundreds of dollars. The average victim paid thousands of dollars, and some victims paid tens of thousands of dollars. Many victims lost their homes, were evicted from their homes, or suffered other adverse economic consequences. The investigation uncovered hundreds of victims with collective losses of more than $1.5 million.

According to the indictment:

Diamond owned and operated businesses with offices located in Riverside County, including Transmitting Assets, Inc., Operation Save Haven, Citizen Beware, and Unlimited Logistics Corporation (collectively known as TAI/UCL). TAI/ULC purported to offer debt-elimination services to homeowners who were behind on their mortgage payments and other debtors who were behind on their debt payments, including car and student loans, in exchange for substantial fees, including an advance fee, periodic program fees, and notary fees.

Diamond, Gruber, and co-schemers induced victims to pay the TAI/ULC fees for services that defendants Diamond and Gruber falsely represented would eliminate the homeowners’ and debtors’ financial obligations to their financial institution creditors.

Defendants Diamond and Gruber recruited victim customers, many of whom did not speak English well or at all, through various means, including live seminars and presentations, as well as written marketing materials.

Defendants Diamond and Gruber and their co-schemers offered two primary methods of purported debt-elimination:

 

1) The Diamond Home Claim Reclamation Method, also known as the Free & Clear Method, which targeted financially distressed homeowners; and

 

2) The Electronic Funds Transfer Program, which targeted financially-distressed homeowners and victims with other debts including car and student loans.

 

The defendants and their co-schemers falsely told victim customers that they did not have to continue paying their mortgages after entering into the programs and should instead pay TAI/ULC. Defendant Diamond also falsely told victim customers that if they ceased making mortgage payments to their banks, the banks would be forced to settle with the victim customers.

At least as early as 2010, defendants Diamond and Gruber ignored correspondence they received from various financial institutions and government entities informing them that documents created by the defendants and their co-schemers, which they submitted or directed victim customers to submit to financial institutions (or other creditors) had no legal effect, that they would not discharge any outstanding debts owing, and/or that they were fraudulent.

When victim customers received similar correspondence from financial institutions and government entities and confronted defendants and their co-schemers with this correspondence or requested refunds, defendants Diamond and Gruber ignored them, claimed that the correspondence was part of the debt-elimination process, encouraged the victim customers to pay purported outstanding fees to TAI/ULC so that their debts would be successfully eliminated, or offered to enroll the victim customers in other services for additional fees.

After paying TAI/ULC for services, some victim customers received unlawful detainer notices, notices of trustee sale, and other foreclosure-related documents. Some victim customers lost their properties. When victim customers complained to defendants Diamond and Gruber about these foreclosure-related developments, defendants Diamond and Gruber would ignore them or offer to enroll the victim customers in other services for additional fees.

The defendants and their co-schemers did not comply with state laws and regulations that govern, and in some cases, prohibit the operation of advance-fee loan modification businesses.

Diamond Home Reclamation Method:

In order to participate in the scheme, the defendants and their co-schemers generally required victim customers to pay an advance fee ranging from $3,500 to $8,000 per property, plus additional fees per lien on the property, periodic program fees, and notary fees.

After victim customers paid an advance fee, the defendants and their co-schemers directed the victim customers to travel to the TAI/ULC office in Riverside, California, to provide TAI/ULC employees with information relating to the victim customers’ debt obligations. At the TAI/ULC office, defendants and their co-schemers directed the victim customers to sign various documents that purported to eliminate the victim customers’ debts when sent to financial institutions, including banks and mortgage companies, and government agencies, entities and officials (the Documents).

Defendant Gruber generally notarized the Documents and charged a fee for each document that she notarized, typically between $50 and $300 per document, which was well above the prevailing rate.

The defendants and their co-schemers provided some of the Documents to the victim customers and instructed them to mail the Documents to various entities. The defendants and their co-schemers also filed some of the Documents with county recorders’ offices for additional fees.

In furtherance of this part of the scheme, the defendants and their co-schemers made and caused others to make the following material false and fraudulent pretenses, representations and promises:

That victim customers who paid for the Diamond Home Reclamation Method would eliminate their mortgages entirely and own their residences free and clear when in truth and in fact, as defendants and their co-schemers then well knew, the Diamond Home Reclamation Method would not eliminate victim customers’ mortgages entirely or allow them to own their residences free and clear.

That the Diamond Home Reclamation Method had successfully eliminated debt obligations, when in truth and in fact, as the defendants and their co-schemers well knew, the method had not eliminated debt obligations.

That the Documents that the defendants and their co-schemers had the victim customers sign and send to financial institutions and government agencies would result in the elimination of the victim customers’ debts, when, in truth and in fact, as the defendants and their co-schemers then knew, the Documents would not eliminate any debt obligations and had no legal effect at all.

That victim customers were not legally obligated to continue to pay their mortgages, when in truth and fact, the DHRM did not relieve the victim customers of their obligations to pay their mortgages.

That correspondence received from various financial institutions stating that the Documents created by the defendants and their co-schemers had no legal effect, would not discharge outstanding debts owing, and/or were fraudulent actually were part of the debt-elimination process, when in reality, the letters were not part of a process that would eliminate any debt obligations.

The indictment alleges that the defendants knowingly concealed from victims the fact that the Documents had no legal effect and that their Diamond Home Reclamation Method had never succeeded in eliminating a customer’s mortgage obligation.

Diamond Electronic Fund Transfer (Diamond EFT):

In order to participate in the Diamond EFT Program, defendants Diamond and Gruber and their co-schemers generally required victim customers to pay a fee, which they calculated as a percentage, typically 13% of the amount of the debt to be discharged, plus additional program fees and notary fees. The victim customers were required to pay an advance fee, typically several thousand dollars, followed by monthly payments and notary fees. Defendant Diamond sometimes also recorded liens on the victim customers’ properties in the amount of the fee.

After victim customers paid the advance fee, defendants Diamond and Gruber and their co-schemers directed the victim customers to provide the TAI/ULC employees with information relating to the victim customers’ debt obligations. After victim customers paid the advance fee, defendant Diamond prepared and directed to be prepared, among other documents, documents that appeared to be checks in the name of James I. Diamond, made payable to the victims’ financial institution creditors in the amounts of the balances owed on the victim customer debt obligations (the EFT Checks). The memoranda lines on the EFT Checks bore the words, FOR EFT ONLY FOR THE DISCHARGE OF DEBT, or similar words. Defendant Diamond and Gruber and their co-schemers then provided the EFT Checks to the victim customers and instructed the victim customers to mail the EFT Checks to their financial institution creditors and other entities as purported payments satisfying the outstanding balances owed by the victim customers.

Defendant Gruber generally notarized documents relating to the EFT process and charged a fee for each document that she notarized, typically between $50 and $300 per document, which was well above the prevailing market rate.

When victim customers advised defendants Diamond and Gruber that their financial institutions had rejected the EFT checks, defendant Diamond falsely told the victim customers that this was part of the debt-elimination process and that customer victims were required to continue making monthly payments to TAI/ULC in the amount of 13% of the amount of the debt obligation.

If a victim customer stopped paying the monthly payments, defendant Diamond would:

advise the victim customer that the debt-elimination process would not work until she/he had completed all payments; threaten to foreclose on the victim customer’s property or other assets; and threaten to assess late fees

In furtherance of this part of the scheme, defendants Diamond and Gruber and their co-schemers made and caused others to make the following material and false and fraudulent pretenses, representations and promises:

That victim customers who paid for the Diamond EFT Program would be able to discharge or entirely eliminate their debt obligations, including home mortgages, car loans, and student loans, when in truth and fact, as defendants and their co-schemers then well knew, the Diamond EFT Program would not discharge or entirely eliminate victim customers’ debt obligations.

That EFT Checks were valid, legal tender, drawn on open bank account, when in truth and in fact, as the defendants and their co-schemers then well knew, the EFT Checks were not valid, legal tender, and were not drawn on open bank accounts.

That EFT Checks would pay off the victim customers’ debts when in truth and fact, as defendants and their co-schemers then well knew, the EFT Checks would not pay off the victim customers’ debts.

That the financial institutions’ rejection of the EFT checks was part of the debt-elimination process, when in truth and in fact, as the defendants and their co-schemers well knew, the financial institutions’ rejection of the EFT Checks was not part of a process that would eliminate any debt obligations.

 Also in furtherance of this part of the scheme, defendants Diamond and Gruber knowingly concealed the following material facts from the victim customers:

That the EFT Checks were not valid, legal tender and instead contained account numbers belonging to closed bank accounts.

That the EFT Checks had never succeeded in eliminating a customer’s debt obligations.

As a result of the fraudulent scheme, defendants Diamond and Gruber induced hundreds of distressed homeowners and other debtors to pay more than $1.5 million in fees to TAI/ULC.

Diamond appeared in federal court in Los Angeles Thursday afternoon for an initial appearance. If convicted of the charges in the indictment, Diamond and Gruber face a statutory maximum sentence of 30 years in prison each.

Investigators believe there may be other victims of this scheme not yet identified. If you believe you may have been victimized in this scheme, or have information about someone who has, you are encouraged to contact your nearest FBI office. In Los Angeles, the FBI can be reached 24/7 at (310) 477-6565.

A photograph of defendant Diamond is being issued publicly to assist possible victims.

This case was investigated by the FBI’s Los Angeles Division, Riverside Resident Agency, the Riverside County Sheriff’s Department, and the Drug Enforcement Administration. This case is being prosecuted by Assistant United States Attorney Cassie D. Palmer of the Major Frauds Section.

An indictment merely contains allegations that a defendant has committed a crime. Every defendant is presumed innocent unless and until proven guilty at trial. www.fbi.gov/contact-us/field-offices/losangeles @FBILosAngeles www.facebook.com/FBI

 

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