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Folsom attorneys busted for loan mod fraud | Crime

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Folsom attorneys busted for loan mod fraud
Crime

SACRAMENTO, CA - Three Sacramento-area attorneys were arrested Thursday and charged with bilking homeowners out of thousands of dollars in upfront loan modification fees.

Arrested on 19 felony counts each were the owners of Folsom-based Flahive Law Corporation: Gregory Flahive, 39, of El Dorado Hills and his ex-wife Cynthia Flahive, 41, of Folsom, along with the firm's managing attorney Mike Johnson, 42, of Elk Grove.

Gregory Flahive is a former employee of disgraced "tax lady" Roni Deutch, who surrendered her license to practice law last year in the wake of unrelated investigations into her national tax relief business.

Flahive was also a high-profile and prolific bankruptcy attorney, advertising his services on local TV.

Court records show Flahive filed 850 bankruptcy cases in the Eastern District of California between 2009 and 2011.

The California Office of the Attorney General, which last summer took over the Flahive investigation begun by the State Bar of California, says the accused are facing charges of grand theft by false pretense, conspiracy and false advertising.

Prosecutors allege Flahive Law Corp. collected up to $2,500 in upfront fees from clients for loan modification services never carried out.

It is illegal in California to collect fees upfront for loan modifications.

The state investigation found the Flahive Law Corp. advertised "mortgage violation audits" to find violations by lenders.  Investigators discovered that in some cases there was no contact whatsoever between Flahive and the client's lender.

In one case, Gregory Flahive is alleged to have told a client to reject the mortgage modification offered by the lender because his firm could get better terms, said the AG's office.  The client lost his home to foreclosure four months later.

The Flahives and Johnson were booked into the Sacramento County Jail on $50,000 bond each.

State investigators say Flahive Law Corp. processed loan modifications for hundreds of Californians and there could be more victims.

If you are a former client of the Flahive Law Corporation, or if you want to report fraud or file a complaint, visit the Office of the Attorney General's Stop Mortgage Fraud website or call 1 (800) 952-5225.

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