Joseph Nguyen, 37, of Woodland Hills, and Matthew Bourgo, 27, of Thousand Oaks, California—former employees of ALG Capital Inc—as well as Sean McConville, 30, president and co-owner of the brokerage, were arrested on June 9 and held in custody in lieu of nearly $30 million. McConville was arrested in Austin, Texas and will be extradited to Los Angeles for prosecution, according to the 6/10/10 edition of the Los Angeles Daily News.
According to an investigation by the state Attorney General's Office, the brokerage entered into home equity loans with borrowers and promised low interest rates, minimal fees and other attractive terms to refinance homes. However, it is alleged that the brokerage undertook to negotiate different terms with lenders without the knowledge of homeowners, who had signed agreements in good faith.
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It is reported that while ALG collected just under $1 million in undisclosed fees, their alleged efforts locked a collection of homeowners into about $30 million in loans at terms to which they did not agree.
The Daily News reports that many homeowners were forced to come out of retirement, tap into retirement savings or pay significant prepayment penalties. In one case, those payments amounted to $21,000.
Many homeowners were forced to sell their homes.
An investigation was launched into the activities of ALG Capital in 2008 after the Office of the Attorney General received more than 70 complaints about the firm. ALG operates in Calabasas and Mission Hills, California.