During the housing market crash, homeowners across the United States found themselves drowning in mortgage payments that they could not afford to make. Scammers like Jonathan Herbert took advantage of this crisis to steal money from unsuspecting homeowners. Herbert created Federal Mortgage Marketplace, a company that claimed to be government-affiliated and able to help homeowners reduce their mortgage payments. Herbert preyed on homeowners whose desperation to avoid foreclosure made them particularly susceptible to the scam. Instead of providing any form of assistance as he promised, Herbert stole his clients’ mortgage payments, resulting in hundreds of thousands of dollars lost, with some victims even losing their homes.
TIPS: If you think you’ve been a victim of a scam or would like to report fraud call The Fraud Watch Network Helpline at 877-908-3360. Anyone can become the victim of a scam, it’s important to be vigilant and know your vulnerabilities. For instance, if you are looking for a job you are more vulnerable to a work-at-home scam.
[00:00:03] Julie: This week on AARP's The Perfect Scam.
[00:00:06] He's just somebody that through the years he's been involved in some type of criminal activity, and uh found this as an easy way to make some quick money, a lot of money, and uh, to deceive as many people as possible.
[00:00:23] Julie: Welcome back to AARP's The Perfect Scam. I'm Julie Getz, and with me today is my cohost, Frank Abagnale. Frank, it's good to see you.
[00:00:29] Frank Abagnale: It's great to be here. Thanks for having me.
[00:00:31] Julie: Frank, you're one of the busiest people that I know. You're the AARP Ambassador and fraud expert, traveling around the country speaking to communities on fraud prevention, you're writing books, including the new one with AARP, "Scam Me If You Can," which folks, if you haven't gotten your copy yet, you'll definitely want to. It really teaches you how to stop scammers in their tracks. I really enjoyed reading it. And also, all your work with the FBI. Frank, we're curious, what are you teaching at the FBI Academy these days?
[00:00:59] Frank Abagnale: First let me go back 40 years ago when I taught about embezzlement, check forgery, counterfeiting. Today, the last 20 years is all about cybercrime and identity theft, things that didn't exist 40 years ago when I started teaching there. And I teach, of course, new agents who come into the Academy, we, I also teach a program for our National Academy, that's where we bring law enforcement agencies from all over the world, from Hong Kong, from India, that come and they go through an 11-week course, and of course the CISO Academy where we bring in Chief Information Security Officers from Fortune 100, 500 companies; they spend a week at the Academy. I teach a part of that that deals with uh cybercrime. I also spend a lot of my time out in, we have 56 field offices in the United States, so I go out to different field offices around the country. We have what's called All Agents Meeting, and that's where all the agents spend the day going in through briefings and being updated about things that are going on, and a lot of times I go out and bring them up to date with some of the things that are going on out in the marketplace as well. So, I do a lot of those different things with inside the FBI.
[00:02:06] Julie: In your long successful career in fraud education, is there anything that surprises you the most?
[00:02:11] Frank Abagnale: It just surprises me one, the greed of people, sometimes beyond belief, 'cause you want to say, when is enough enough? So we saw that in Enron, in WorldCom and Tyco where people literally got away with $50 million. Instead of saying, and got away with it, so no one would have ever found out with it. These were men in their late '60s and yet they turned around and said, "Yep, so how do we get the next 50 million?" And so there's a lot of greed out there, a lack of ethics and character; it's all about me. If I have to cheat somebody but it's going to make me richer, people are more apt to do that today than they did 20 years ago, and of course, the fact that you can commit these crimes from so far away without anyone having any repercussions to get to you and prosecute you for it, has made these things just become much more and more prevalent today than they were 20 years ago. But I think everything is turning to cyber because it's the easy way to commit crimes, it's the easy way to stay safe. Your victim doesn't know you, you don't know the victim, and so I think we're going to see as we get to do more and more things on computers and cell phones and things like that, we're going to see more scam artists come up with ideas to use those things against us.
[00:03:23] Julie: Well, on this episode, we're going to hear a story about a con artist who was definitely filled with greed. His name is Jonathan Herbert, and the story originated out of Lighthouse Point, Florida. Starting in 2011, Herbert promised he could help save people's homes through a mortgage relief program. He defrauded 247 homeowners by stealing their mortgage payments and leaving many of them homeless. His brazen lies netted him over $750,000 before he was caught.
[00:03:53] Julie: Joining me from Miami, Florida, to talk about the case is US Postal Inspector Bryan Masmela. He's been with the postal service for 17 years.
[00:04:02] Julie: Hi, Ryan[sic] it's Julie Getz with AARP's The Perfect Scam. How are you?
[00:04:05] Bryan Masmela: Hey, good Julie, how are you?
[00:04:07] Julie: I'm well, thank you. Bryan, let's talk about Jonathan Herbert. Who is he?
[00:04:11] Bryan Masmela: He's somebody that through the years has been involved in some type of criminal activity, and found this as an easy way to make some quick money, a lot of money, and to deceive as many people as possible.
[00:04:24] Julie: Do you know how or where he got the idea to pull off a scam like this?
[00:04:28] Bryan Masmela: This specific scam he learned of through a friend of his, someone that was actually on probation when he was on probation. This friend told him that he was working for a company that was doing debt relief and asked Jonathan if he was interested in working with him. Jonathan started working at a call center.
[00:04:46] Julie: Okay.
[00:04:46] Bryan Masmela: And he quickly became one of the top quote unquote salespeople, because he had a, a good way in speaking to people. So he actually was making pretty good money, and this call center was also a fraud. So once he stopped working at this call center, he had got the idea from where he was working already and opened up his own company.
[00:05:08] Julie: So Bryan, the Federal Mortgage Scam, can you tell me what the scam is and how did it work?
[00:05:13] Bryan Masmela: The way the scam operated was uh, Jonathan obtained lead lists of different individuals that were seeking some type of mortgage relief, or some type of debt relief. He would contact them via phone and identify himself as a federal loan officer with the Federal Debt Commission. He would tell them that he'd, he reviewed their loan applications, had identified different uh mistakes or violations that the banks had made during their application. He told them that he or his company, the Federal Debt Commission, would negotiate with the banks a lower mortgage rate, and basically congratulated them for being accepted into this program where the government would help reduce their mortgage by a substantial amount.
[00:05:59] Julie: And just to be clear, he wasn't actually a loan officer, correct?
[00:06:02] Bryan Masmela: He was definitely not a loan officer. That's what he told people in order to steal their money.
[00:06:07] Julie: What were his tactics and following up with people who seemed interested in the program?
[00:06:11] Bryan Masmela: He then went on to send letters in the mail that appeared very official looking. He told them to stop paying their mortgage and to send the money to the Federal Debt Commission who was Jonathan Herbert, and he was the one that was receiving this money.
[00:06:28] Julie: And as this money was going straight to Herbert, that means folks weren't actually making payments on their mortgage, correct?
[00:06:35] Bryan Masmela: Correct. They were not making payments on their mortgage, and he would tell them to not pick up the phone when a mortgage company would call them, don't open the mail, don't respond to any type of solicitation or any type of calls being made to them by the mortgage companies, because he's handling everything on the back end.
[00:06:53] Julie: How did he spend the money he stole?
[00:06:54] Bryan Masmela: The money that he stole, he basically used it for drugs, paying his, uh his household bills, having nice dinners out, paying for uh child support, and um, car payments. He had purchased a motorcycle as well, so he was uh, making some payments on his motorcycle, so he was using it for just day-to-day life and just to continue operating his fraudulent scheme.
[00:07:21] Julie: Stealing thousands of dollars from people who are already struggling financially is bad enough, but that was just part of Jonathan Herbert's scam. In order to keep his fingerprints off the money he was collecting, he actually pulled off another scam; stealing the identities of the people who interviewed with him for a job. One of them was Timothy Messemer.
[00:07:44] Julie: Hi, Timothy, it's Julie Getz calling from AARP's The Perfect Scam. How are you?
[00:07:48] Timothy Messemer: Good, good, how's it going?
[00:07:49] Julie: Great, I'm doing well, thanks.
[00:07:51] Julie: Nowadays, Tim sells cigars and men's accessories to stores around the country. In 2011, he had a sales job and was looking for a little supplemental income which led him to Jonathan Herbert.
[00:08:02] Timothy Messemer: He had a classified ad in the uh, the local newspaper, the Sun Sentinel. I saw this ad, I called the number, on the other end of the line the guy answered, "FDC, Jon speaking." I said, "Yeah, I'm calling regarding the help wanted ad in the Sun Sentinel." He says, "Okay, great, what we do is we offer loan modifications to people that are uh upside-down on their mortgages or people that are having a hard time with their debt. Does that sound like something you can do?" I said, "Yeah, it sounds like something I could do." And then he scheduled an interview for me. Um, I called him probably around 10 o'clock in the morning and I had an interview with him at 3 o'clock that afternoon.
[00:08:35] Julie: A few hours later, Messemer pulls up to a strip mall in Ft. Lauderdale, Florida. He gets out of his car, sees a door that says Federal Debt Commission and walks inside.
[00:08:46] Timothy Messemer: And the room was like maybe 15 by 15; it wasn't a big place. There was about five desks in there, I guess. I thought it was pretty cheesy. Old linoleum floors and, you know, junkie furniture and stuff, you know, mix--, mix and match type stuff, and small. It just didn't have, you know, the trappings of a company that deals in finance and loans and things like that that's on the way up. There was like a lot of red flags coming off it, yeah, this is like some kind of a scam outfit, this is kind of a cheesy operation, but, you know, I'm here, let me see what, you know, what's actually going on, if this is legit or not. One of the first things I asked the guy is about the name of the company. He had a website too at the time that had like all of these like sort of federal insignia and crests on them, and they were all red, white, and blue, and everything, you know. He really wanted people to believe that he was connected to the government.
[00:09:34] Julie: Herbert admits that his company is not part of the government. He seems friendly and eager to get Tim started right away.
[00:09:41] Timothy Messemer: Yeah, filled out all the application forms. Had to provide two forms of ID. You know, all the usual stuff you would do at a legit place. I had my license and credit cards and stuff like that, but in my car, I knew in my glove case I had my passport. And I went out to my car. I said, "Yeah, hang on a second. Let me just go out to my car, I think I do have another form of picture ID." And I grabbed my passport.
[00:10:03] Julie: The next step, training. But instead of feeling more at ease, Tim continues to suspect that something just isn't right.
[00:10:12] Timothy Messemer: I spent like the second half of the shift watching Jon get on the phone with a couple of prospects; it just didn't seem to me like it needed to be a pressure sort of thing, you know, but he seemed to be a little irate when the prospect, you know, getting their feelers up to the fact that this might be some kind of a scam. I was pretty much done on the idea of doing this whole thing, but I, you know, I just sort of rode out the shift, never went back. Called him to tell him, "Listen, Jon, I don't think this is for me. I'm not coming back to this thing," and he's like, "Well, you know, if you want to come in and get a paycheck and whatever for the, for the day you worked you can and everything." I'm like, "You know what, don't worry about it. It's on me."
[00:10:46] Julie: Four months later the Federal Debt Commission is just a distant memory and Tim is getting on with his everyday life.
[00:10:52] Timothy Messemer: I really didn't even think about this place. I just figured, okay, another scam operation in all of the phone rooms in South Florida. I went into the bank to make a withdrawal, and I'm at the window and uh the teller says, uh "Would you like that out of the business account or out of your personal account?" And I said, "Well, that's interesting, um, the business account, because I don't have one with you." And you know, she's like, "Well, yeah, you do. You have a business account with us and a personal account with us." I said, "No, I don't have a business account; never opened a business account with you."
[00:11:24] Julie: By now, Tim's more than concerned. He speaks to the branch manager who shows him something extremely disturbing; an application to open an account under the name of Timothy Messemer, complete with his signature, ID, passport, and driver's license.
[00:11:39] Timothy Messemer: I don't know how he managed to do that without going down in person. But he was able to do it on the telephone with a, a bank representative somewhere. And the guy opened up a business account so he could bank checks into his business with my name and social security number, all my credentials and stuff.
[00:11:57] Julie: It doesn't take long for Tim to figure if Herbert opened one account, then he probably opened others too.
[00:12:03] Timothy Messemer: I went back towards the area of where the office was, and I just tried a few bank branches in rock-throwing distance to the office, and he opened up accounts in all of them. Plus, he had his checks from the people he was scamming going to a post office box, which I was able to track down in Pompano Beach, Florida.
[00:12:23] Julie: So Jon Herbert had people making checks out to you and they were going to a UPS mailbox store in Pompano Beach. Was the mailbox registered to you as well?
[00:12:32] Timothy Messemer: He opened it under my name, and I guess a couple of the people that got scammed sort of did some legwork and got in touch with him, and he sort of was alerted to the fact that maybe this PO box and this stuff coming in there was part of a big mortgage relief scam, so he stopped allowing anybody to pick up the mail that didn't have the proper ID that matched the mailbox, I guess in the hopes of catching the guy who opened up the box. So Jon just stopped going there to pick up his mail. But he was really irate with that guy too, so he slandered that guy in a website around the area, calling him a child abuser and a child molester and so on and so forth, so I walked into the UPS store and I said, "Can I talk to the owner?" And the guy says, "Yeah, who should I say is calling?" I said, "Tim Messemer." He said, "Really?" He says, "You've got a lot of nerve showing up here." I said, "It's not what you think, man, I mean this whole thing's part of a scam. This guy opened up a box," etcetera, etcetera. I told him the whole story.
[00:13:32] Julie: Tim also tells his story to the police department. Not long after, he gets a call from the Chicago branch of the Federal Trade Commission. They've been working with the US postal inspector to investigate the case for months. Staff attorney Jim Davis was one of their lead attorneys.
[00:13:47] Jim Davis: After several months of gathering evidence, filed a lawsuit in federal court in Florida in which we not only filed a complaint, but asked the court for a temporary restraining order that shut down the business, froze the defendant's assets, and put control of the business into the hands of the bankruptcy trustee or fiduciary.
[00:14:11] Julie: During the course of their investigation, Davis and his team learned that Timothy Messemer is just one of the people that Herbert used to try and cover his tracks.
[00:14:20] Jim Davis: Herbert did go to great lengths to conceal his involvement in this scam much, much more so than a typical FTC defendant. We deal with defendants who are accomplished, sophisticated grifters on a regular basis, but this was on a different level than I'm accustomed to dealing with. We identified over 12 people whose identities he stole, and that made our job of connecting Herbert to the conduct and the evidence that we needed in order to show his responsibility much more difficult, and required us to be a lot more creative and resourceful investigating the case.
[00:14:58] Julie: How so?
[00:14:58] Jim Davis: We knew that a lot of the individuals who were superficially responsible for the conduct, at least according to bank records and corporate records, they didn't appear to be actually responsible. So that required us to do things that we don't typically have to do in cases like hire a private investigator to stake out, physical locations in Florida that were connected to the conduct. We also subpoenaed ATM surveillance, footage from banks that showed Herbert as the person responsible for withdrawing cash from bank accounts. That was key because all of the funds were deposited into banks that he wasn't a signatory on, so that allowed us to show to the judge that even though he was not at least on, on paper someone who was connected to those accounts, he was the one who was, who was benefitting from the funds that were deposited into those accounts, and those were proceeds of the scam.
[00:15:54] Julie: So it sounds like the investigation was more complicated than usual. Anything else that stood out about this particular case?
[00:15:59] Jim Davis: I was taken aback by the, the severity and brazenness of the fraud. In most of our cases, the fraud cases, the defendants are doing something that can arguably be framed as providing some kind of value or service, but this was just straight up criminal conduct. Mr. Herbert was stealing money from consumers and providing no service in return. It's relatively small in terms of the number of victims in dollar loss, but in terms of the severity of harm, I would say it's on the higher side because in addition to the money that consumers paid on a monthly basis to Herbert, many consumers also lost their homes.
[00:16:52] Julie: In March 2015, the Southern District of Illinois sentenced Jonathan Herbert to 140 months in federal prison for wire fraud. His sentence will be followed by five years of supervised release. The judge also ordered Herbert to pay restitution to the victims of his crime, restitution that postal inspector Bryan Masmela doesn't think they'll ever see.
[00:17:13] Bryan Masmela: In these schemes it's very hard to get restitution. I don't know if there is any money that was obtained, that was confiscated or seized from different bank accounts, but for the most part, these individuals, the minute the money comes in, those ill-gotten gains come in, they pretty much spend it very quickly. Typically any money that he makes while he's in prison, he actually has to send to the fund. It's not going to be much, unfortunately, but victims, if they get 10% of what they lost, that's a positive, you know.
[00:17:46] Julie: This is such a terrible scam. Do you know if Herbert ever expressed any remorse for what he'd done?
[00:17:51] Bryan Masmela: The only comments or mentions that he did make is that there were times where he felt that he needed to get out of this type of business, because he had children, because he would look at his children and say that he knew that this was not the right way to do things, and that he knew that he was defrauding people. But in the end, the money just was too good, and he preferred to continue stealing money from people than to go out and do a manual labor type of job. Because he knew that those were probably the only types of jobs he was going to be able to get.
[00:18:25] Julie: Great. Thanks so much, Bryan. I really appreciate your help and speaking with us today. And thank you for all the good work that you do.
[00:18:30] Bryan Masmela: Thank you, so much.
[00:18:33] Julie: Now I'm back in the studio with my cohost, Frank Abagnale. You know, Frank, no matter how many scams you've covered in this podcast, I'm always shocked at the lengths that some people will go to, to take advantage of their fellow man. I mean these home mortgage scams are awful. Homes, oftentimes, come with far more emotional weight than any other investments that we make, and losing one to a scam just must be a horrible, horrible feeling. Is there anything unique about this mortgage scam story that stands out to you?
[00:19:02] Frank Abagnale: It's really very common. You know, I sit and watch television in the morning and I see all these ads about, we'll fix your credit if you have poor credit, but there's a fee involved. They never actually do nothing. The same way where someone's telling you, I'll fix your mortgage if you're in trouble, you're behind on your mortgage, we can help you. They pay a fee and absolutely nothing happens, or they get more information from you than you want to give someone. In most cases, if you really look at it, it's something you can do yourself. You don't need them to do it, so when someone says you're back, I can negotiate payment with your creditors so that you get your creditors off of you, well you could do that. You could call your creditors and say, "Look, I want to pay my bill off, but I can only pay this much a month." Every company's going to do that. They'd rather get money than no money at all. So, a lot of these things, ask yourself, can I do this, or do I need to really have this person help me and what proof does this person have that they could really help me better than me doing it myself.
[00:19:59] Julie: What's the first thing someone should do if they receive a call like this?
[00:20:03] Frank Abagnale: The first thing I would do is call the
State Attorney General's Office, ask to someone in consumer protection, say that I've been contacted by this company, this is the name. This is what they said they can do for me. And they will either know that we've had a lot of complaints about that, that company, or we've investigated that company and they don't do what they say they're going to do, or that company's under investigation, or we would look into that for you. I'm not familiar with that company, I'm not familiar what they're telling you, but we will look into that and see if that is, in fact, a legitimate company offering a legitimate service. But most again, these consumer protection people have heard all these scams, and they know off the top of their head that that's a scam. They may not know that particular company, but they'll tell you, that's a scam and you don't need that, you can do that yourself. If you don't want to talk to the State Attorney General's Office, you could call your Better Business Bureau; they would have information about this company and if it exists, and if it in fact is a listed nonprofit and registered with the state as a nonprofit, and etc.
[00:21:04] Julie: Do you think a scam like this one will ever go away?
[00:21:06] Frank Abagnale: I think there'll always be scams as there always have been scams. There will always be people trying to defraud other people if it enhanced their wealth. I think technology is going to make it a lot easier to do that. You're able, again, to do it from thousands of miles away. I don't see scams going away, and as we notice with every scam, they pop up every day, because it's in real time, so when they, as we know they were issuing new Medicare cards, then they immediately came out and said, "Hey, if you didn't get your Medicare card 'cause you didn't pay your fee," there was no fee, but people said, "Oh, I didn't know I had to pay a fee;" and they said, "Give me your credit card, and it's a $35 fee," every day it's tied to what's actually going on. So the scam artist sits there and says, "Whoa, this just happened, I'm going to go out there and pick up on that and tell people." So we're going to have, pretty soon, contributions for political people running for office, well that's a perfect time, "I'm going to start calling people and say I represent so and so. Would you like to donate to his campaign? And uh, if so, this is where you send your donation or you can give it to me online, give me a credit card number." Again, everything is just what's going on at the moment, so we don't know what will be down the road, but someone will find a way to manipulate whatever that is, and get around it or get information, or get money from you.
[00:22:20] Julie: You're absolutely right, Frank. And I wanted to ask you another question: With election season right around the corner, what should people do if and when they start receiving calls to donate to a party or a specific candidate? I mean how do we verify that that person on the other end of the line is actually with the party or candidate that I want to contribute to?
[00:22:37] Frank Abagnale: And again, that's very common, and you can see falling for that, 'cause you really want to support this person and they say they're from their office, and you want to make a donation; of course you do, so you're happy to give them your credit card number or you're happy to send a check to them. Again, these are just like charities. You can call the Better Business Bureau, you can call the State Attorney General's Office, and they'll say, "No ma'am, that is actually not the link to that senator's campaign," or that people absolutely do not represent that senator. They represent an organization maybe trying to get him elected, but that's not his office, so you just need to do a little research, but just don't send somebody money because they say they're from, and that may come as an email or it may come as a solicitation, just don't send money unless you know that you've checked it out that that's actually who you want to send money to.
[00:23:26] Julie: All right, Frank, thanks so much for being here.
[00:23:29] Frank Abagnale: Thank you, Julie.
[00:23:30] Julie: If you or someone you know has been the victim of a fraud or scam, call AARP's Fraud Watch Network Helpline at 877-908-3360. Thank you to our team of scambusters, Producer Brook Ellis, our Audio Engineer, Julio Gonzalez, and of course, my cohost, Frank Abagnale. Be sure to find us on Apple Podcasts, Spotify, or wherever you listen to podcasts. For AARP - The Perfect Scam, I'm Julie Getz.
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