LOS ANGELES – Last week agents with state Attorney General Edmund G. Brown Jr.'s office arrested three people involved in a refinancing scam, some of whom also were involved in a property reassessment scam that was sent out to property owners around Lake County and the rest of the state.

Brown's agents arrested Michael McConville, and two of his associates for their roles in an alleged “criminal conspiracy” to steal nearly $1 million from borrowers seeking to refinance their homes.

McConville and his co-conspirators allegedly lured dozens of borrowers into refinancing home loans by falsely promising low interest rates and brokers' fees, and other attractive terms.

They then negotiated different terms with lenders, forged the victims' signatures on the final loan documents and collected hefty brokers fees – ranging from $20,000 to $57,000 – that were never disclosed. Only when the borrowers received true copies of the loan documents after the refinance did they discover that their names had been forged.

In total, defendants are alleged to have stolen more than $950,000 from more than 70 borrowers, leaving victims holding $30 million in loans with terms they did not agree to.

Brown recently sued Michael McConville and his brother Sean for their part in the "Property Tax Reassessment" scam which targeted Californians looking to lower their property taxes, as Lake County News reported earlier this year.

Tens of thousands of mailers were sent out that featured official-looking logos and demanded hundreds of dollars in payments for property tax reassessment and reassessment appeal services. Some of those mailers ended up in the hands of Lake County residents.

The statements warned homeowners that if payments were not received by the "due date" they faced late fees or would have their file marked "non-responsive" or "ineligible for future tax reassessments."

Jim Campbell, Lake County's deputy county assessor, helped get the word out, and said for a time it was the “talk of the assessor world,” but the scam appeared to have died down once the community was notified.

In this most recent action, Brown filed 44 criminal charges against:

• Michael McConville, 39, of Simi Valley, sales manager of ALG Inc, a Los Angeles based mortgage company. McConville was arrested at his home late Thursday. He is being held in Ventura County Jail on $2 million bail.

• Garrett Holdridge, 23, of Palmdale, California and Texas, loan officer for ALG Inc. Holdridge is being held at the Los Angeles County Jail (Palmdale Station) on $2 million bail.

• Alan Ruiz, 28, of Huntington Beach, a loan officer for ALG Inc. Ruiz was arrested at his home late Thursday. He is being held at Orange County Sheriff's Main Jail on $2 million bail.

The charges include 28 counts of grand theft, 14 counts of forgery, one count of elder abuse, one count of conspiracy to commit grand theft; three special allegations of aggravated white-collar crime in excess of $500,000; and taking in excess of $3.2 million.

“After victims signed their closing papers, McConville and his associates doctored the loan documents, forged borrowers' signatures and slipped in hefty fees that were never disclosed,” Brown said. “This was not some clerical error but a criminal conspiracy to steal nearly a million dollars from borrowers.”

From April 2007 to October 2008, McConville and his associates provided homeowners closing documents bearing terms promised, but which the lender never approved. After homeowners signed those documents, key pages were removed and replaced with pages bearing the terms that the lender had actually agreed to. The homeowners' signatures were forged on the replacement pages, and ALG forwarded the forged documents to the escrow company.

Homeowners only discovered they had been defrauded when they received the final loan documents with the true terms and saw their signatures forged on disclosures of closing costs, Truth-in-Lending disclosures, loan applications and other documents. ALG often collected between $20,000 and $30,000 in undisclosed broker fees. In one transaction, they collected over $57,000 in such fees.

As a result of this scheme, homeowners suffered devastating financial losses. Some were forced to sell their homes, come out of retirement, or tap into retirement savings. Others paid significant prepayment penalties – in one case, more than $21,000. Borrowers often never received the significant amounts of cash-out they were promised.

In one case, Michael McConville promised one couple a 5.5 percent fixed interest rate, cash-out of $58,000 and $4,500 in closing costs. Only after they signed the documents, they realized their copy did not include the pages detailing the key terms of the loan.

The couple soon received loan documents from Indymac Bank and discovered their signatures had been forged and they had received a 7 percent interest rate, no cash-out, and over $50,000 in closing costs, including a $42,000 origination fee paid to ALG.

ALG contacted a 65-year-old retired woman in July 2007 and promised her a 30-year fixed rate loan at 5.25 percent. A month later, a notary had arrived at the victim's house with loan documents reflecting the 5.25 percent fixed interest rate.

After closing, the victim discovered she had received an adjustable rate mortgage with an initial rate of 8.65percent, a $22,000 origination fee, and $2,230 in miscellaneous fees. The victim's signature had been forged on most of the documents.