A former Long Beach man has pleaded guilty to using telemarketing companies to fleece timeshare owners hoping to escape their contracts.
Michael McDonagh, 42, pleaded guilty to one count of wire fraud in connection to the scheme to employ boiler rooms in Los Angeles and Orange counties to scam dozens of timeshare owners, many of them seniors, the Orange County Register reported.
When sentenced, he faces a maximum sentence of 20 years in federal prison.
McDonagh and four co-conspirators obtained more than $3.5 million through a fraudulent telemarketing scheme that used lies and high-pressure tactics to promise financial relief to timeshare owners, according to the U.S. Justice Department and court records.
From 2015 to May 2019, McDonagh, who founded or controlled telemarketing companies based in Irvine, Costa Mesa, Santa Ana and Signal Hill, used “openers” to contact timeshare owners and offer a fixed fee to terminate their timeshare interests.
He told company employees to “take no prisoners” and have “no remorse when interacting with victims,” court records state.
He also told workers to “take every penny” they could from victims, “so they cannot sue” the telemarketing companies.
Owners who expressed interest in offers to get them out of their timeshare contracts were switched to a “closer” who would convince them to sign deals for a “one-time fee” of several thousand dollars, court records show.
McDonagh and his co-conspirators would also leave false positive reviews online and form new telemarketing companies to continue the fraud after the former firm was flooded with consumer complaints, a Justice Department news release said.
Within weeks of paying the one-time fee, victims were contacted by the telemarketing companies and told they could secure a large settlement from the timeshare company for an additional fee. It was all bogus, according to prosecutors.
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In one case, a co-conspirator solicited an additional $4,475 from a victim by falsely stating the fee would be reimbursed and that the victim’s timeshare company had agreed to pay $66,725 in restitution, according to a grand jury indictment.
The four co-defendants charged along with McDonagh have also pleaded guilty to one count of wire fraud.
— Dana Bartholomew