The High Cost of Too Good to Be True
As the red-hot California real estate market sizzled in recent years, National Consumer Mortgage looked like just another residential mortgage company successfully riding the boom. It had lush offices in downtown Orange; the former baseball great Steve Garvey promoted its products in radio spots; and its founder, Salvatore Favata, a former local baseball hero himself, lived in a $1.7 million mansion in tony Yorba Linda and zipped around in a Mercedes roadster. An annual “Favata Fest” at the founder’s home featured live music and photo ops with Mr. Garvey.
For customers like Bryan F. Downey, a 41-year-old father of three, it was a tantalizing pitch. Mr. Downey had a $125,000 inheritance that he wanted to put to work, and his younger brother had already invested his inheritance with N.C.M… Earlier this spring, Mr. Downey, along with more than 200 others living mostly in California and Colorado, found out they were victims of a long-running Ponzi scheme that pulled in about $30 million before N.C.M. sought bankruptcy this spring, according to a Securities and Exchange Commission civil complaint and filings in a federal criminal case, both filed in United States District Court for the Central District of California in Santa Ana.