Michael McManus of Philadelphia was sentenced Tuesday (October 7) to 16 years in prison for running an up-front loan scam that fleeced $26 million from more than 1000 hopeful entrepreneurs who gave him up-front money to get a loan. But McManus's operation, Remington Financial Group, kept the up-front loan payments without delivering on the loans.
That's the essence of the up-front loan scam: people who can't get loans from conventional sources pay a fee to the con artist who promises a loan, but never delivers, and keeps the up-front payment.
One of McManus's victims was former San Diego councilmember Ed Struiksma, who was once an acting mayor in the mid-1980s. Struiksma earlier told Bloomberg News that in 2006 he paid Remington $25,000 in fees, but failed to receive $8 million to $10 million he needed to fund an 1100-acre master-planned community in Central California.
Struiksma said Remington gave him a partial refund — $300 a month for about a year. After Remington got his money, the company "started coming up with requests for studies costing a couple hundred thousand dollars," Struiksma told Bloomberg. But with no loan in sight, the project tanked.
Joel Nathanson of San Diego was "one of Remington's most proficient employees," said the Federal Bureau of Investigation in Philadelphia. Nathanson was sentenced to 12 months and one day in prison.