Newport man sentenced to prison for role in fraudulent debt-relief scheme

A Newport Beach man was sentenced to two years and three months in prison for participating in a fraud scheme that promised to help debtors pay off their credit cards but instead charged them secret upfront fees that ate up most of their payments for six months.

John Vartanian, 57, was sentenced Nov. 21. He had pleaded guilty in federal court in July to one count of conspiracy to commit mail fraud and wire fraud.

In addition to the prison sentence, followed by three years of supervised release, U.S. District Judge Dale Fischer ordered Vartanian to pay more than $1.2 million in restitution.

Vartanian admitted he didn’t disclose the fees and made false statements to prospective customers while he worked as a salesman for Nelson Gamble and Associates and Jackson Hunter Morris and Knight, which pitched themselves as law firms that would negotiate settlements for debtors, according to a news release from federal officials.

Four other people — Jeremy Nelson of Dana Point, Elias Ponce of Santa Ana, Christopher Harati of Long Beach and Athena Maldonado of Lake Forest — also pleaded guilty in the fraud scheme and were sentenced this month.

Vartanian and others never told customers during sales calls that they were taking at least 15% of their total debt as upfront fees, with the first six months of payments going almost entirely toward the fees, authorities said. They also never paid promised refunds.

The scheme ran from February 2010 to September 2012, federal officials said. During that time, the company changed its name from Nelson Gamble and Associates to Jackson Hunter Morris and Knight.

Though the company essentially remained the same, Vartanian and others told customers that the new company couldn’t pay refunds, and they blamed any past problems on Nelson Gamble, authorities said.