SANTA ANA, Calif.—The owner of a Huntington Beach-based company was convicted Tuesday of identity theft in an alleged $6 million nationwide student loan fraud scheme, but jurors deadlocked on multiple other counts after 11 days of deliberations.
Angela Kathryn Mirabella, 49, was convicted of one felony count of identity theft. During the trial 24 other felony counts were thrown out, and jurors deadlocked on 62 other counts including conspiracy, computer access and fraud, identity theft, grand theft, and money laundering.
During the trial, Orange County Superior Court Judge Richard King threw out a case against co-defendant Paulina Francine Pacheco, 35, an employee, who was charged with identity theft, computer access and fraud, and grand theft.
Pacheco was cleared of being one of the callers who “tricked” student loan holders, according to Deputy Attorney General Tawnya Austin. Her attorney, Rob Harley, said his client was a woman who “jumped at the chance” to take a more professional job after years as a waitress and did nothing wrong.
Co-defendants Cesar Sandoval-Vilchis, 38, Stephen Allen Gamboa, 42, Briana Nacole Graham, 38, Matthew Bruce Walsh, 30, and Teresa Marie Lovato, 48, have pleaded guilty and are awaiting sentencing. They all had agreements with prosecutors to testify in the trial.
King set Oct. 25 as the next date to consider sentencing and a retrial on the remaining counts. The jury deadlocked 10-2 for guilt on some counts and 11-1 for guilt on other counts.
Austin told jurors in her opening statement of the trial that while superficially the case may seem complicated, “It’s really a simple bait and switch.”
In closing arguments, she said, “The entire company is a scam.”
The loan holders “believed they were actually speaking to the Department of Education” when Mirabella’s employees called them, Austin said.
“This crime is prolific,” Austin said, adding there were about 13,000 student loan accounts related to the company.
One of the victims learned that her loans were never changed or adjusted, Austin said. She thought her payments were going toward the loan, Austin added.
“It’s a story of greed,” Austin said. “Rules were bent. They were busted. It was a way to make millions of dollars off the backs of people who were struggling.”
But the money the loan holders paid for help winning student loan forgiveness “went directly to Mirabella,” and not the lenders, Austin said.
Mirabella’s company would generate leads from loan holders such as Kristen Torres, who owed $9,000, and was struggling to make her payments, Austin said.
But most of the loan holders did not qualify for loan forgiveness, Austin said.
When Torres received a notice she was missing payments, she called for Pacheco, who by that time had handed her off to the processing department, Austin said.
Pacheco told her to put those agents calling her about missed payments on the government’s do-not-call list and to ignore them, Austin said.
“To her detriment, she didn’t make payments, and what was a $9,000 loan was now a $12,000 loan,” Austin said. “This scheme was repeated over and over again.”
When the employees made contact with loan holders they asked for an email and a date of birth so they could access federal files, Austin said.
“Based on that opening (in the sales pitch) they believed they were talking to the Department of Education,” Austin said.
They also used personal identifying information to access files to change the terms of their student aid without their consent, prosecutors said.
Also, the script included the phrase, “Congratulations, you’ve been pre-approved” for loan forgiveness, Austin said.
The alleged scheme involving about 19,000 borrowers nationwide, including 3,000 in California, ran from 2017 through 2020, Austin said.
At one point, Mirabella contracted with Equitable Acceptance that opened credit accounts in the names of borrowers without their consent and was paid in exchange, prosecutors alleged.
The company was “destroyed” when many victims reported they didn’t apply for the credit cards, Austin said.
The call center employees would also push “forbearance,” which would suspend payments, Austin said.
What the company offered was “impossible,” Austin said.
“You could never provide what you claim to be selling—that’s the fraud,” Austin said.
Department of Education officials who monitor IP addresses noticed the websites Mirabella controlled were linked to an alarming number of student loan defaults, so those addresses were blocked, Austin said.
Mirabella’s attorney, Bobby Samini, told jurors his client’s “interest was to help people navigate what was a complicated process.”
The banks handling the loans “made it complicated... so people turned to” third-party alternatives, Samini said.
Mirabella’s business had “growing pains” so she hired help for processing claims, Samini said. And that effort was successful, he added.
“You’re going to have to determine her intent,” Samini said. “And her intent was to make the company work.”
In his closing argument, Samini said, “There is absolutely no way to substantiate that Ms. Mirabella had an intent to defraud or to do anything criminal... This was a start-up business. It was intended to help people.”
Equitable was hired to help with processing claims and failed so Mirabella turned elsewhere and got results, he added.
Harley said Pacheco took a job with Mirabella’s firm in 2017. At the time she was single and was driving a 2004 Volkswagen Jetta with 240,000 miles on it, he added.
She worked as a waitress for 10 years after graduating high school, Harley said.
“She spent days and weeks studying” the student loan forgiveness process as part of her training, Harley said.
Torres was routed to Pacheco, who obtained her personal information with Torres’s consent so the defendant could provide various options she had for help paying her loans, Harley said.
