Government Moves To Close Firm Accused Of Bilking Customers
Aug. 14, 1991
NEWARK, N.J. (AP) _ A company advertising loans up to $1 million - even to people with bad credit - bilked consumers nationwide out of millions of dollars by taking big deposits and not delivering, a federal prosecutor said Wednesday.
For hundreds of dollars, Fidelity Financial Service Inc. took basic information and forwarded it to lenders who routinely denied the applications, court papers say. One Georgia businessman paid $13,350 for a $900,000 loan.
Federal and local law officers raided the company's Morganville office Aug. 6 and hauled away records and computers.
U.S. District Judge Nicholas Politan issued a temporary order preventing the company from accepting money. He held a hearing Wednesday on a government request for a permanent ban and an order forcing refunds. Politan said he would issue a ruling Friday.
The company also has been served with a search warrant, which indicates the government plans to pursue criminal charges.
Company owner Max Rudner of Old Bridge told the court the company had processed about 3,000 applications since it was formed in November. Assistant U.S. Attorney Daniel Gibbons estimated the company collected $2.5 million.
At Wednesday's hearing, Gibbons presented transcripts and a tape-recording of conversations undercover U.S. Postal inspectors had after calling the company's toll-free number.
The inspectors gave phony information about their income and expenses, then were told their applications would be reviewed, the transcripts showed. They were told they qualified after reviews that lasted about a half hour.
One inspector was told to send a $450 application fee for a $6,000 loan, the transcripts showed.
Rudner told the court his operators were trained not to tell applicants that loans were guaranteed.
However, one transcript quotes a Fidelity employee as saying: ''You're qualified for the amount you are asking. You could, if you want, get up to fourteen thousand.''
Rudner, 52, has other trouble with the law.
After the hearing he was arrested by Marlboro Township police. Detective Sgt. Brian Hall said cocaine was found in his desk during the raid.
He was charged with possession of less than five grams, which carries a maximum sentence of five years in prison and a $25,000 fine. Bail was set at $2,500.