2 Brothers Charged in Home Equity Fraud Case

Two brothers who allegedly conned dozens of Los Angeles homeowners in home equity scams were arrested Wednesday on charges that include grand theft and fraud, authorities said.

Timothy Barnett, 31, who promoted his business as “one of Southern California’s largest Christian-owned and operated mortgage companies,” and his brother, Darryl Barnett, 33, were charged in a 16-count complaint accusing them of fraudulently taking advantage of half a dozen unsuspecting homeowners and causing some to lose their homes.

Timothy Barnett, known as a smooth talker who often quoted the Bible to gain peoples’ trust, had been the subject of numerous complaints to consumer and law enforcement agencies since the late 1980s, but officials had not filed charges or warned the public.

Lawyers for some of the alleged victims, and documents reviewed by The Times, show that Barnett had allegedly defrauded at least 40 people and that about 30 former clients had sued him.

“The victims were unsophisticated in real estate, sometimes elderly, sometimes more vulnerable,” said Deputy Dist. Atty. Clifford Klein of the major fraud division. “The crimes affected their basic housing needs.”

Timothy Barnett, of Yorba Linda, formed American First Funding Inc., Funding 21 Mortgage Corp. and other companies. For a fee, Barnett and his representatives offered to help customers find loans for home repairs or catch up on mortgage payments. The complaints came from customers who said they were fooled into deeding their property to Barnett, or who believed he was investing their money but later found out that their money was lost.

Barnett, who has said that he never intended to cheat anyone but was a victim of the depressed real estate market, and Darryl Barnett could not be reached Wednesday for comment.

Klein said Timothy Barnett faces eight counts of grand theft, two counts of securities fraud, two counts of failure to register securities, two violations of the Foreclosure Consultant Act, one violation of the Home Equity Fraud Act and one count of issuing a check without sufficient funds.

Darryl Barnett was charged with two counts of grand theft, one count of violating the Foreclosure Consultant Act and one count of violating the Home Equity Fraud Act, Klein said.

If convicted, Timothy Barnett could face up to eight years in state prison. Darryl Barnett could face up to six years in prison, authorities said.

“I think it’s justice at last,” said Eugene L. Trope, a lawyer for one of the alleged victims, Betty Young. “Let me tell you, they’ve hurt a lot of people.”

Young said Barnett approached her and offered to refinance her mortgage to pay for home renovations. She signed for a loan, but laborers recommended by Barnett never finished the work, leaving the home uninhabitable. Young and her family were forced to move to a rental unit while she struggled to pay the mortgage for the house. Eventually, volunteers who heard of Barnett’s plight helped her build a home.

“Thank the Lord,” Young said after learning of Barnett’s arrest. “He won’t be able to hurt anybody else, hopefully. It’s a beginning.”

An attorney at the Legal Aid Foundation of Los Angeles said several residents who became involved with Timothy Barnett turned to the foundation for help in trying to salvage what for many was their life savings.