This case brings to light the use of attorneys to get around a loophole in the law. It's a loophole legislators are now moving to close.
Prosecutors agree on one thing.
"It's probably the fastest growing area of fraud right now," said Santa Clara County Deputy DA James Sibley.
And so do community activists.
"Right now this appears to be the scam of the day," said Kevin Stein from the California Reinvestment Coalition.
It's the use of lawyers to defraud people desperate to save their homes.
The state Bar of California received 400 such complaints against attorneys in just the first six months of this year -- compare that to eight all of last year.
"These companies are out soliciting people, making them guarantees that they can't fulfill and people are just grabbing at anything just to save their homes," said Suzan Anderson from the State Bar of California.
One company accused of defrauding homeowners is Legal Support Services of San Jose. Police served a search warrant on the company earlier this year and it's been shut down ever since.
Police also searched the home of the two people believed to be behind the company, Mary Del Vecchio and Amir Rashidihfar.
The two are now in custody in Toronto and face extradition back to the Bay Area to face 27 counts each of fraud and theft.
"To date we know there are 129 victims identified here in San Jose. We believe there may be more victims, not just in the San Jose area but in other counties," said Officer Jose Garcia from the San Jose Police Department.
Prosecutors say the company collected $500,000 from its victims on the promise of getting a loan modification. Legal Support Services says on its website that the company was founded by two attorneys.
"Neither was involved in the business. One of them who in fact had passed away was a very well respected and well known attorney from the Central Valley," said Sibley
In fact Leo Kolligian is a former chair of the University of California Board of Regents.
He also championed the UC Merced campus. The State Bar says attorneys both knowingly and unknowingly are connected to loan modification scams.
By law these kinds of companies aren't allowed to collect fees before performing a service.
"The exception is if an attorney is involved, then the attorney can collect advanced fees from these people. So that's one of the way that they're getting their money," said Anderson.
Two bills making their way through the state legislature would plug that loophole.
Assembly Bill 764 and Senate Bill 94 both would ban advance fees. But AB 764 states that companies can only collect fees if it is successful in getting the customer a good loan modification.
"With that kind of restriction, it will probably drive out all the scam artists looking to cash in on people's desperation," said Stein.
The State Bar told 7 On Your Side that attorneys doing legitimate work in the area of loan modifications are the exception. It recommends staying away from attorneys all together and avoid paying advanced fees. Certified non-profit housing counselors can help you for free.
Related informaton HUD Approved Housing Counseling Agencies