Advance-fee loan scams

What it is

Someone promises you a loan. Personal, business, “hard money” against real estate, the pitch varies, but the sequence never does: you are told approval is all but certain, then asked to pay a fee before the money arrives. The fee has a dozen names, “processing,” “insurance,” “appraisal,” “commitment,” “letter of intent,” “collateral”, and none of them change what actually happens next: no loan, no refund.

This is not a grey area. The FTC’s Telemarketing Sales Rule specifically bans collecting any payment in advance of a loan whenever a seller has represented a high likelihood of getting one arranged for you. A company that guarantees your approval and then bills you before funding has told you, in the sequence of its own pitch, that it is not a real lender.

The scale runs from a few hundred dollars targeting someone with bad credit, to seven figures targeting a small-business owner chasing a nine-figure commercial loan, the same mechanism, applied to two very different wallets.

How it actually works

1. The search or the pitch

   A borrower who has already been turned down elsewhere searches online for a lender, or is cold-called by one. The pitch matches whatever they were rejected for, bad personal credit, or a commercial loan a bank wouldn’t underwrite.

2. A guarantee that is itself the violation

   The caller represents a high likelihood, sometimes an outright guarantee, of approval, often regardless of credit history: “bad credit, no problem.”

   Where it could have stopped

   The FTC’s Telemarketing Sales Rule (16 CFR 310.4(a)(4)) bans requesting or receiving any fee in advance of a loan once a seller has guaranteed or represented a high likelihood of arranging one. The guarantee and the fee request, taken together, are the offence, a legitimate lender never combines the two.

3. The fee, dressed as paperwork

   A “processing,” “insurance,” “appraisal,” “commitment” or “collateral” fee is requested before closing, prosecutors say Anna Kline asked business-loan clients for up to 5% of the requested loan amount, often itself in excess of $100 million.

4. Fabricated proof the lender is real

   Larger operations back the fee request with falsified financial documents. Federal investigators allege Carlos Manuel da Silva Santos’s company, Ethos Asset Management, pointed one victim to a brokerage account holding $359,088,190.22 that did not exist, inducing a single payment of more than $8 million.

5. Stalling once the fee clears

   A fabricated reason for the delay follows, sometimes repeated for months, while, in the Ethos and Kline cases, the money is spent on personal expenses or used to quiet an earlier victim demanding a refund.

6. No loan, and the fee is not coming back

   The loan never funds. Operators typically stop responding, or keep stringing a victim along with new excuses rather than issue a refund.

7. A variant that skips the wire transfer

   Instead of asking a victim to send a fee, some operations collect bank account and routing numbers “to process the loan,” then withdraw funds directly, federal prosecutors allege this is how Samuel Selmar and associates took nearly $1 million from dozens of victims.

8. Enforcement, after the fact

   Cases on this page reached criminal charges only after years of operation and millions in losses: Kline’s shell companies ran for over two years before her 2022 arrest; Santos’s for longer still. Restitution, where ordered, is a fraction of what was actually taken.

Why it works

The guarantee answers a problem the target is already living with. Someone who has been turned down for credit once is primed to believe the next offer that doesn’t ask hard questions.

The fee is framed as routine, not risky. “Appraisal fee,” “processing fee,” “commitment fee”; these are real terms used by real lenders for real, much smaller charges, which makes the same words attached to a much larger, earlier payment sound unremarkable.

Falsified paperwork answers the one objection a careful borrower would raise. A skeptical business owner asking “how do I know you actually have the money” is shown a bank statement or brokerage balance built to answer exactly that question, and built specifically because that question gets asked.

Ponzi-style repayment buys time. Using a new victim’s fee to placate an earlier one who is asking questions, alleged in the Ethos Asset Management case, keeps complaints quiet and the operation running longer than a single-victim scheme would survive.

The dollar amounts scale with the target. A borrower asking for a $100 million commercial loan does not blink at a $5 million “collateral” fee the way an individual would blink at $500, the fee is calibrated as a percentage, so it never looks disproportionate to what’s supposedly being unlocked.

Where it comes from

Domestic and outwardly professional, not hidden or foreign-run.

These operate as registered or semi-registered US businesses, not offshore call centres. Global Capital Partners Fund, Ethos Asset Management and Kline’s shell lending companies all presented themselves as ordinary finance firms, with names, websites and, in Ethos’s case, an apparent office presence.

Losses documented here run from mid six figures to eight figures per operation. The scale depends entirely on who is targeted: individual consumers lose hundreds to a few thousand dollars per the FTC’s general guidance; the business-lending version documented in this page’s own sourced cases produced single scheme totals of $7 million and $17 million, driven by percentage-based fees on much larger requested loan amounts.

Both criminal and civil tools are used. Every case on this page was prosecuted criminally as wire fraud (and, for Santos, aggravated identity theft) rather than pursued only as a civil FTC matter, a contrast with credit repair and debt settlement scams, which are overwhelmingly handled civilly.

Real cases

Red flags

• A loan “guarantee” combined with any fee request before funding. This exact combination is what federal telemarketing rules ban.
• Any advance payment labelled “processing,” “insurance,” “appraisal,” “commitment,” “collateral” or “letter of intent.” These are legitimate terms attached to an illegitimate sequence.
• “Bad credit, no problem” advertising paired with pressure to pay quickly.
• Being shown bank statements or account balances you cannot independently verify with the institution named.
• A request for your bank account and routing numbers “to process” the loan, rather than a lender pulling your credit report.
• Repeated, shifting excuses for delay once a fee has already been paid.
• No state lending or loan-broker license you can verify, most US states require one, and most advance-fee loan operators don’t have it.

If it’s happening to you

Stop any further payment immediately, and do not provide bank account or routing numbers to a lender you have not independently verified.

1. Check the lender’s license. Most US states require a lender or loan broker to be licensed; your state’s Department of Financial Institutions or equivalent regulator can confirm one in minutes.
2. Call your bank if you’ve already wired money or shared account details. Ask about a wire recall or a block on further withdrawals from the account you disclosed.
3. Do not pay a second fee to “release” the first loan. Requests for follow-on fees after a delay are a documented pattern in these cases, not a path to recovery.
4. Report it to the FTC at ReportFraud.ftc.gov, and to your state’s financial regulator or attorney general, who can pursue loan-broker-licensing violations directly. See where to report for other countries.
5. Keep every document the “lender” sent you, fabricated bank statements and account balances have been central evidence in the cases on this page.

Where the money goes

Held domestically, spent quickly, and only sometimes shared with earlier victims to keep the operation running.

There is no cross-border laundering chain documented in any case on this page, the fee goes directly from the victim’s bank account to the operator’s, by wire or ACH withdrawal. From there, prosecutors describe two patterns: personal spending (luxury vehicles, artwork and vacations, in Kline’s case), and Ponzi-style redistribution, where a new victim’s fee quiets an earlier victim’s complaint rather than being banked outright. Both patterns mean the money is typically gone, not merely hidden, by the time a case reaches prosecutors, restitution orders in these cases recover a fraction of what was taken.

By the numbers

No published dataset breaks this scheme out as its own category yet, so there is no chart to show. The data page explains which agency categories exist and why some schemes are invisible in official statistics.