Federal regulators are sending payments totaling $3.3 million to students who were bilked by an Orange County business claiming it would reduce their student loan debt.

The Federal Trade Commission alleges Arete Financial Group and its related businesses tricked more than 37,800 students into making illegal, upfront payments of up to $1,800, along with subsequent monthly fees, by pretending to be affiliated with the U.S. Department of Education.

SEE MORE: Feds say 3 debt-relief companies in OC bilked students of $12.5 million

The company used radio, television, online ads and telemarketing calls with the promise of student loan forgiveness, consolidation and repayment programs, the agency said.

“In reality, the scammers pocketed customers’ payments and never provided the promised relief,” the FTC said.

Representatives with Arete Financial and its affiliated businesses could not be reached for comment Wednesday.

In 2019, the FTC obtained a temporary restraining order that halted operations at Arete Financial, Arete Financial Freedom, CBC Conglomerate LLC and Diamond Choice Inc., among others. The businesses maintained operations in Santa Ana, Huntington Beach, Irvine and Walnut Creek. An online posting also lists Tustin.

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A settlement was reached the following year in U.S. District Court for the Central District of California when defendants Carey G. Howe, Anna C. Howe, Shunmin Hsu, Ruddy Palacios and Oliver Pomazi agreed to pay at least $835,000 to settle the FTC allegations.

The order banned the defendants from providing student loan debt relief services and prohibited them from violating the Telemarketing Sales Rule. It also included a monetary judgment of $43.3 million, which was largely suspended due to the defendants’ inability to pay.

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Investigators said the scam had been ongoing since at least April 2014. The total settlement rose from $835,000 to $3.3 million, agency officials said.

The FTC said students who receive payments should cash their checks within 90 days.

Agency spokeswoman Nicole Drayton said the businesses are barred from providing student loan debt-relief services but can still offer unsecured debt relief for credit cards.

A similar case arose in May when federal regulators halted student debt-relief programs offered by three Orange County businesses that allegedly bilked students out of more than $12 million.

Complaints filed April 24 in U.S. District Court in Santa Ana by the Federal Trade Commission target SL Finance LLC, BCO Consulting Services Inc. and SLA Consulting Services Inc, alleging the companies used deceptive claims about repayment programs and loan forgiveness that didn’t exist.

The actions were filed under the Federal Trade Commission Act and Telemarketing and Consumer Fraud and Abuse Prevention Act, among other legal protections.

Students who believe they were bilked by the companies can find more details by calling 855-678-0558 or going to the FTC website.

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