FTC SAYS MORTGAGE RELIEF BUSINESS TARGETED HOMEOWNERS FACING FORECLOSURE

FROM:  U.S. FEDERAL TRADE COMMISSION
Court Halts Mortgage Relief Operation that Targeted Homeowners Facing Foreclosure

Some People Lost Their Homes: Paid Defendants Instead of Making Mortgage Payments

At the Federal Trade Commission’s request, a federal court halted a sham operation that allegedly told financially distressed homeowners it would help get their mortgages modified, but instead effectively stole their mortgage payments, leading some to foreclosure and bankruptcy. The FTC seeks to permanently stop the scheme and its participants’ illegal practices. It also filed a contempt action against one of the scheme’s principals, Brian Pacios, who is under a previous court order that prohibited him from mortgage relief activities.

“These defendants stole mortgage payments from struggling homeowners, and they pretended to be a nonprofit working with the government,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “We’ll continue to shut down shameful mortgage frauds like this one.”

According to the FTC’s complaint, the defendants, sometimes doing business as HOPE Services, and more recently as HAMP Services, targeted consumers facing foreclosure, and especially those who had failed to get any relief from their lenders. Pretending to be “nonprofit” with government ties, they sent mail bearing what looked like an official government seal, and indicated that the recipients might be eligible for a “New 2014 Home Affordable Modification Program” (HAMP 2).

The defendants called the program “an aggressive update to Obama’s original modification program,” and stated that “[y]our bank is now incentivized by the government to lower your interest rate . . .”

The defendants falsely claimed they had a high success rate, special contacts who would help get loan terms modified, and an ability to succeed even when consumers had failed. After obtaining consumers’ financial information, they told them they were “preliminarily approved” and falsely claimed they would submit consumers’ loan modification applications to the U.S. Department of Housing and Urban Development, the Neighborhood Assistance Corporation of America, and the “Making Home Affordable” (MHA) program. The MHA application form they sent consumers excluded the page that warns, “BEWARE OF FORECLOSURE RESCUE SCAMS,” and “never make your mortgage payments to anyone other than your mortgage company without their approval.”

Later, the defendants falsely told consumers they were approved for a low interest rate and monthly payments significantly lower than their current payment, and that after making three monthly trial payments, and often a fee to reinstate a defaulted loan, they would get a loan modification and be safe from foreclosure. They also told consumers not to speak with their lender or an attorney.

In reality, homeowners who made the payments did not have their mortgages modified, and their lenders never received their trial payments, the FTC alleged. Instead, they were contacted by an “Advocacy Department” run by one of the defendants, Denny Lake, and told that the department would get them an even better loan modification than the one purportedly obtained through MHA, according to the FTC’s complaint.

But the “Advocacy Department” was just another trick designed to make sure consumers continued to make all of the monthly trial payments. When consumers raised concerns about continuing foreclosure warnings, sale date notices, and even court dates, they were told their loan modification was being processed or nearly completed.

By keeping consumers on the hook for months, the defendants doubled, tripled, or quadrupled consumers’ trial payments, the FTC alleged.  They told consumers they would put these payments in escrow accounts and eventually pay off consumers’ lenders. In fact, the defendants simply took the money for themselves. As a result, some consumers lost their homes, and most consumers incurred additional penalties and interest as they fell further behind on their mortgages.

The defendants include Chad Caldaronello, also known as Chad Carlson and Chad Johnson; C.C. Enterprises Inc., doing business as HOPE Services, Retention Divisions, and Trust Payment Center; Justin Moreira, a/k/a Justin Mason, Justin King and Justin Smith; Derek Nelson, a/k/a Dereck Wilson; D.N. Marketing Inc., d/b/a HAMP Services and Trial Payment Processing; and Brian Pacios, a/k/a Brian Berry and Brian Kelly. They are charged with violating the FTC Act, the FTC’s Mortgage Assistance Relief Services Rule (MARS), and its Telemarketing Sales Rule (TSR).

Denny Lake, d/b/a JD United, Advocacy Department, Advocacy Division, and Advocacy Agency, is charged with knowing or consciously avoiding knowing the other defendants were violating the MARS and the TSR. A relief defendant, Cortney Gonsalves, is charged with holding money and assets she received from the scam.

To learn how to avoid mortgage and foreclosure rescue scams, see Home Loans.

TWO SENTENCED FOR ROLES IN HOME LOAN MODIFICATION SCAM

FROM:  U.S. JUSTICE DEPARTMENT 
Thursday, February 20, 2014
Two Florida Men Sentenced for Defrauding Thousands of Homeowners in $4 Million Nationwide Home Loan Modification Scam

Two Florida men were sentenced today to serve 84 months in prison for defrauding thousands of homeowners in a $4 million nationwide home loan modification scheme.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Carmen M. Ortiz of the District of Massachusetts and Special Inspector General for the Troubled Asset Relief Program (SIGTARP) Christy Romero made the announcement.

Christopher S. Godfrey, 44, of Delray Beach, Fla., and Dennis Fischer, 42, of Highland Beach, Fla., were sentenced by U.S. District Court Judge Rya W. Zobel of the District of Massachusetts and ordered to serve three years of supervised release following their prison term.

The defendants were convicted on Nov. 14, 2013, after a two-week trial, of one count of conspiracy, eight counts of wire fraud, eight counts of mail fraud and one count of misusing a government seal.

“These men stole millions of dollars from struggling Americans who had achieved the dream of home ownership and sought help to refinance their mortgages and save their homes from foreclosure,” said Acting Assistant Attorney General Raman.  “Today’s sentences should serve as a warning to anyone who exploits distressed homeowners and prevents them from getting the real help they need.”

“These convictions and sentences should send the message that those who prey on the most economically vulnerable among us to line their own pockets will be caught, convicted and given the long prison sentences they deserve,” said U.S. Attorney Ortiz.

“Scamming homeowners by selling for $400 to $2,000 what is a free application to TARP’s housing program is a despicable crime, and for their crimes, Godfrey and Fischer will each spend the next seven years in federal prison,” said Special Inspector General Romero.  “Godfrey and Fischer swindled homeowners out of more than $4 million, which they used for extravagant trips to Dubai and France, luxury shopping sprees, and to pay their own mortgages on waterfront homes in Florida beach communities.  SIGTARP and our law enforcement partners will put an end to scams that exploit TARP and bring swift justice to con men who perpetrate these scams.”

According to the evidence presented at trial, from January 2009 through May 2011, Godfrey, Fischer and their employees, operating under the name Home Owners Protection Economics Inc. (HOPE), made a series of misrepresentations to induce struggling homeowners to pay HOPE a $400 to $2,000 up-front fee in exchange for HOPE’s help obtaining federally funded home loan modifications.   Among these misrepresentations were the claims that, with HOPE’s assistance, the homeowner was guaranteed to receive a loan modification under the Home Affordable Modification Program (HAMP), which is part of the Troubled Asset Relief Program (TARP) and is a federally funded mortgage-assistance program.   For example, the defendants routinely claimed that the homeowner had already been approved for a loan modification, provided phony “approval codes,” quoted new (and wholly fictitious) mortgage terms and due dates, touted their 98 percent past success rate and claimed that they were “underwriters” or were otherwise affiliated with the homeowners’ mortgage companies.   HOPE also claimed that it would offer homeowners refunds in the unlikely event that they did not receive a loan modification.

According to the trial evidence, in exchange for the up-front fees, HOPE sent its customers, including homeowners in Massachusetts, a do-it-yourself application package, which was virtually identical to the application that the government provides free of charge.   The HOPE customers had no advantage in the application process, and, in fact, most of their applications were denied.   Through these misrepresentations, HOPE was able to persuade thousands of homeowners to pay more than $4 million in fees.

Trial evidence also showed that the defendants claimed that they operated HOPE as a non-profit, when, in fact, they operated as a for-profit telemarketing fraud scheme.   Godfrey and Fischer used funds that homeowners had paid into the purported non-profit’s bank account to pay for their trips to Dubai and the South of France, to shop at luxury stores, to pay for their pool service, and to pay the mortgages on their waterfront home and condominium.   The remaining two defendants in the case, Vernell Burris Jr. and Brian Kelly, have pleaded guilty and will be sentenced on Feb. 25, 2014.

The case was investigated by SIGTARP and is being prosecuted by Senior Trial Attorney Mona Sedky of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Adam Bookbinder in the District of Massachusetts’s Computer Crimes Unit.

LOAN MODIFICATION OPERATORS ARRESTED IN ALLEGED SCAM

FROM;  U.S. JUSTICE DEPARTMENT
Wednesday, December 4, 2013
Federal Agents Arrest Operators of Loan Modification Scam That Targeted Struggling Homeowners

Federal agents arrested yesterday Bryan D’Antonio, 47, of Brea, Calif., and Charles Wayne Farris, 53, of Aliso Viejo, Calif., for operating the Rodis Law Group and America’s Law Group, businesses that allegedly offered bogus loan modification assistance to struggling homeowners.  Attorney Ronald Rodis, 49, of Irvine, Calif., surrendered today to federal agents on charges alleging that he participated in, and lent his name and the law license he formerly possessed to, the fraudulent operation.  All three defendants were named in a federal indictment unsealed yesterday following an investigation by the FBI and IRS-Criminal Investigation.

According to the indictment, as a result of the scheme run by D’Antonio, Farris and Rodis, more than 1,800 financially distressed homeowners lost a total of at least $12 million in fees they paid to the companies.  Many homeowners also lost their homes to foreclosure.  During a nine month period that began in October 2008, the Rodis Law Group and America’s Law Group allegedly defrauded distressed homeowners by making false promises and guarantees regarding the companies’ ability to negotiate loan modifications from the homeowners’ mortgage lenders, falsely representing that a “team of attorneys” would represent the homeowners and advising homeowners to cease making their mortgage payments.

“These arrests send a strong message to those who would prey on vulnerable homeowners during these tough financial times,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “If you defraud homeowners, you will be found and brought to justice.”

The Rodis Law Group, and its successor company, America’s Law Group, allegedly advertised loan modification assistance on radio stations nationwide.  According to the indictment, many of these radio advertisements featured Rodis’ voice telling homeowners that a “team of experienced attorneys,” who were “highly skilled in negotiating lower interest rates and even lowering your principal balance,” would negotiate with mortgage lenders.  Sales staff hired and trained by Farris and D’Antonio allegedly told interested homeowners that Rodis Law Group was “100% successful,” “routinely lowered monthly payments” and obtained reduced principal balances.  According to the indictment, once the defendants and their co-conspirators convinced homeowners to pay a fee of several thousand dollars, little to no effort was made to obtain loan modifications.  After making their payments, homeowners who tried to get updates on the status of their cases were often unable to contact anyone at either company.

The indictment further alleges that D’Antonio committed these crimes after having been convicted of mail and wire fraud for his role in a previous telemarketing scheme.  The previous scheme resulted in a civil case by the Federal Trade Commission and ultimately a court order, entered in 2001, which permanently banned D’Antonio from participating in future telemarketing operations.  The indictment in this case alleges that D’Antonio committed criminal contempt of court by directing the telemarketing activities of Rodis Law Group and America’s Law Group and by misrepresenting the services they provided.

“Posing as successful lawyers, these defendants offered struggling homeowners false hopes and bogus promises of quality legal representation,” said U.S. Attorney for the Central District of California André Birotte Jr.  “The market offering loan modifications is rife with fraud, which is why we have redoubled our efforts to investigate and prosecute those who engage in financial crimes that target distressed homeowners.”

“The unconscionable act of scamming homeowners already facing foreclosure is far too common,” said Assistant Director in Charge of the FBI’s Los Angeles Field Office Bill Lewis.  “This indictment should send a clear message to anyone contemplating similar crimes, and should also remind potential victims to be cautious before paying fees to those offering financial rescue, regardless of whether the solicitor holds a law degree.”

D’Antonio, Farris and Rodis are each charged with 10 felony counts – nine counts of wire fraud and one count of conspiracy.  Each of these counts carries a statutory maximum penalty of 20 years’ imprisonment.  In addition, D’Antonio is charged with 13 counts of criminal contempt for violating the 2001 court order.  Criminal contempt of court has no statutory maximum penalty.

This indictment was brought in coordination with the President’s Financial Fraud Enforcement Task Force’s Mortgage Fraud Working Group.  The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations.  Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants.