In addition to charging huge up-front fees while offering little or nothing in return -- operators of foreclosure rescue schemes often bleed every bit of equity they can from the homes of distressed borrowers by using mortgage fraud.
Edward G. McCusker and his wife Jacqueline, through their company Axxium Mortgage Inc., promised to help distressed homeowners avoid foreclosure, according to a news release from the U.S. Attorney's Office for the Eastern District of Pennsylvania. Instead, however, the couple stripped the homes of all remaining equity through fraudulent mortgages.
"The defendants promised financially distressed homeowners that they would find an 'investor' who would help them save their home," the government claims. "The defendants would then arrange for a straw purchaser to obtain a fraudulent mortgage and then transfer of the title of the homeowner's residence to the straw purchaser."
The McCuskers were convicted on June 21 of conspiracy to commit mail and wire fraud, conspiracy to commit money laundering, six counts of wire fraud and three counts of mail fraud in the $14.6 million case. Co-defendants Jeffrey A. Bennett and Stephen G. Doherty, owners of the Doylestown law firm Bennett & Doherty P.C., along with John Bariana already pled guilty and await sentencing.
A 160-month sentence was handed down to Gennaro Rauso on June 20, the U.S. Department of Justice reported. Through his company, D&B Property Investors, he promised to help delinquent borrowers sidestep foreclosures and improve their credit at the same by transferring the title to him and becoming renters. Instead, according to the government, he kept the rental payments -- ultimately leaving the original borrowers with foreclosed properties.
Rauso prolonged the foreclosure period by filing bankruptcy. He managed to pocket $400,000 as a result of deceiving more than 200 borrowers. He also defrauded lenders -- including on four loans insured by the Federal Housing Administration. Rauso also allegedly failed to file tax returns for his company in a move that cost the Internal Revenue Service over $1.6 million.
The Federal Trade Commission mailed 1,455 refund checks to customers of The Rodis Law Group Inc., America's Law Group and The Financial Group Inc., a recent announcement indicated. The companies and Bryan D'Antonio are accused of falsely promising delinquent borrowers that they could stop foreclosures and negotiate better loan terms. Borrowers were charged up to $5,500.
The FTC previously obtained an $11.4 million judgment against the defendants.
Refunds totaling $2.3 million were mailed by the FTC to 1,410 borrowers who were allegedly defrauded by Home Assure LLC, an April 15 statement said. The company settled allegations last year that it charged as much as $2,500 in up-front fees but "did little or nothing to help consumers avoid foreclosure" and frequently refused to provide refunds despite written promises to the contrary.
An 81-month sentence was handed down to George Eggleston by U.S. District Judge Lawrence J. O'Neill on June 3, the Justice Department announced. The defendant, who previously pled guilty, was ordered to forfeit $364,899.
According to the news release, Eggleston did business as Nexxus and Global Legal Associates and promised to help distressed borrowers avoid foreclosure by fraudulently representing that his companies used and managed attorneys to file lawsuits against foreclosing lenders for violations of state and federal laws. He collected a thousand dollars a month -- eventually earning over $100,000. He also allegedly submitted a fraudulent loan to SunTrust Mortgage -- leaving the bank with $261,000 in losses.
Following her indictment by a federal grand jury on June 21 on one count of conspiracy to commit mail and wire fraud, three counts of mail fraud and three counts of engaging in unlawful monetary transactions, Kathleen Harps was arrested by the FBI on June 24, the Justice Department announced.
Harps operated New Beginnings Group in Hampton Roads, Va., during 2006 as a foreclosure rescue service, the government said. She convinced distressed borrowers to sell their homes based on promises to let them stay in the houses and buy back the properties after getting their finances in order. But Harps and the buyers she lined up allegedly obtained fraudulent mortgages against the properties, stripped the equity then let the loans go into foreclosure anyway.
Aquilino Hernandez, who is also known as Lino Hernandez, was charged last week by Ventura County District Attorney Gregory D. Totten with two counts of foreclosure consultant fraud under California Civ. Code § 2945.4(a)), a press release said. Hernandez is accused of operating a foreclosure rescue scheme through his business, Terra Bella Management, in Bellflower, Calif.
Hernandez allegedly targeted distressed Spanish-speaking borrowers and collected thousands of dollars in up-front fees. While he promised to help save the homeowners, "In reality, Hernandez completed no actual services for the victims who eventually lost their homes in foreclosure."
The Department of Justice in the Eastern District of California announced on May 10 that Charles C. Jamison was sentenced to 32 months in prison. Jamison pled guilty in February to bankruptcy fraud charges in a scheme where he collected up-front fees to use the bankruptcy process to fraudulently delay foreclosures on residential properties through a program called "Stop Now."
Three Florida foreclosure rescue firms -- Home Owner Protection Economics Inc., DC Financial Group and Deleverage America Inc. -- and their owners Dennis Fischer and Christopher S. Godfrey were sued by Florida Attorney General Pam Bondi in May for allegedly charging up-front fees on loan modification services. The defendants are accused of collecting fees ranging from $495 to $2,000 for foreclosure-related loan modification services that were never rendered.
The judge issued an order freezing the assets of the defendants, according to Bondi's announcement.
Las Vegas resident Alex P. Soria was charged in April for allegedly collecting $17,000 from 15 distressed borrowers whom he promised to obtain foreclosure relief or loan modifications for even though he wasn't licensed, a statement from the Department of Justice said. But none of the victims received any actual help.
FTC v. Data Medical Capital, Inc., et al.
Civil Action No. SA-CV-99-1266 AHS (EEx), FTC File No. X000001 (Central District of California, Southern Division).
Federal Trade Commission, Plaintiff, v. Home Assure, LLC; B Home Associates, LLC, doing business as Expert Foreclosures; Brian Blanchard, individually and as a member, officer, or director of Home Assure, LLC, and B Home Associates, LLC; and Michael Grieco, Michael Trimarco, and Nicolas Molina, individually and as members, officers, or directors of Home Assure, LLC, Defendants.
Civil Action No. 8:09-cv-547-T-23TBM, FTC File No. 082 3192 (U.S. District Court for the Middle District of Florida, Tampa Division).