Mod Firms Face Civil, Criminal Legal Actions

Much of the recent litigation against modification firms is happening in California and Florida. But Nevada and Oregon have also seen some action. While some of the defendants face civil charges — many face criminal prosecution.

Michael Sinclair pled guilty in Las Vegas to one Category B felony count of mortgage fraud in violation of NRS 205.372(2), according to a January news release from Nevada Attorney General Catherine Cortez Masto. The plea agreement calls for Sinclair to pay $60,000 in restitution. He faces sentencing on June 3.

Beginning in 2007, Sinclair and partner William Vargas allegedly used a Philippines call center to solicit loan modification services — collecting between $899 and $1,500 in up-front fees and promising 100 percent money-back guarantees. But the state alleges they failed to provide either the promised services or refunds.

After learning of his indictment, Sinclair fled to, and was extradited from, the Philippines. The state warned other prospective fugitives that “we will find you and extradite.”

A 61-month prison sentence was handed down to American Home Modification owner Julian James Ruiz III, a March 19 statement from Oregon Attorney General John Kroger said. The Salem mortgage broker also must pay $469,500 in restitution to over 100 borrowers, give up his mortgage license and stay out of the industry.

During January, Oregon announced a $28,857 settlement with The USMAC Law Group, which allegedly collected up-front fees for loan modifications in violation of the 2008 Oregon Mortgage Rescue Fraud Protection Act. The company is also accused of using a deceptive infomercial to lure delinquent borrowers. It must cease providing modification services in Oregon.

In San Diego, U.S. Attorney Karen P. Hewitt announced the March 19 indictment of Glenn Steven Rosofsky, who is accused of operating a telemarketing business that sold loan modification services to delinquent borrowers. A related indictment was issued against Michael Trap.

Doing business as Nations Housing Modification Center and Federal Housing Modification Department, the defendants allegedly made false promises to collect between $2,500 and $3,000 for modification services. Rosofsky tried to give the false impression that attorneys and forensic accountants were on staff and that the businesses were run from Washington, D.C. — collecting more than $900,000 in the process.

Kahram Zamani, the president of Infinity Group Services, was arraigned over allegations he collected $177,000 in up-front modification fees from 165 borrowers, according to an announcement from the district attorney of Orange County, Calif. The county claims Zamani, a licensed real estate broker, instructed employees to make false promises about services and collected $995 per borrower.

Contact with Infinity, which was formerly known as Hope to Homeowners, became difficult after fees were collected. When contact was made with representatives, additional fees were required in order to obtain the rate originally promised.

In January, Curtis Melone and Christopher Fox faced a court hearing over their claims that their loan modification business — which operated as Guardian Credit Services, Green Credit Solutions, Green Credit Services, Erickson Law Group, Green Credit Law and PacWest Funding — was supervised by attorneys, the State Bar of California reported in a statement. Their business had already been shut down, and they were to have the opportunity at the hearing to show why the shutdown shouldn’t be made permanent.

The Orange County Register subsequently reported that the judge granted the states petition to permanently closed the business.

Irvine, Calif., attorney Christopher Lee Diener was arrested over allegations of illegal modification activities, the California Bar Journal reported. The State Bar is investigating dozens of lawyers, but Diener — who allegedly collected $1.25 million — was the first arrested.

In Florida, the Office of Financial Regulation has announced that it issued cease-and-desist orders against several firms along with some of their owners to prohibit unlicensed loan modification services. The actions were the result of a Jan. 1 law that requires individuals and companies to obtain a license before offering modification services and prohibits up-front fees. The orders charge violation of F.S. Chapter 494.