Foreclosure Criminals and Defendants

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6 · 16 · 10

Many of the latest legal actions tied to foreclosure rescue activity involve firms or individuals — some ruthless — charging up-front fees to stop foreclosure but doing little or nothing for the borrower. Some of the cases result in prison time for the defendants. In one groundbreaking case, the judge awarded attorneys fees to the plaintiff borrower before the case had even been tried.

In an alert released during May, the Federal Trade Commission warned borrowers to avoid the latest scam: fraudulent forensic mortgage audits. The agency said to avoid con artists who claim they can help avoid foreclosure for an upfront fee using audits.

The agency issued the consumer alert, Forensic Mortgage Loan Audit Scams: A New Twist on Foreclosure Rescue Fraud.

More than 300 consumers have filed complaints against Florida foreclosure consultants with the Florida Attorney General’s Homeowner Protection Unit since the beginning of last year.

Michael Fiorito was sentenced by U.S. District Court Judge Patrick J. Schiltz in St. Paul, Minn., to 270 months in prison for allegedly skimming nearly $500,000 in equity from delinquent borrowers in foreclosure, the U.S. Department of Justice reported. In giving Fiorito more than the sentence recommended in sentencing guidelines, the judge said the defendant is “troubled and dishonest,” “incapable of empathizing” with the victims and refusing to accept responsibility.

“I have no doubt that upon his release from prison, Mr. Fiorito will return to victimize others, and the sole way to limit that is to keep him locked up,” the judge said. “He’s spent most of his life lying and stealing, and I do not believe it’s possible to deter him.”

Jeffery Tye Brown was handed down a prison sentence of between 12 and 30 month over his operation of DB Financial Services, a foreclosure rescue business, Nevada Attorney General Catherine Cortez Masto announced. He was also ordered to pay $23,685 in restitution and more than $7,000 for the expense of extraditing him from the Philippines — where he fled as a fugitive.

Brown is accused of misleading borrowers by guaranteeing he could resolve their foreclosures for a fee.

A month earlier, Masto announced that William Vargas received a one-year sentence, though it was suspended under a plea agreement that required more than $10,000 in cash restitution before sentencing and a $21,000 in total restitution.

Through Federal Housing Aid, Vargas collected up-front fees ranging from $700 to $1,500 based on his promise to stop foreclosure and save the borrower’s credit, Nevada said. But nothing was done after the fees were received.

A lawsuit was filed on May 6 by Indiana Attorney General Greg Zoeller against USA Mortgage Aid Inc., which the state said scammed a borrower out of $1,700.

The California-based firm allegedly deceived borrowers with claims its consultants were foreclosure prevention experts. It also operated without proper bonding and violated several state consumer protection laws when it demanded up-front fees for services that had not been performed.

In a groundbreaking move, Essex County, N.J., Superior Court Judge Kenneth Levy awarded counsel fees to alleged victims of foreclosure rescue fraud before a judgment has been reached in a pending Consumer Fraud Act lawsuit, the New Jersey Law Journal reported. New York-based Newell Funding is up against Abraham Borenstein, the $500-an-hour attorney for plaintiffs Juan Miguel and Iluminada Pena of Newark

Pena v. Newell Funding, LLC.

Case No. ESX-C-16-09 (Essex County, N.J., Superior Court).

Mortgage Expert

Mortgage Daily Staff



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