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TRENTON
– Attorney General Anne Milgram today
announced the filing of lawsuits charging
a total of 37 mortgage loan providers, mortgage
industry employees, lawyers and other defendants
with consumer fraud and civil racketeering
for using predatory “foreclosure rescue”
schemes to persuade desperate homeowners
to sign over their homes.
The
state alleges that the defendants obtained
at least $13.5 million worth of fraudulent
loans to further their foreclosure rescue
schemes. In addition, the state alleges
that defendants stole at least $3 million
in homeowner equity.
In
two separate but related state complaints,
the defendants are charged with exploiting
the financial hardship and fear of homeowners
by convincing them to surrender their homes
to third-party or “straw” buyers
as part of complex “sale/lease-back”
transactions. Homeowners were told that,
by signing over their property titles to
third-party buyers, they would be able to
still live in their homes as renters while
repairing damaged credit, and then, in the
future, buy back their dwellings.
In
reality, the state lawsuits charge, the
solvency and renewed home ownership promised
by such deals did not materialize. Instead,
defendants collected most of the sale/lease-back
proceeds for themselves, thereby stripping
the homes of their equity value. Struggling
homeowners were left with few or no means
to pay rent or re-establish their credit.
Some of the homeowners have been evicted
from their homes, while others remain and
continue to pay rent. In some instances,
defendants continue to collect the rent
but do not apply the rent payments to the
mortgage, leaving the homes once again in
foreclosure.
“The
conduct charged in these lawsuits is unconscionable.
These defendants preyed on people who were
facing foreclosure and searching for a lifeline
that would enable them to get back on their
feet and remain in their homes,” said
Attorney General Milgram. “Having
placed their hope and trust in these defendants,
victims ended up far worse off than they
were before. It is critical that we root
out this kind of fraud and protect consumers
who go seeking help from finding complete
financial ruin instead.”
Filed
on October 15 in New Jersey Superior Court
in Bergen County, the state’s lawsuits
are against Vest Financial LLC, formerly
of Paramus, along with 16 other defendants,
and JP Global Property Management, Inc.,
of Bloomfield, along with 19 other defendants.
Five defendants are common to both complaints.
Together,
the two complaints allege violations of
both the New Jersey Consumer Fraud Act and
the New Jersey Racketeer Influenced and
Corrupt Organizations Act involving a total
of 48 properties. The properties are located
in 14 counties including Atlantic, Bergen,
Burlington, Cape May, Essex, Gloucester,
Hudson, Mercer, Middlesex, Monmouth, Ocean,
Passaic, Somerset and Union.
The
state alleges that defendants in the Vest
complaint stole at least $1.25 million in
homeowner equity, while defendants in the
JP Global case stole at least $1.75 million
in homeowner equity.
As
a result of the defendants’ conduct,
at least $4 million in fraudulently obtained
rescue loans are in default.
The
Vest Financial lawsuit names as defendants
five corporations and 12 individuals. The
JP Global Property Management complaint
names as defendants three corporations and
17 individuals.
Among
other things, the lawsuits seek court-imposed
penalties, restitution for consumers and
permanent injunctions banning companies
named as defendants from offering foreclosure
rescue or credit repair services to consumers.
The lawsuits also seek to have the records
of the defendants impounded, and the assets
of each defendant frozen, with no ability
to dispose of any assets.
The two lawsuits are:
Milgram
v. Vest Financial, L.L.C: The State’s
four-count complaint charges Vest and the
other defendants with soliciting consumers
facing foreclosure or otherwise experiencing
money troubles that could lead to losing
their homes.
According
to the lawsuit, the defendants advertised
“foreclosure rescue” services
over the Internet and radio, and by word-of-mouth
within the real estate and mortgage broker
communities.
The
defendants are accused of falsely leading
homeowners to believe that surrendering
the titles to their homes would save them
from foreclosure when, in fact, entering
into such a straw-buyer arrangement would
only imperil them further while enriching
the defendants.
Among
other things, the defendants are charged
with civil racketeering. Predicate offenses
listed in the racketeering count of the
lawsuit include theft by deception, forgery,
bank fraud and money laundering. The suit
also charges violations of the Consumer
Fraud Act including unconscionable business
practices and making false promises; misrepresentations
and knowing omissions of fact; and violation
of state advertising regulations. The alleged
conduct took place between 2005 and early
2008.
Defendants
other than Vest Financial named in the lawsuit,
all but one of them from New Jersey, include:
Metropolitan
Mortgage Services, Inc., of Cliffside Park;
Alex Armani of Cliffside Park; Sohrab Moussavian
of Englewood; Anthony Scordo III of West
Orange; Felix Nihamin, an attorney who resides
in Franklin Lakes and practices in New York
City; Francis A. Ciambrone, an attorney
with law offices in Paramus; Rhys A. Herrmann,
of Belleville; JP Global Property Management
LLC of Bloomfield; Peter H. Eckhardt, Jr.
of Livingston; Philip Altieri of Flemington;
Kristopher Pilone of Manalapan; DBK Realty
Investments LLC of Edison; Tom A. Andriopoulos
of Washington Township (Bergen County);
Settlement Source, LLC of Edison; Vivian
M. Ruiz of Hillsdale and Glen B. Thompson,
New York City.
Milgram v. JP Global Property Management,
Inc.: The four-count JP Global
Property Management lawsuit, while encompassing
more property transactions than the Vest
complaint, charges essentially the same
fraudulent and collusive conduct in duping
distressed homeowners with “foreclosure
rescue” schemes. Again, homeowners
facing foreclosure were presented with a
way to continue living in their homes by
signing over their titles to a third-party
buyer. Ostensibly, homeowners would pay
“rent” to the new owner while
repairing their credit, then would be in
a position to buy back their home in the
future.
The
schemes were typically facilitated, the
lawsuit charges, through loan applications
and other documents containing false information.
Homeowners
often never met the purchaser of their homes
and, once having committed to the sale/leaseback
transaction, were presented with monthly
“rent” terms more costly than
their original mortgages. Also, victims
typically received no money at closing despite
prior assurances the equity in their homes
would be theirs to keep.
The defendants are charged with civil racketeering
including predicate offenses such as theft
by deception, forgery, issuing false financial
statements, deceptive business practices
and money laundering. The suit also charges
violations of the Consumer Fraud Act , including
failing to properly conduct settlement proceedings,
forging consumer’s names on documents,
refusing to provide consumers with copies
of sales contracts and other loan papers,
making false promises misrepresentations
and , knowing omissions of fact, and violation
of state advertising regulations. The alleged
conduct took place between 2004 and early
2008.
Defendants
other than JP Global Property Management
named in the lawsuit, all but one of them
from New Jersey, include:
Jeremy
P. Sorvino of Waldwick; Jeffrey M. Malen
of Ringwood; Peter H. Eckhardt, Jr. of Livingston;
Christopher William Eckhardt of Washington
Township, (Bergen County); Anthony Scordo
III of West Orange; Felix Nihamin, an attorney
who resides in Franklin Lakes and practices
in New York City; Michael J. Andalaft, an
attorney with law offices in Cedar Grove;
Capital Hill Mortgage, Inc.; Stanley Capital
Mortgage Company, Inc. of Englewood Cliffs;
Rhys A. Herrmann of Belleville; Brendan
Joseph Flynn of Fort Lee; Maryann E. Sorvino
of Ridgewood; Frances B. Benna of Elmwood
Park; Vincent F. Latorre of Kenilworth;
Jennifer R. Kortman of Livingston; Rebecca
A. Kortman of Chatham; William McVeigh of
Wharton; Mauricio V. Almeida of Colonia
and Glenn B. Thompson of New York City.
Attorney
General Milgram thanked Deputy Attorney
General Megan Lewis, Chief of the Affirmative
Litigation Section; Deputy Attorney General
Wendy Leggett Faulk of the Affirmative Litigation
Section; Assistant Attorney General James
J. Savage; and Supervising Investigator
Jennifer Micco of the Division of Consumer
Affairs, for their hard work on the foreclosure
rescue fraud investigation and lawsuits.
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