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TRENTON
– Continuing the state’s attack
on mortgage fraud, Attorney General Anne Milgram
announced today the filing of three new fraud
lawsuits charging a total of 14 individual
and corporate defendants.
“The
lawsuits we announce today involve three separate
complaints, but they share a common thread
of greed, human callousness and disregard
for the law,” said Attorney General
Milgram. “In one way or another,
each of the defendants in these complaints
is charged with making money by selling false
hope to trusting people during uncertain economic
times.”
One of the state’s three complaints
charges a disbarred lawyer, Martin Gendel
of Montville, and his son, Seth Gendel of
New York City, as well as their companies
Casey Properties and Lee Alan LLP, with violating
New Jersey’s Civil Racketeer Influenced
and Corrupt Organizations (RICO) statute.
The suit charges the Gendels, along with six
other defendants, with using deception --
and the credit information of their unwitting
victims – to obtain fraudulent mortgage
loans and turn a profit via the sale of urban
properties at grossly inflated prices. Casey
Properties basically duped its victims into
buying homes in Newark, Paterson, Irvington
and East Orange that were the subject of bogus
appraisals, then profited by taking fees out
at closing from the inflated equity.
The
defendants told investors Casey Properties
would take care of all aspects of the sale,
as well as property management -- including
finding tenants, collecting rents, paying
the mortgages and making needed repairs. However,
Casey never did maintain the homes or keep
up the mortgage payments. In the end, victims
had their credit ruined and were left responsible
for dilapidated homes that had been foreclosed
on and abandoned. At the same time, the municipalities
were left to deal with dozens of nuisance
properties. In some cases, tenants were left
to live in squalor, without utilities, as
conditions deteriorated and properties fell
into foreclosure. Some renters ended up homeless
when their houses were declared uninhabitable.
Altogether,
Casey Properties is accused of persuading
at least 32 investors to buy 63 properties
that sold for a total of $18 million.
In
the other two lawsuits announced today, two
unrelated companies in South Jersey -–
Hope Now Financial Services Corp. of Cherry
Hill and New Hope Modifications of Bellmawr
-- are charged with selling loan modification
services that never materialized, and with
creating the false impression they were affiliated
with a non-profit foreclosure prevention organization
known as the Hope Now Alliance. Among other
services, the Hope Now Alliance offers free
credit counseling with federally-approved
counselors.
As part of the actions announced today, Milgram
said, the state has asked the court to shut
down a Web site operated by Hope Now Financial.
Since at least November 2008, Hope Now Financial
has advertised loan modification services
through a Web site at www.hopenowmod.com.
By posting a video, news articles and links
to federal government press releases, the
profit-seeking Hope Now Financial has falsely
suggested an affiliation with the non-profit
Hope Now Alliance, Milgram said. In fact,
Milgram noted, there is no connection. Moreover,
Hope Now Financial is accused in the state’s
lawsuit with charging significant fees for
loan modification services that were never
delivered.
To
date, 23 consumers living in New Jersey and
out of state have filed complaints against
Hope Now Financial with either the Division
of Consumer Affairs or the Better Business
Bureau. The total amount of money paid by
those victims to Hope Now Financial exceeds
$29,000.
The third lawsuit announced today charges
the Bellmawr-based New Hope Modifications
with similar fraud for representing themselves
as having an affiliation with the Hope Now
Alliance, and for also selling loan modification
services that were never provided. To date,
the state has identified 80 victims of New
Hope, and the total amount of money collected
from those victims exceeds $98,000.
Like
Hope Now Financial, New Hope Modifications
is accused of victimizing New Jersey consumers
and those living out of state.
“This
kind of predatory activity is reprehensible,
especially in this economic climate, and will
not be tolerated,” said Department
of Banking and Insurance Commissioner Steven
M. Goldman. ”Struggling homeowners
were led to believe these companies would
help them, but instead the homeowners were
exploited. Any individual or financial services
organization that attempts to defraud consumers
will be subjected to the maximum penalty the
law allows.”
Among
other things, each of the state’s three
complaints asks the court to order a halt
to the defendants’ business practices.
The lawsuits also seek consumer restitution,
imposition of the maximum civil penalties
and a freezing of the defendants’ assets.
In its Casey Properties lawsuit, the state
also asks that defendants be ordered to pay
to repair or rehabilitate buildings that were
allowed to deteriorate, and reimburse the
cities of Newark, Paterson, Irvington and
East Orange, as well as the state, for costs
incurred in dealing with the dilapidation
and foreclosure. The state also asks that
the defendants pay “reasonable expenses”
associated with relocating displaced tenants
to clean, safe housing.
Details of the state’s three complaints
are as follows:
Milgram v. Casey
Properties, LLC: Filed in Superior
Court in Passaic County, the state’s
four-count complaint charges Casey Properties,
headquartered in Totowa, and defendants Martin
and Seth Gendel with running a scheme that
involved soliciting people to “invest”
in urban properties from 2005 through mid-2008.
Victims of the Gendels did not actually put
up money, but rather agreed to have properties
purchased in their names in return for a share
of the income generated by sale of those properties.
The Gendels told victims, falsely, that they
could not simply buy the properties themselves
because New Jersey law limited the number
of properties they could own. They assured
victims Casey Properties would collect the
rent, pay the mortgage and perform maintenance
on houses purchased in their names. However,
the houses were left to deteriorate, mortgage
payments were not kept up and the properties
ended up foreclosed on and abandoned. One
victim, a retired school counselor living
on a fixed income, was left with ruined credit
and two abandoned properties -– one
in Newark and one in Paterson -- that were
so damaged she was unable to sell them. Among
other things, the defendants are accused of
submitting phony mortgage applications to
enable her to qualify for loans she would
not have otherwise obtained, and of forging
her signature on various documents.
In
addition to the Gendels, defendants include
Francis T. “Frank” Memmo,
of Medford, a mortgage solicitor; Kelly Kotzker,
of Evesham, a loan processor; Damien Figueroa
of Oak Ridge, an attorney who acted as a closing
agent for both Casey Properties and the Gendels’
victims; Edward Evans, of Fair Lawn, an attorney
who also acted as a closing agent; Nicholas
Manzi, of Totowa, an attorney who acted as
a closing agent, and Robert B. “Barry”
McBriar, a real estate appraiser who surrendered
his license in October 2008 in connection
with the conduct charged in the lawsuit.
The Casey Properties lawsuit charges defendants
with a “pattern of racketeering
activity” as defined by the New
Jersey civil RICO statute.
Included in the civil RICO count are such
predicate acts as theft by deception, falsifying
records and issuing false financial statements,
as well as accepting commissions on phony
mortgage loans, forging documents and collecting
rent monies that were to go toward mortgage
payments, but keeping the funds instead.
Other charges in the Casey Properties suit
include violating the Consumer Fraud Act by
making false promises and engaging in unconscionable
commercial practices. The complaint also includes
a charge of creating and maintaining a nuisance
by operating a scheme that resulted in dozens
of run-down and uninhabitable properties,
including many damaged by fire and/or flooding.
Milgram
v. Hope Now Financial Services: Filed
in Superior Court in Camden County, the state’s
three-count complaint charges Hope Now Financial
with violation of the Consumer Fraud Act by,
among other things, making numerous misrepresentations
and false promises, and with violation of
state advertising regulations. The complaint
charges that Hope Now Financial placed content
on its Web site designed to deceive consumers
into believing it was affiliated with the
Hope Now Alliance, a legitimate non-profit
organization that provides credit counseling
and free foreclosure prevention.
The lawsuit also charges that Hope Now Financial
charged already-distressed consumers thousands
of dollars in upfront fees for loan modification
services, but failed to provide any such services.
Ultimately, the lawsuit charges, consumers
fell further behind on their mortgage payments,
making the threat of foreclosure more likely.
In addition, the state charges that Hope Now
Financial failed to provide refunds to consumers
who requested them upon realizing they were
receiving no services for their money. Among
Hope Now’s victims were a husband and
wife from Eagleswood Township, Ocean County,
who had more than $2,800 billed to their credit
card by the defendants, received no loan modification
services, and ultimately confronted foreclosure
after they stopped paying their mortgage on
the advice of a company representative.
Milgram
v. New Hope Property LLC d/b/a New Hope Modifications:
Filed in Superior Court in Camden County,
the state’s four-count complaint charges
New Hope with violating the Consumer Fraud
Act, state advertising regulations and the
Debt Adjustment and Credit Counseling Act.
In addition to New Hope, Donna Fisher and
Brian Mammoccio, identified as registered
agents of the business in New Jersey, are
named as individual defendants. Both Fisher
and Mammoccio reside in Mullica Hill, Gloucester
County.
According
to the state’s lawsuit, New Hope has
engaged since 2007 in unlicensed debt adjustment
in New Jersey, including mortgage loan modification
services, and has falsely represented that
it has affiliations with government programs
including the Hope Now Alliance. The state
charges that, through its Web site, and through
agreements with other businesses that provide
leads, the unlicensed New Hope has sold loan
modification help to distressed homeowners,
failed to deliver on its promises of mortgage
loan assistance, and failed to provide refunds
once consumers realized they were getting
nothing for their money. In one case a Linden,
Union County, woman facing foreclosure had
a total of $1,500 electronically drawn from
her bank account to cover the “fee”
she owed New Hope, but received no loan modification
help in return.
With the lawsuits announced today, the state
has filed a total of eight mortgage fraud
complaints since last June naming 87 individual
and corporate defendants. Milgram noted that
the fraud schemes charged in those complaints
have run the gamut, and have included those
aimed at victims seeking to own investment
properties, those hopeful of improving their
living situations via “rent-to-own”
opportunities and, more recently, in keeping
with the societal trend, property owners in
need of foreclosure rescue assistance.
The
Attorney General urged any member of the public
who has been a victim of mortgage-related
fraud to report it by calling the Division
of Consumer Affairs. New Jersey residents
can call the toll-free hotline at 1-800-242-5846.
Consumers from out of state can call 973-504-6200.
Those seeking to file a complaint can also
visit the Division’s Web site at www.njconsumeraffairs.gov
. Milgram also reminded homeowners facing
foreclosure that free help may be available
to them through the state’s foreclosure
mediation program. She urged distressed homeowners
to explore what help is available through
the program by calling the toll-free hotline
number at 1-888-989-5277
or visiting the Web site at www.NJForeclosureMediation.org.
Through the foreclosure mediation program,
qualified homeowners who are in danger of
losing their homes can receive help from housing
counselors, attorneys and a neutral mediator
to resolve loan delinquencies.
Attorney
General Milgram thanked Deputy Attorney General
Megan Lewis, Chief of the Division of Law’s
Affirmative Litigation Section, Deputy Attorney
General Jim Michael of the Affirmative Litigation
Section; Deputy Attorney General Lisa D. Kutlin
of the Affirmative Litigation Section; Assistant
Attorney General James J. Savage of the Consumer
Affairs Practice Group; Deputy Attorney General
Lorraine Rak, Chief of the Division of Law’s
Consumer Fraud Prosecution Section; Deputy
Attorney General Nicholas Kant of the Consumer
Fraud Prosecution Section; Deputy Attorney
General Raymond Chance, Chief of the Division
of Law’s Banking and Insurance Section,
Deputy Attorney General Gregory McHugh of
the Division of Law’s Banking and Insurance
Section, Supervising Investigator Jennifer
Micco, Investigator Joseph Iasso and Investigator
Jared O’Cone of the Division of Consumer
Affairs, for their hard work on the mortgage
fraud cases announced today.
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