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TRENTON
-- Attorney General Anne Milgram filed mortgage
fraud lawsuits against 36 defendants charging
consumer fraud and civil racketeering by
various mortgage brokers, real estate entities
and others throughout New Jersey.
The
unrelated complaints accuse defendants of
inducing consumers to buy property on the
basis of false promises and misrepresentations,
and of taking out mortgage loans on the
basis of grossly inflated property values.
The defendants include mortgage brokers,
real estate appraisers, title companies,
straw buyers and sellers, and promoters.
Filed in state Superior Court in Essex,
Camden and Passaic Counties, the three complaints
allege violations of both the New Jersey
Consumer Fraud Act and the New Jersey Racketeer
Influenced and Corrupt Organizations (RICO)
Act involving 25 properties and more than
$5 million in fraudulent loans.
The separate lawsuits name as defendant
15 corporations and 21 individuals. The
lawsuits allege that all defendants engaged
in a practice known as “inflated sale
and crash,” in which investors are
convinced to buy property at grossly inflated
values through mortgage loans obtained using
false information. The defendants broker
these loans knowing the properties will
end up in foreclosure. Some defendants are
also accused of using an approach known
as “bait and bump,” in which
a mortgage solicitor offers a loan on false
terms, then informs the defrauded consumer
at closing that it is too late for them
to get out of the transaction. Still others
are accused of luring victims with bogus
“rent-to-own” and “foreclosure
rescue” deals.
In
some cases, unwitting investors faced foreclosure
and their credit ratings were ruined. The
defaulted homes contributed to community
blight and also threatened to devalue neighboring
properties.
“The
actions alleged in these lawsuits are unconscionable.
The conduct involved ranges from acquiring
properties through false mortgage applications
to prevailing on a desperate homeowner to
transfer the deed to her property to someone
else on the false promise that she would
be able to buy back her home,” said
Attorney General Milgram. “It is imperative
that we root out alleged mortgage fraud
like this and protect the victims of these
predatory lending practices.”
Filed on June 13, the state lawsuits
include:
Milgram
v. A&E Mortgage Company, L.L.C.:
Filed in Essex County, the State’s
four-count complaint alleges that the defendants
engaged in an ongoing enterprise to induce
buyers to purchase properties at grossly
inflated values on the basis of false promises
regarding the terms of loans, and to induce
a homeowner facing foreclosure to transfer
the deed to her home to a straw buyer on
the basis of false promises, including that
the homeowner would be able to buy back
her home within a year. The homeowner was
not able to buy back her home, which ultimately
went into foreclosure. The homeowner, who
currently resides in the house, has been
served by the defendants with eviction papers.
In connection with each transaction, the
defendants fraudulently stripped the equity
from the properties by pocketing substantial
sums from each loan transaction. A&E
Mortgage allegedly conspired with other
entities and individuals, including real
estate appraisers, a title company, straw
buyers and sellers, and promoters, to carry
out these fraudulent transactions. A&E,
also known as Colony Financial Services,
is located in Woodbridge. In addition to
A&E, defendants in the case include
Darrin Jennings, the A&E company president,
and A&E employees Reginald Price, Yvonne
Strickland and Wayne Carless. Strickland
and Carless are licensed mortgage solicitors.
Other
defendants include: Complete Title, L.L.C
of Woodbridge and Nichelle Jennings, the
CEO of Complete Title and wife of A&E
president Jennings. Also named as defendants
are Premier Real Estate Appraisal Service,
L.L.C. of Toms River and Darryl C. Haymon,
a licensed real estate appraiser affiliated
with Premier; Hammond Appraisal Service,
L.L.C., of Burlington and Adrienne Ali,
a licensed real estate appraiser affiliated
with Hammond; Daniel Isiwele of Maplewood;
Novlet Lawrence-Hoo of Whitehouse Station;
William Soriano, an attorney whose practice
is in Roseland; LG’s Business Services,
L.L.C. of Bloomfield and LG’s company
president Elizabeth Greenlee.
Milgram
v. Ultimate Real Estate Solutions, L.L.C.:
Filed in Camden County, the state’s
six-count complaint alleges that Ultimate
Real Estate Solutions of Williamstown, Gloucester
County, set up a scheme in which it used
the names and credit scores of “investors”
to acquire properties through fraudulent
mortgage applications, then leased these
properties to rent-to-own consumers, who
believed they would become owners of the
properties while Ultimate paid the mortgages.
While Ultimate collected the rental payments
from rent- to-own consumers, it did not
pay the mortgages on the properties.
The
scheme was financed with mortgages brokered
by a firm known as 1st Metropolitan Mortgage
Services on the basis of misrepresentations
and false information about the investor/loan
applicant.
The
transactions ended with investors losing
properties to foreclosure, and rent-to-own
customers being evicted upon foreclosure,
despite having made their rental payments.
The state alleges the scheme was developed
to allow Ultimate Real Estate Solutions
to take unwarranted proceeds from the property
transactions, and to allow 1st Metropolitan
to collect unwarranted fees and commissions
on the fraudulent loans. The lawsuit accuses
Ultimate Real Estate Solutions of conspiring
with 1st Metropolitan Mortgage and with
real estate appraisers and others to carry
out these fraudulent transactions.
In addition to Ultimate Real Estate Solutions,
defendants named in the complaint include
Halimah Prater, president and registered
agent of Ultimate Real Estate Solutions;
Empire Equity Group, Inc., doing business
as 1st Metropolitan Mortgage Services of
Mount Laurel, Cassandra Coles and Frank
Memmo, licensed mortgage solicitors employed
by 1st Metropolitan.
Milgram
v. American Millenium Company, L.L.C.:
filed in Passaic County, the state’s
three-count complaint alleges that the defendants
set up a scheme in which they recruited
buyers to purchase “investment”
properties with no money down and no out-of-pocket
payments on the promise that rental income
from the properties would more than pay
for the mortgage costs.
The
defendants would then acquire properties
through fraudulent mortgage applications,
on the basis of greatly inflated property
values and through use of misrepresentations
and false information concerning the investor/loan
applicants.
The
state’s lawsuit alleges that American
Millenium Company conspired with real estate
appraisers, a title company and others to
carry out these fraudulent transactions.
Defendants
in the case include American Millenium,
doing business as American Mortgage Company
of Florham Park, and Martin Ohlmeyer, a
licensed mortgage solicitor employed by
American Mortgage. Other defendants include
Equititle, L.L.C., a title insurance and
real estate settlement service firm located
in Morganville, Monmouth County; The Addison
Group L.L.C., a real estate appraisal firm
located in Bridgewater, as well as Orlando
Barardo, a formerly licensed real estate
appraiser affiliated with The Addison Group;
Radell Appraisal Services of Bloomfield,
as well as Donald Radell, a licensed real
estate appraiser; Valentine Morrisson, L.L.C.,
Green Ink Investments and individuals Jamal
Clark and Leslie Clark.
Each of the State’s three lawsuits
alleges “a pattern of racketeering
activity” as defined by the New Jersey
Civil RICO statute. Each of the lawsuits
also charges violations of the state Consumer
Fraud Act, including unconscionable business
practices and making false promises, misrepresentations
and knowing omissions of fact.
In
addition, the A&E complaint alleges
violation of the federal Credit Repair Organizations
Act. The Ultimate Real Estate Solutions
complaint also alleges violation of the
Credit Repair Organizations Act, as well
as state advertising regulations.
The American Millenium complaint alleges
violation of state advertising regulations
as well. The three lawsuits were developed
by the Affirmative Litigation Section with
assistance from the Department of Banking
and Insurance, which referred one matter
and provided information regarding others.
Attorney General Milgram thanked Deputy
Attorney General Megan Lewis, Chief of the
Affirmative Litigation Section; Deputy Attorney
General Jim Michael 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 mortgage
fraud investigation and lawsuits.
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