Source: https://oag.ca.gov/news/press-releases/brown-shuts-down-fraudulent-foreclosure-relief-companies-and-recovers-cash
Timestamp: 2016-05-31 05:55:32
Document Index: 62025520

Matched Legal Cases: ['§ 45', '§ 310', '§ 310', '§ 310', '§ 17500', '§ 17200', '§ 407', '§ 407', '§ 407']

Brown Shuts Down Fraudulent Foreclosure Relief Companies and Recovers Cash for Scammed Homeowners | State of California - Department of Justice - Kamala D. Harris Attorney General
Brown Shuts Down Fraudulent Foreclosure Relief Companies and Recovers Cash for Scammed Homeowners Monday, March 22, 2010Contact: (415) 703-5837, agpressoffice@doj.ca.govSanta Ana, Calif.—Attorney General Edmund G. Brown Jr. today shut down two fraudulent foreclosure-assistance companies and secured a court judgment that prohibits three individuals from working in the real estate industry and provides more than $1 million in restitution for victims left with “false hope” after paying upfront fees for nonexistent loan-modification services.
On July 7, 2009, Brown filed suit against two affiliated companies based in Orange County, U.S. Foreclosure Relief Corp. and H.E. Servicing, Inc., as well as their executives, George Escalante and Cesar Lopez, and legal representative Adrian Pomery. The suit was filed jointly with the Federal Trade Commission (FTC) and the State of Missouri as part of “Operation Loan Lies,” a massive federal-state crackdown on loan-modification fraud. The joint investigation, initiated in March 2009, found that the defendants used aggressive telemarketing tactics to convince distressed homeowners to pay $1,800 to $2,800 in upfront fees for loan-modification services that included reductions in principal and lower interest rates. In sales calls, H.E. Servicing, for example, claimed it had successfully negotiated 10,000 loan modifications. However, a full review of internal records found the company opened only 2,960 loan-modification files and completed only 311. It is estimated that California homeowners accounted for 15 to 20 percent of the company’s opened loan-modification files. Brown’s judgment permanently shuts down U.S. Foreclosure Relief and H.E. Servicing and prohibits the defendants from ever working in the real estate and loan-modification industries again. Additionally, the judgment will provide more than $1 million in relief to victims paid through frozen company funds and the sale of Escalante’s jewelry, 2007 Mercedes SUV, 2007 Mercedes sedan and 2009 Toyota Tundra. Separately, Lopez declared bankruptcy in June 2009 and relinquished possession of a 2007 Cadillac Escalade SUV and 2008 BMW S Series sedan as part of those proceedings.
Under the judgment, a court-appointed independent receiver will oversee the repayment program. Victims can access more information about this program by visiting the receiver’s website at www.heservicingreceiver.com, by calling: 1-866-243-8101 or by emailing: info@heservicingreceiver.com. The FTC’s enforcement division will monitor the defendants’ compliance with the judgment, and if they are found to have misrepresented their financial condition and inability to pay, the judgment, in full, will become due immediately. The full judgment requires total payment of $8.6 million from Escalante, US Foreclosure Relief and H.E. Servicing as well as $3.3 million from Lopez and $3.4 million from Pomery. While in operation, H.E. Servicing spent $70,000 a week on radio and television advertising in 100 media markets nationwide and had plans to spend an additional $10,000 to $30,000 a week with the goal of bringing in an estimated $270,000 a week in new business. A report prepared by an outside accountant found that in the first six months of 2009 alone, the company made $4.5 million in net income.
The original lawsuit alleged that US Foreclosure Relief, H.E. Servicing and their executives violated: •	FTC Act, 15 U.S.C. § 45(a) for false or unsubstantiated loan modification and success claims;
•	TSR, 16 C.F.R. § 310.2(a)(2)(iii) and (a)(4) for making false or misleading statements;
•	TSR, 16 C.F.R. § 310.4(b)(l)(iii)(B) for violations of the National Do Not Call Registry;
•	TSR, 16 C.F.R. § 310.8 for failure to pay national Registry fees;
•	California Business and Professions Code § 17500 for making untrue or misleading statements;
•	California Business and Professions Code § 17200 for unfair competition;
•	Missouri Merchandising Practices Act § 407.020 for unlawful merchandizing practices; and
•	Missouri Merchandising Practices Act § 407.938 and § 407.940 for unlawful foreclosure consulting. Earlier this month, Brown filed an amended complaint naming Brandon L. Moreno and his law firm, Cresidis Legal, as additional defendants in the case. This comes after investigators found that Moreno served as the legal affiliate for H.E. Servicing after Pomery departed. These defendants are not part of the judgment announced today, and Brown will continue to prosecute the case against them.
By law, all individuals and businesses offering mortgage-foreclosure consulting, loan-modification and foreclosure-assistance services must register with Brown’s office and post a $100,000 bond. It is also illegal for loan-modification consultants and businesses to charge up-front fees for their services. Non-profit housing counselors certified by the U.S. Department of Housing and Urban Development provide free help to homeowners. To find a counselor in your area, call 1-800-569-4287.
Brown has sought court orders to shut down more than 30 fraudulent foreclosure-relief companies and has brought criminal charges and obtained lengthy prison sentences for dozens of deceptive loan-modification consultants. For more information on Brown’s action against loan-modification fraud visit: http://ag.ca.gov/loanmod. A copy of the court-approved stipulated judgment, filed in U.S. District Court for the Central District of California, is attached.
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