Debt Elimination & Foreclosure
Rescue Scams "Kick 'em while they're down" Schemes By:
Bill E. Branscum
Copyright 2009
Judging by the inquiries I am receiving, schemes related to debt
elimination, mortgage modification and foreclosure protection are
the frauds de jour. There is something truly noxious about these
"kick 'em while they're down" schemes that exploit fear
and desperation, defrauding families of their last dollars with
empty promises, and false hope. It is hard to imagine that people
have built businesses around this concept; fortunately, several
of them are finding the Federal Trade Commission to be America's
instrument of righteous indignation.
This has been the subject of discussion on the Florida
Association of Private Investigators news group,
and it was suggested that I publish something here that our members
could use for reference when contacted about these schemes.
First, let's talk about the problem - in recent years,
many American home owners have fallen victim to a veritable "perfect
storm," in the world of financial calamity, oftentimes beginning
with a mortgage lending process that was nothing short of predatory,
and sometimes involved outright fraud. Adjustable rate mortgages
that were marketed as a good deal, weren't. As those adjustable
rates "adjusted" upward, property values fell, credit
standards tightened, and a particularly devastating recession sapped
people's income.
When property values plummet, an adjustable rate mortgage
is a pit there is no climbing out of. A homeowner cannot hope to
refinance a home that is no longer worth it's existing mortgage
- and mortgagees know that. Dealing with some of the nation's largest
lenders is about like belonging to Simon Legree.
People began hearing about government sponsored mortgage
relief and foreclosure protection programs, mostly in advertisements
by the promoters of these services who had no connection to any
government entity, and no interests at heart other than their own.
United Savings Center, INC, USC, LLC, and MCS Programs,
LLC, were Washington corporations, officed at 1215 Earnest S. Brazill
Street, Suite 33 in Tacoma, Washington doing business as Mutual
Consolidated Savings, and run by Paul Morris Thompson and Miranda
Cavendar. Mutual Consolidated Savings was a boiler room operation
that promoted a "rapid debt reduction" program in the
United States and Canada. They claimed that they could negotiate
with creditors to substantially lower interest rates, allowing consumers
to pay of their debts "three to five times faster," without
increasing their payments. They charged consumers who entered their
program $2500 or more, promising a full refund if their promises
did not prove out.
The Federal Trade Commission filed a Complaint and
petitioned for an Injunction on June 25, 2009, in the United States
District Court, Western District of Washington, Case# 09-CV-05380.
The FTC alleged that they failed to perform as promised, and failed
to refund fees as promised, which they characterized as unfair and
deceptive trade practices in interstate or international commerce,
in violation of Section 5 of the FTC Act, Title 15 USC Section 45(a).
Freedom Foreclosure Prevention Services, LLC, Loss
Mitigation Training Centers of America, LLC, Arizona limited liability
companies officed at 1234 S. Power Road, Mesa, Arizona, and run
by Jeffrey C. Segal and Michael R. Workman, marketed and sold "loss
mitigation services." These loss mitigation services were touted
as a way for consumers to prevent foreclosure by negotiating with
a consumer's mortgage lender to secure a modification of a consumer's
mortgage payment or loan terms. Segal and Workman are alleged to
have claimed to have a 97% success rate in saving homes from foreclosure
and offered a 100% money back guarantee.
While marketing these "services," Segal
and Workman marketed and sold "loss mitigation consultant businesses,"
which were touted as being business opportunities in which purchasers
became "consultants" and earned money by referring homeowners
to Defendants for loan modification services. Segal and Workman
are alleged to have routinely claimed that these consultants would
earn $10,000 monthly, while saving consumers' homes from foreclosure.
The Federal Trade Commission filed a Complaint and
petitioned for an Injunction on June 1, 2009, in the United States
District Court, District of Arizona, Case# 09-CV-01167. The FTC
alleged that they failed to perform as promised, and failed to refund
fees as promised. Specifically, their investigation revealed that
their loss mittigation efforts were successful in approximately
6% of the cases and, in some cases, the consultants advised consumers
to stop making mortgage payments while they were negotiating. They
found that no consultant who bought into their program made a significant
salary and many made nothing at all. Two key employees audited the
books and discovered that, "Segal was running a Ponzi scheme
- they provided testimony and evidence to the FTC. The FTC characterized
these activities as unfair and deceptive trade practices in interstate
or international commerce, in violation of Section 5 of the FTC
Act, Title 15 USC Section 45(a).
Federal Loan Modification Law Center, LLP, formerly
known as Anz & Hilmoe, LLP and subsequently doing business as
FLM Law Center, Federal Loan Modification, and Federal Loan Modification
Law Center, was a California limited liability partnership. Anz
& Associates, PLC ("Anz & Associates"), was a
California professional law corporation. All were officed at 9460
Balboa Boulevard, Northridge, CA, and run by Nabile "Bill"Anz,
an attorney licensed in California.
Legal Turn Inc. was a California corporation. Federal
Loan Modification, LLC was a California limited liability company.
Both were officed at 6420 Wilshire Boulevard, Suite 200, Los Angeles,
CA, and run by Boaz Minitzer and Jeffrey Broughton.
The companies have offered and sold mortgage loan
modification and foreclosure relief services to consumers misleadingly
marketing themselves as "Federal Loan Modification" service
providers, and used the web site www.fedmod.com, although the businesses
are/were not affiliated with, or endorsed, by the federal government.
In addition to their own advertisements, they were "shilled"
at www.keepmyhouse.com, in a blog, authored by Ralph R. Roberts,
who purports to be a "source of loan modification news, information,
commentary, and community." Among other things, the www.keepmyhouse.com
blog stated that Roberts is an "Award-Winning Author and REALTOR,"
a "Real estate-focused Consumer Advocate," and a "spokesperson
for Federal Loan Modification Law Center, LLP."
They charged consumers $1000 to $3000 in up front
fees for their "services," claiming success rates exceeding
95%, and promising a full refund if the consumer wasn't satisfied.
The consultants often encouraged consumers to stop making their
mortgage payments as a way to better motivate the mortgagee to negotiate,
while falsely reporting that negotiations were ongoing, or going
smoothly.
The Federal Trade Commission filed a Complaint and
petitioned for an Injunction on April 3, 2009, in the United States
District Court, Central District of California, Case# 09-CV-00401.
The FTC alleged that they failed to perform as promised, and failed
to refund fees as promised. The FTC characterized these activities
as unfair and deceptive trade practices in interstate or international
commerce, in violation of Section 5 of the FTC Act, Title 15 USC
Section 45(a).
Federal Housing Modification Department, Inc., having
done business under several names including Nations Housing Modification
Center and Loan Modification Reform Association (collectively, “NHMC”),
is a Delaware company officed at 1780 La Costa Meadow Drive, San
Marcos, California, with mailing addresses of 611 Pennsylvania Avenue
SE, No. 393, Washington, D.C. and 236 Massachusetts Avenue NE, No.
206, Washington, DC. NHMC was run by Michael A. Trap, Glenn S. Rosofsky,
and Bryan P. Rosenberg. It's the same story, so I'll spare you the
litany, but you can read the Complaint for yourself.
The Federal Trade Commission filed a Complaint and
petitioned for an Injunction on September 16, 2009, in the United
States District Court, District of Columbia, Case# 09-CV-01753.
The FTC alleged that they failed to perform as promised, and failed
to refund fees as promised. The FTC characterized these activities
as unfair and deceptive trade practices in interstate or international
commerce, in violation of Section 5 of the FTC Act, Title 15 USC
Section 45(a).
I have at least a dozen more of these cases THAT WERE
FILED THIS YEAR, and I may add some more as time permits. A "Rogue's
Gallery" shouldn't leave any rogues out.
When fielding an inquiry related to "foreclosure
rescue," please consider the situation your caller is in. There's
no money in these inquiries, as there is no "investigation"
for you to do, but take a few minutes to put these people on the
right track - the investment of a few minutes could save an innocent
family a lot of avoidable grief.
The thing to know and share is, mortgage modification
and foreclosure help exists. Many of these con artists
masquerade as government programs, but the government programs they
pretend to be are out there. Seventy five billion of dollars, and
thousands of free HUD counselors are available as part of the Making
Home Affordable program that promises to keep millions of Americans
in their homes by preventing avoidable foreclosures.
If you do nothing else, tell these people that anybody
trying to charge them any up front fee is a fraudster, and direct
them to www.MakingHomeAffordable.gov
and the Hope Hotline at 888-995-HOPE.
Oracle International
Bill E. Branscum, Investigator
OracleIntL@aol.com
(239) 304-1639
