Selling Hope: Attorneys are playing a larger role in scams, authorities say

/

By JOSH SALMAN

More complaints of foreclosure rescue fraud now involve attorneys, who are exempt from laws that prohibit soliciting distressed homeowners and who can slow down investigations by citing client confidentiality.

Of the 1,526 Florida complaints of foreclosure rescue fraud made to the Federal Trade Commission since January 2013, nearly one-third cited issues with lawyers, representing 474 complaints.

Last year, the average loss reported by homeowners who alleged attorney involvement in a foreclosure rescue scheme was $3,449 — $700 higher than other complaints, federal data shows.

“We really started clamping down because we want to protect the integrity of the bailout program,” said Christy Romero, special inspector general for the U.S. Treasury’s Troubled Asset Relief Program.

Simple scam

Florida homeowners have been targeted by one California law firm more than any other.

Remedy Center & Associates of Newport Beach has drawn 172 complaints from Floridians in the Consumer Sentinel Network since the start of 2013, including many from consumers in Southwest Florida.

The firm would collect up-front fees to work out loan modifications, but then cut communication before a deal could be worked out, according to state and federal records.

One Manatee homeowner, whose name was redacted in FTC records, sent Remedy Center $4,095 for a modification. The money was collected up front. Remedy Center Law also refused to send the homeowner a copy of the signed contract, the FTC record states.

SPECIAL PROJECT: Selling Hope

The homeowner contacted law enforcement in California, but Orange County police would not accept a complaint from a Florida resident. The homeowner also filed a complaint with the Manatee County Sheriff’s Office, records show.

“The scam is simple,” the homeowner wrote in the FTC complaint. “Set up a law firm, mail out solicitations that seem to be from the government or the bank offering to help people with modifications, advise the incoming caller to contact the law firm, once the caller contacts the law firm, convince the people that you are a law firm working with the bank and ask the person to send a check with a signed contract, steal the money without doing the job that is promised.”

Remedy Center is run by California lawyer Pamela Gerber-Gressier, who is facing more than 100 complaints of misconduct by the State Bar of California, records show.

Those charges allege Gerber-Gressier practiced law without a license in eight states — including Florida — through her mortgage modification solicitations.

In a response to the Bar, Gerber-Gressier denied most of the 108 allegations against her. The cases remain pending.

Last year, regulators in Georgia issued a cease-and-desist order against one of her companies, State Trust Legal Inc., claiming it operated as a mortgage broker without a proper license. That order became final in September 2013, and a spokesman for the Georgia Department of Banking and Finance said it is not a ruling that State Trust Legal could challenge or appeal.

The FBI and California police also raided Gerber-Gressier’s offices. But no federal charges have been filed against her.

Florida Attorney General Pam Bondi filed a lawsuit against Remedy Group in July. Bondi’s 17-page complaint says that although Gerber-Gressier is not licensed to practice in Florida, she had accepted at least $469,930 from 123 Floridians for foreclosure-related services that were never delivered.

Gerber-Gressier had not responded to Bondi’s lawsuit.

Gerber-Gressier did not return three phone calls and emails from the Herald-Tribune seeking comment. A phone number listed on Bar records for Arthur Margolis, an attorney representing Gerber-Gressier, was no longer connected to the law firm.

Confusing sites

Mader Law Group, which has offices in West Palm Beach and Tampa, has received 27 consumer complaints in the databases obtained by the Herald-Tribune.

Similar allegations prompted Bondi last year to sue the legal practice. The attorney general’s complaint alleges that Mader “ran a nationwide foreclosure-rescue operation that charged illegal fees and failed to provide promised assistance to homeowners.”

In an email to the Herald-Tribune, firm owner Eric Mader blames the bulk of those complaints on a rogue business partner.

The state contends that Mader Law allegedly set up at least nine imposter websites, tricking financially troubled homeowners into believing they were signing up for relief under the federal government’s Hardest-Hit Fund.

With names like HardestHitHelp.org and FlaHardestHitHelp.org, the sites were similar in name to the program’s official site: FLHardestHitHelp.org.

“There are always people out there trying to figure out how to beat the system,” said Cecka Rose-Green, a spokeswoman for the Florida Housing Finance Corp., which administers the Hardest-Hit Fund in Florida. “The market fell sometime around 2007, and this became more pervasive as all of those different government programs came into play.”

Christell Wood tried to contact a government-certified housing counselor to apply for Hardest-Hit funds, which can mean up to $18,000 in payment assistance.

But she had actually found a company tied to Mader Law.

SELLING HOPE PART 3: Foreclosure scam results in charges

A representative told Wood that she qualified to cut her mortgage payments in half through the government’s Home Affordable Modification Program. She was directed to stop making payments on both of her home loans and start writing checks to the Florida law firm instead.

She was quoted $2,495 for the services on the first mortgage and an another $500 on the second loan, which she mailed with a Hardest-Hit application to Mader Law, Florida Housing Finance records show.

Wood ultimately saved her Leon County home, cancelling the payment when she realized she was not working directly with Hardest-Hit representatives.

Others were not as fortunate.

In an email to the Herald-Tribune, Mader blamed the consumer complaints and allegations detailed in Bondi’s lawsuit on a former business partner.

Clients who contacted the ex-partner through one of the spoofed websites were either refunded their money or provided the services promised, Mader told the newspaper.

“The Attorney General is aware that my former business partner has already testified under oath that I did not know that he had created the websites complained of by the Attorney General and that the sites were taken down as soon as I was notified of the Attorney General’s concerns,” Mader wrote in an email to the newspaper.

“I took what I believed were ethical and moral actions when I realized what was being done in my name and adversely affecting my reputation,” Mader wrote. “I tried to work with clients who were affected. I also reached out proactively to the Attorney General. This is what I considered to be the ‘right thing’ to do and to be implicated for fraud of this nature is just wrong and unfair.”

Complaints filed

Other law firms operating in Florida have run afoul of law enforcement.

In St. Petersburg, a law firm headed by Robert and Rory Alarcon has generated 18 complaints for its National Legal Associates affiliate, which charged as much as $3,000 in up-front fees for foreclosure relief that was never delivered, according to the FTC database.

Documents show the law firm cold-called delinquent homeowners throughout Florida from a small strip mall on Dr. Martin Luther King Jr. Street.

In tandem with business partner Bruce Thomas, the duo ran similar operations in Long Island, New York and Irvine, California, according to complaint documents and court records.

They contacted homeowners in Rhode Island, where they were not licensed to practice law. They also violated mortgage modification rules in Connecticut, a cease and desist order states.

In addition to the FTC complaints, Tampa area consumers submitted 142 complaints to the Better Business Bureau about National Legal Associates.

BBB representatives contacted National Legal Associates in January 2013, asking why customers were filing the complaints, and what actions the business has taken to help eliminate them. The law firm never responded.

The company dissolved in December 2012, state records show. But complaints about its loan modification efforts filed by consumers to the FTC continued until September 2013.

“Bottom line, this company pitches a Make Home Affordable Program that supposedly is federally mandated, when in fact, they never contact your lender,” one South Florida homeowner wrote in a complaint to the FTC.

 

Last modified: October 9, 2014
All rights reserved. This copyrighted material may not be published without permissions. Links are encouraged.