Wednesday, March 24, 2010

FYI: FTC Shuts Down More Fraudulent Loan Mod Companies

The Federal Trade Commission acting with the states of California and Missouri shut down the operators of a mortgage foreclosure "rescue" company, and banned them from selling mortgage relief services.  A copy of the Stipulated Final Judgment is attached.

The FTC and States alleged that "U.S. Foreclosure Relief Corp.," and its operators George Escalante, Cesar Lopez, and Adrian Pomery, falsely claimed they helped 85 percent of their clients get their loans modified, and that they would get loan modifications to make consumers' homes much more affordable, all the while falsely asserting that they had a "proven track record" and the "highest standards of business ethics." They also allegedly violated state laws against charging advance fees for foreclosure consulting services. The Central District of California immediately barred the practices and froze the defendants' assets.

The FTC added as defendants H.E. Servicing, Inc., Brandon L. Moreno, and his law firm, Cresidis Legal, and charged all of the defendants with two more law violations: falsely claiming a lawyer would negotiate the terms of consumers' home loans, and falsely promising refunds if they failed. The settlement order resolves the case against the original defendants and H.E. Servicing. The case continues against Brandon L. Moreno and Cresidis Legal, a professional corporation.

In addition to banning the settling defendants from selling mortgage loan modification and foreclosure relief services, the order prohibits them from making misrepresentations about financial goods and services, such as loan terms, ability to improve someone's credit history, and how much a consumer will save by enrolling in a debt relief service.  The order also bars the defendants from making misrepresentations about any good or service, such as refund terms, government affiliation, and total cost, and from violating the FTC's Telemarketing Sales Rule.  Finally, the order bars the defendants from enforcing any contracts with their customers, and selling or otherwise disclosing customers' personal information.

The order imposes a $8.6 million judgment against George Escalante and his two companies, U.S. Foreclosure Relief and H.E. Servicing. The judgment will be suspended except for $980,000 in cash, jewelry, and vehicles that Escalante and his companies have surrendered to lenders or the court-appointed receiver, including a 2007 Cadillac Escalade, a 2008 BMW sedan, a 2007 Mercedes-Benz SUV, and a 2009 Toyota Tundra truck.  The order imposes $3.3 million and $3.4 million judgments against Cesar Lopez and Adrian Pomery, respectively, which will be suspended due to their inability to pay. The full amount will become due immediately if they are found to have misrepresented their financial condition.

Let me know if you have any questions.  Thanks.


Ralph T. Wutscher

Kahrl Wutscher LLP

The Loop Center Building

105 W. Madison Street, Suite 2100
Chicago, Illinois  60602
Direct:  (312) 551-9320 

Fax:  (866) 581-9302
Mobile:  (312) 493-0874


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