The defendants in two separate alleged scams have settled charges with the Federal Trade Commission and will be banned from providing mortgage- and debt-relief services.
As part of the federal Distressed Homeowner Initiative last year, the FTC charged Mark Nagy Atalla and his companies, American Mortgage Consulting Group and Home Guardian Management Solutions, with offering false promises of mortgage-rate reductions to consumers trying to hold onto their homes. Under the settlement with the FTC, the defendants will surrender their assets and be banned from providing mortgage relief or debt relief to consumers.
Atalla and his companies, according to the FTC complaint, violated the FTC Act and the Mortgage Assistance Relief Services Rule (known as the MARS Rule or Regulation O) when they promised to substantially lower consumers monthly mortgage payments in exchange for an up-front fee ranging from $1,495 to $4,495.
The FTCs complaint alleged that in addition to misrepresenting the likelihood that consumers would obtain a mortgage modification, the defendants falsely represented that consumers who did not receive a modification would receive full refunds, falsely represented that they were affiliated with the U.S. government, and falsely claimed to provide legal representation to consumers.
Also, in violation of the MARS Rule, the defendants allegedly told consumers to stop communicating with their lenders, and failed to make Rule-mandated disclosures intended to ensure that consumers understand transactions with mortgage-assistance relief service providers and their rights under the Rule. A federal judge granted the FTCs request for a temporary restraining order and preliminary injunction, froze the defendants assets, and appointed a receiver to take over the companies.
Under the terms of the agreed-upon settlement, in addition to being banned from participating in the debt relief and mortgage relief industries, the defendants are prohibited from misrepresenting the features of any product or service, and making claims without competent and reliable evidence.
Also under the settlement, Atalla faces a $514,910 judgment, which will be suspended when he turns over various items of personal property and proceeds from the sale of other assets.
In a separate case involving Southeast Trust LLC (formerly known as The Debt School LLC and also doing business as Financial Freedom Credit Counseling), the companys principal, Paul A. Wexler allegedly violated both the FTC Act and the agencys Telemarketing Sales Rule by charging cash-strapped consumers hundreds of dollars based on misrepresentations that they could obtain credit card interest rates as low as zero percent. The operation also routinely called consumers on the Do Not Call Registry, according to the FTC.
Under the agreed-upon settlement, the defendants are banned from providing debt- and mortgage-relief services and from making robocalls and prohibited from calling consumers on the Do Not Call list.
The complaint alleged that the defendants claimed to be a non-profit group that targeted consumers with robocalls, and with ads on Web sites such as southeasttrust.com and thedebtschool.com. The defendants promised a single monthly payment, an interest rate ranging from zero percent to six percent, and that consumers would be debt free in three to five years.
The defendants are prohibited from collecting money from consumers who used their services, making unauthorized withdrawals from consumers bank accounts, misrepresenting the features and characteristics of financial or other types of products and services, and making unsupported claims about products and services. They also are required to keep any consumer information they have confidential, and destroy it promptly.
The order imposes a $2.7 million judgment against Wexler, which is suspended due to his inability to pay. If it is determined that the financial information the defendants gave the FTC was untruthful, the full amount of the judgment will become due.