The Federal Trade Commission won a $2.6 million federal court judgment against three defendants behind a scheme that charged consumers high upfront fees and failed to deliver the mortgage modifications they promised.

The U.S. District Court for the Middle District of Florida, Tampa Division, banned the defendants for 10 years from selling mortgage modification, foreclosure rescue, and debt-relief products or services; and from collecting or attempting to collect from consumers who had agreed to purchase a mortgage-assistance product or service.  The court ordered the defendants to destroy any consumer information they have collected within 30 days after the order takes effect.

The judgment against defendants Richard Bishop, Brent McDaniel and Tyna Caldwell, along with  defunct company Washington Data Resources, came after a five-day trial. The court found Bishop, McDaniel, and Washington Data Resources liable jointly for $1.97 million, and Caldwell liable for $665,000. If the defendants do not turn over their assets voluntarily, the Federal Trade Commission will move forward with seizing and selling them.

The court also approved settlements with five more defendants in the case, and entered a default judgment against another defendant.

The FTC filed a complaint against the nine defendants behind the Crowder Law Group in a 2009 law enforcement sweep.  The FTC alleged that the defendants behind Crowder Law Group promised relief from burdensome mortgages by falsely claiming they could modify consumers’ mortgages and substantially reduce their monthly payments; exaggerating the role an attorney would play in obtaining a loan modification; and pretending to be affiliated with a government agency.

All nine defendants were charged with violating the Federal Trade Commission Act and the Telemarketing Sales Rule.  The operation involved a marketing company that contracted with a direct-mailing company to send oversized postcards to homeowners nationwide whose mortgage payments were at least two months in arrears.  Each postcard offered financial relief to the homeowner and displayed a toll-free phone number and the signature of an attorney who was local to the homeowner and was paid $100 to accept the homeowner into the program.  

When homeowners called the toll-free number, a customer service representative collected financial documents and the $2,000 fee from the consumer.

The court found that the defendants, through the post cards and telephone procedures, assured homeowners that they had qualified for loan modifications. In fact, homeowners still had to go through the modification process with lenders, and it which was usually unsuccessful.

The court-approved settlements for other defendants in the case include:  
  
•    Bruce Meltzer and Crowder Law Group; Kathleen Lewis and Optimum Business Solutions: These defendants agreed to settlements in which the court entered a $3.1 million judgment against each of them. For the four defendants, the judgment is suspended, due to their inability to pay, upon the surrender of funds in corporate bank accounts that total $69,256.

•    Meltzer and his firm, Crowder Law, and Lewis and her company, Optimum Business Solutions, are banned from telemarketing and from marketing mortgage loan modification and foreclosure services.  The settlements prohibit them from misrepresenting the terms or rates that are available for a loan or line of credit, including closing fees, the payment schedule, and the savings.

•    The court entered a $3.1 million judgment against attorney Douglas Crowder that is suspended except for $10,000 due to his inability to pay. The settlement allows him to practice bankruptcy law provided he meets certain conditions. 

Crowder is banned from telemarketing and from marketing mortgage loan modification and foreclosure services. It prohibits him from misrepresenting the terms or rates that are available for a loan or line of credit, including closing fees, the payment schedule, and the savings.   

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