The South Florida-based defendants in an alleged mortgage relief scam will surrender their assets and be banned permanently from providing mortgage relief and debt relief to consumers under a settlement with the Federal Trade Commission.
The settlement, which requires the defendants to pay nearly $3.6 million to redress consumer victims is the Federal Trade Commission's largest judgment to date against a purported mortgage assistance relief provider.
In 2012, as part of the Distressed Homeowner Initiative, a multi-agency federal enforcement crackdown, the FTC charged 11 companies and five individuals with running an illegal mortgage relief scheme, which operated under various names, including Prime Legal Plans.
Using Reaching U Network, a sham non-profit front, and a maze of other companies, the scheme lured consumers with false promises that enrollment would save their homes from foreclosure or result in lower mortgage payments. The FTC obtained a court order shutting down the operation and freezing the defendants corporate and personal assets pending settlement of the case.
Rather than make good on their promise to offer people relief from mortgage trouble, these schemers put their targets even further behind financially, said Jessica Rich, director of the FTCs Bureau of Consumer Protection. They broke the law by taking money upfront and making false promises.
The FTC charged that the defendants promised consumers that they would prevent foreclosure or significantly lower their mortgage payments by conducting audits of consumers loans and providing access to full-service, expert legal representation to fight their lenders. The defendants, who marketed their programs in English and Spanish through a national outbound telemarketing campaign, allegedly told consumers that 80 percent of mortgages contain some fraud and, in some cases, that even a small error in their loan documents could nullify the mortgage.
The defendants also allegedly told consumers that they would be assigned an expert mortgage foreclosure defense attorney in their state who would halt the foreclosure process and save their homes. But instead of helping consumers, the defendants charged them illegal advance fees ranging from $595 to $750 per month, while delivering little or no help and driving them deeper into debt.
In addition to alleging that the defendants deceived consumers, the FTC charged that the scheme violated the Mortgage Assistance Relief Services Rules ban on advance fees for mortgage relief. The FTC also asserted that the Defendants placed numerous calls to numbers listed on the national Do Not Call Registry.
The defendants are banned from participating in the mortgage relief and debt relief industries, and are prohibited from misrepresenting various features of any product or service or making advertising claims that are unsupported by competent and reliable evidence.
They also are prohibited from placing unsolicited calls both to numbers listed on the Do Not Call Registry and to any number in an area code for which they have not paid the fee to access the list of numbers on the Do Not Call Registry.
Under the terms of the settlements:
A $25.1 million judgment, reflecting the total amount of fees taken in by the scheme, is imposed on Derek Radzikowski, Jason Desmond, Prime Legal Plans LLC, and five other corporate defendants. The judgment will be suspended when they surrender their assets an estimated $3.5 million. The order also resolves allegations against Desmonds wife, relief defendant Shelie Desmond, by requiring her to turn over an estimated $110,000 in unearned ill-gotten gains that she received from the scheme.
$1,428,658 judgments are imposed on Andrew Primavera and Lazaro Dinh and four corporate defendants. The judgments, entered August 22, 3013, reflect these defendants ill-gotten gains, and were suspended after they surrendered their assets: about $20,0000 from Dinh and $1,600 from Primavera. The Dinh order also resolved allegations against two relief defendants: the San Lazaro Irrevocable Life Insurance and its trustee, Dinhs sister Maria Soltura. The $336,929 judgment against Soltura and the Trust was suspended when the FTC received the $1,575 that was frozen in the trusts bank account when the FTC shut down the operation last year.
A $392,215 judgment was imposed against Christopher N. Edwards and Reaching U Network, Inc., and a $102,417 judgment was imposed upon Kim E. Landolfi. The judgments, entered May 22, 2013, reflect these defendants ill-gotten gains and were suspended when they surrendered frozen assets to the FTC: approximately $950 from Edwards and Reaching U Network, Inc. and $40,000 from Landolfi.