ftc-building

FTC Halts California Based Brookstone Law Mortgage Relief Scam

The Federal Trade Commission has charged the operators of a mortgage relief scam with bilking millions of dollars from homeowners by falsely telling them they could join a so-called “mass joinder” lawsuit that would save them from foreclosure and provide additional financial awards.

“Preying on homeowners who already are financially distressed and struggling to pay their mortgages is appalling,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “That’s why stopping phony mortgage relief operations, like this one, is a priority at the FTC.”

At the FTC’s request, a federal court temporarily halted the scheme, and the agency seeks to permanently stop the alleged illegal practices and obtain refunds for consumers.

According to the FTC’s complaint, Damian Kutzner and four attorneys using a set of law firms under the names Brookstone Law and Advantis Law, claimed they would bring lawsuits against lenders for mortgage fraud and void consumers’ mortgage notes “to give you your home free and clear, and/or to award you relief and monetary damages.”

According to the FTC, the promise of a mass joinder lawsuit is a ruse used by some mortgage relief scams. Unlike class-action lawsuits, in the event of trial each plaintiff would have to prove his or her case separately. Although the defendant attorneys have sued several well-known banks, the FTC has alleged that they have not won any cases and that most were dismissed because they never pursued them. According to the FTC’s complaint, the defendants’ operation did not have attorneys who could litigate hundreds or thousands of cases.

According to the complaint, the defendants mailed marketing materials to consumers with the homeowner’s name, loan amount and property identification number, with statements such as, “Your home will be sold at Auction unless you take immediate action.” People who responded to the advertising were told they could join a lawsuit by paying $895 or more in advance for a “legal analysis,” and that they were likely or certain to prevail in a lawsuit against their lender; some consumers were told they would recover at least $75,000. After claiming the analysis showed that a consumer had a good case, the defendants charged thousands of dollars in recurring monthly fees through the law firms and failed to deposit the fees in client trust accounts as required by law.

The defendants falsely promised some clients that they would add them as plaintiffs in lawsuits; they told others they would add them soon but did so only months later. Clients’ requests for information were ignored. In addition, the defendants did not tell people when their lawsuits had been dismissed and kept collecting fees from those clients. Clients’ requests for refunds were refused.

One of the defendants, Vito Torchia, was disbarred by the California bar for misconduct. During his ethics trial, he conceded that Brookstone failed to provide the most basic elements of legal representation

The defendants are Damian Kutzner; Vito Torchia, Jr.; Jonathan Tarkowski; R. Geoffrey Broderick; Charles T. Marshall; Brookstone Law P.C., doing business as Brookstone Law Group, a California corporation; Brookstone Law P.C., doing business as Brookstone Law Group, a Nevada corporation; Advantis Law P.C.; and Advantis Law Group P.C. They are charged with violating the FTC Act and the FTC’s Mortgage Assistance Relief Services Rule (MARS Rule) and Regulation O.

fraud

Husband and Wife Charged with Short Sale Fraud – Violation of the Arm’s Length Affidavit

fraudCynthia Hosbrook, 41, currently a licensed real estate agent, and Robert Hosbrook, 51, formerly a licensed real estate agent, have been charged in U.S. District Court with conspiracy and fraud for making false statements to Wells Fargo Bank in order to get it to approve a short sale on their home. 

 

The defendants are charged in a criminal indictment dated June 12, 2013, with one count of conspiracy to commit bank fraud and one count of bank fraud. 

 

According to the indictment, the Hosbrooks solicited a friend to act as a buyer for their home which was listed as a short sale. In a short sale contract dated March 2, 2010, and in other paperwork submitted to Wells Fargo Bank, the Hosbrooks falsely represented that the sale of their home would be an “arms-length” transaction, that it was between two unrelated parties, that no party to the contract was a family member or business associate, that there were no agreements that the seller would remain in the property as a renter, and that the short sale did not constitute straw buying, when they allegedly knew that they were selling the residence to a known party/straw buyer. 

 

The Hosbrooks also allegedly caused the straw buyer to falsely sign a title company form on July 9, 2010, stating that the buyer would be residing at the property, which the Hosbrooks knew was a false and fraudulent representation. 

 

Cynthia Hosbrook and Robert Hosbrook have been summoned to appear before U.S. Magistrate Judge Carl W. Hoffman. If convicted, they face up to 30 years in prison and fines of up to $1 million on each count.

advanced fees

California Lawyer Disbarred for Accepting Advanced Fees and running a Loan Modification Scam

advanced feesTimothy Clarence Bryson, 61, San Diego, California, State Bar #140798, was disbarred for accepting advance frees (and/or monthly fees) for a loan modification matter and running a false “Attorney Backed” loan modification scam.

Bryson was charged with accepting advance fees for loan modification matters in violation of Civil Code § 2944.7(a), failing to deposit and maintain client funds in trust, failing to competently perform legal services improperly withdrawing disputed funds from a trust account, misappropriating funds, failing to render proper accounts, and failing to cooperate in a disciplinary investigation.

alonzo

California Attorney Disbarred for Accepting Advance Fees and running an “Attorney Backed” Loan Modification Scam

alonzoJerry Alonzo Stevenson, 43, San Diego, California, State Bar #262798, was disbarred for accepting advance fees for loan modification matters in violation of Civil Code § 2944.7(a), failing to competently perform legal services, and failing to promptly refund advanced fees.

Between March and September 2011 several individuals hired Stevenson to negotiate plans with their mortgage lenders or creditors to restructure their home loan payments. All of the clients learned about Stevenson’s services from unsolicited direct mail sent to their homes. The letters contained personal information regarding the clients and their lender or bank, and they appeared to be generated with the lender’s authorization. Stevenson’s representative told the clients that their loan modifications would be personally handled by him and guaranteed that he would successfully complete the restructuring. However, after the clients paid advance attorney’s fees, Stevenson did not complete the loan modification services. 

In addition, Stevenson engaged in a business partnership with his office manager, a non-attorney with whom he shared legal fees. Stevenson delegated to the manager the tasks of accepting legal services, providing legal advice, supervising non-attorneys, and depositing client fees into joint accounts. Furthermore, Stevenson did not properly supervise his non-attorney staff and was only occasionally present at any of the law firm offices. 

In each of the cases, Stevenson’s staff falsely told the clients that the loan modifications were in the process of being approved. In addition, Stevenson failed to respond to the clients’ reasonable status inquiries. All of the clients tried to obtain refunds, but Stevenson failed to return the advanced fees. 

In aggravation, Stevenson had a record of prior discipline. Furthermore, his clients were seriously harmed, and he engaged in multiple acts of wrongdoing that demonstrated a pattern of misconduct.

orange county

Four Orange County defendants sentenced in loan modification scam

orange countyFour Orange County men were sentenced Monday for their participation in a real estate investment scam that took an estimated $130,000 from hundreds of victims, prosecutors said.

Justin Dennis Koelle, 23, of Costa Mesa, was sentenced to nine months in jail and five years of formal probation, according to the Orange County district attorney’s office. 

Dominic Adam Nolan, 32, of Irvine, was sentenced to six months in jail and five years of formal probation. Jacob John Cunningham, 26, and John D. Silva, 28, both of Irvine, each received sentences of eight months in jail and five years formal probation. 

All four men are required to pay restitution. They pleaded guilty in May to charges that include conspiracy to collect illegal upfront fees. 

A fifth man, Andrew Michael Phalen, 26, of Mission Viejo, pleaded guilty in June 2012. He was sentenced to a year in jail and five years of formal probation.

 All five men are prohibited from engaging in loan modification or loan consulting practices.

Prosecutors said that from January 2009 to March 2012, the men created fraudulent loan modification businesses that were used to steal money without completing any services.

The men sent letters offering to restructure home loans. The notices looked as if they came from the recipients’ lenders, prosecutors said. 

The five regularly changed the names of their fake businesses, as well as their phone numbers and addresses. 

In December 2011, Cunningham, Nolan and Silva started another scheme that distributed letters that were forged with a CitiFinancial or CitiMortgage logo. The letters offered a low interest rate to refinance a home and instructed the recipient to deposit $3,500 to $4,600 directly into bank accounts.