Scammers hit with $19M penalty over bogus loan modifications

A federal court docket decide in California has penalized 4 house modification scammers with roughly $19 million in fines and restitution within the first joint case introduced by state and Federal Commerce Fee officers. 

Michael Nabati, Armando Solis Barron, Dominic Ahiga (also called Michael Grinnell) and Roger S. Dyer had been discovered liable in a abstract judgment on this case; a number of company entities headed by Dwelling Issues USA, based mostly in Los Angeles, had been collectively penalized in a separate default judgment.

All the particular person defendants, besides Barron, didn’t oppose the movement or in any other case problem the allegations raised by the FTC and the California Division of Monetary Safety and Innovation.

Though Barron did file a response, “the only proof submitted in help of his cursory opposition transient — a self-serving declaration — is insufficient to current any dispute of truth and isn’t executed in compliance with federal regulation,” a footnote in Decide Fernando Aenlle-Rocha’s ruling mentioned.

Regulators alleged the rip-off impacted over 3,000 individuals nationwide, a lot of whom had been aged and/or veterans. The victims paid for mortgage modification providers that had been by no means rendered, the ruling famous. It said the defendants “falsely represented that the customers’ houses couldn’t be foreclosed whereas they had been paying for the fraudulent providers, the owners needn’t and shouldn’t make their common mortgage funds or talk with their mortgage suppliers, and that the providers had been related to a authorities program associated to COVID-19 reduction.”

The penalties embrace practically $15.9 million collectively and severally in opposition to the entire defendants as financial reduction. A separate $50,900 superb was levied in opposition to “reduction defendant” MostCap Enterprises, which admitted to receiving cash from the company entities named within the swimsuit.Decide Aenlle-Rocha additionally instituted $3.1 million in civil penalties in opposition to the entire events. A court-appointed receiver has already recovered $3.5 million.

That is the primary time the California DFPI teamed up with the FTC in a civil matter, and it resulted within the highest penalties issued so far beneath expanded authority granted by California’s client safety regulation.

“Our win on this case sends a transparent message to scammers who goal customers dealing with monetary hardship: the FTC and our regulation enforcement companions are centered on combating fraud and halting it,” mentioned Samuel Levine, director of the FTC’s Bureau of Client Safety, in a press launch. “We stay up for extra alternatives to companion with the California DFPI on behalf of customers.”

When the case was initially filed in September 2022, California officers identified the accused had been the topic of prior regulation enforcement actions in Ohio, Washington, Oregon, Connecticut, and North Carolina, in addition to motion by the State Bar of California.

A Google search discovered a Washington State Division of Monetary Establishments client alert from March 2023 in opposition to a Los Angeles-based firm named HomeMatters USA for an unlicensed mortgage modification rip-off. Not one of the people named within the alert had been defendants within the California matter.

A Higher Enterprise Bureau web page lists a number of complaints in opposition to Dwelling Issues USA between 2021 and 2023.

“Fraudsters all over the place ought to take notice – DFPI will discover you, expose you, and maintain you accountable. Victims of fraud ought to likewise take coronary heart. The DFPI has your again,” mentioned Commissioner Clothilde Hewlett.