Markets Wired

The Federal Trade Commission put an end to three schemes that claimed they would help consumers with their mortgage and debt problems, as part of settlements with defendants who allegedly claimed a bogus affiliation with government assistance programs.

Under the settlements, which are part of the agency’s ongoing effort to stop scams that prey on consumers in financial distress, the defendants are banned from marketing or helping others to market any mortgage assistance relief product or service; prohibited from misrepresenting the available terms or rates for financial products and the potential to improve a consumer’s credit history or ability to obtain credit; prohibited from representing the benefits of financial products without competent and reliable evidence to substantiate their claims; and prohibited from making misrepresentations about any good or service, including claims of an affiliation with any government entity or program.  They also are required to protect and properly dispose of customer personal information.

Truman Foreclosure Assistance, LLC.  The FTC alleged that the defendants bilked consumers out of thousands of dollars for phony mortgage relief and foreclosure rescue services. Settlement orders with two of the men behind the operation require them to pay $1.8 million, and ban them from marketing or helping others to market any mortgage relief and foreclosure rescue service.

The FTC’s complaint against Truman Foreclosure Assistance LLC, Eli Hertz, Benzion Jack Itzkowitz, and Richard Zafrani, along with several other defendants, was filed as part of a 2009 law enforcement sweep called “Operation Stolen Hope.”  The agency alleged that the Truman defendants charged up-front feesfrom $1,500 to $3,000, falsely claiming that for all or most consumers they could get their mortgage modified or stop their homes from being foreclosed.  They claimed a 90-percent success rate and a 100-percent money-back guarantee.  But in many instances, after consumers paid the up-front fees, the defendants failed to provide information about the status of their communication with the consumers’ lenders; failed to contact the consumers’ lenders or obtain mortgage loan modifications; and denied refunds to homeowners for whom they failed to obtain modifications, according to the FTC.

The settlement orders also prohibit Hertz and Itzkowitz from sharing or using customer information, such as Social Security numbers or bank account information, and require the information to be destroyed.

Fedmortgageloans.com.  In this case, the defendants marketed debt relief services as well as mortgage assistance relief services, and the settlement bans them from marketing or helping others to market both mortgage assistance relief and debt relief products or services.

In June 2010, the FTC charged the two corporate defendants and two individuals in this case with misrepresenting that the mortgage assistance and debt relief programs they marketed online were affiliated with the federal or state government, and that consumers were eligible for a federal or state government loan modification or debt relief program.  According to the complaint, the defendants used www.fedmortgageloans.com, www.fedhomeaffordableplan.com, and various other websites to market loan modification services, often displaying official government agency seals or logos and links to the websites of federal government agencies such as HUD, the U.S. Treasury Department, and the White House.  Likewise, multiple sites operated by the defendants promoting debt relief services featured federal or state government logos and seals.  Consumers who provided basic information on any of the sites were all assured that they qualified for mortgage assistance or debt relief programs.

The settlement imposes a $1,080,931 judgment against all four defendants:  Dominant Leads, LLC; MAD TJ Holdings, LLC; James Rambadt, also known as James Kane; and Thomas Hayes.  Rambadt is required to pay $15,000, with the rest of the judgment against him suspended because of his inability to pay.  Hayes is required to pay $7,000, with the rest suspended due to his inability to pay.  If it is determined that the financial information the defendants gave to the FTC was untruthful, the full amount of the judgment will become due.

Making Home Affordable.  In its May 2009 complaint, the FTC alleged that the defendants impersonated MakingHomeAffordable.gov, a federal government website that helps eligible homeowners refinance or modify their mortgages.  The FTC previously settled with six other defendants and has now reached a settlement with the final defendant, Scott Lady.

According to the FTC, consumers looking for the federal Making Home Affordable program were diverted to commercial websites that pitched loan modification services or sold consumers’ personal information to marketers that did.  Lady marketed bogus mortgage relief services through two Internet websites that he operated and through search engine advertising promoting his sites.  Making claims such as “Instantly Stop Foreclosure,” and “Guaranteed Solutions to Lower Your Rate Today,” Lady sold to third parties the personal information of consumers who responded.

In addition to the prohibitions against offering mortgage modification services and restrictions on related activities, the settlement imposes a judgment against Lady for $710,415, which will be suspended because of his inability to pay.  If it is determined that the financial information Lady gave to the FTC was untruthful, the full amount of the judgment will become due.

For consumer information about avoiding mortgage and foreclosure rescue scams, see Your Home at the FTC website Money Matters.

The Commission vote approving the proposed consent orders for Truman defendants Hertz and Itzkowitz was 5-0.  The U.S. District Court for the Southern District of Florida entered the orders on June 20, 2011.  On May 12, 2010, the court entered a default judgment against corporate defendants Truman Foreclosure Assistance LLC, Truman Mitigation Services LLC, and Franklin Financial US LLC.  On June 23, 2011 the court granted the FTC’s motion for summary judgment against another Truman defendant, Richard Zafrani.

The Commission vote approving the proposed consent order against fedmortgageloans.com defendants Dominant Leads, MAD TJ Holdings, James Rambadt, and Thomas Hayes was 5-0.  The FTC filed the proposed order in the U.S. District Court for the District of Columbia and it was entered on August 8, 2011.

The Commission vote approving the proposed consent order against Making Home Affordable defendant Scott Lady was 5-0.   The FTC filed the proposed consent order in the U.S. District Court for the District of Columbia and it was entered on August 16, 2011.  On January 15, 2010, consent orders were filed and entered in the U.S. District Court for the District of Columbia for Making Home Affordable defendants Sean Cantkier, Michael Haller, Alan LeStourgeon, Greg Rivera, Lisa Roye, and Jeffrey Altmire.

NOTE: The consent orders are for settlement purposes only and do not constitute an admission by the defendant that the law has been violated.  Consent orders have the force of law when approved and signed by the District Court judge.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them.  To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357).  The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad.  The FTC’s website provides free information on a variety of consumer topics.  Like the FTC on Facebook and follow us on Twitter.

(Truman Foreclosure Assistance)
(Fedmortgageloans.com. and Making Home Affordable)