Massachusetts AG Coakley obtains judgments against foreclosure rescue scheme masterminds
Massachusetts Attorney General Martha Coakley’s Office has concluded its case against former Brockton, Mass. attorney Alec G. Sohmer and five other defendants over their roles in a 2006 foreclosure rescue scheme. The judgments entered by Judge Thomas Connolly against Sohmer in the amount of $620,000 and against the four remaining defendants collectively in the amount of $364,000, together with the judgment obtained last May in the amount of $41,204, resolve allegations that Sohmer, with the assistance of the other defendants, orchestrated an unlawful foreclosure rescue scheme against 26 homeowners. According to the Attorney General’s lawsuit, filed in Suffolk Superior Court on Aug. 30, 2006, Sohmer stripped and retained hundreds of thousands of dollars of the victims’ home equity. The judgments against all defendants require total payments of $545,204 in restitution, $340,000 in civil penalties, and $140,000 in attorney’s fees to the Commonwealth, and also prohibit Sohmer from engaging in mortgage lending or brokering, or any business involving residential real estate. Restitution awarded by the judgments today will restore some of the lost equity to homeowners. The court also entered a consent judgment for $90,000 against Sohmer’s wife, Jennifer Sohmer, who served as the purchaser and mortgage loan borrower for six properties in the foreclosure rescue scheme. Also entered today were a consent judgment for $200,000 against former Norwell attorney Andrew Palmer, who served as the closing attorney for the foreclosure rescue transactions and default judgments against Timeless Funding, the corporation through which Sohmer marketed his scheme, in the amount of $130,000 in civil penalties, and against former Sandwich attorney Shaun M. Ellis, who referred distressed homeowners to Sohmer in exchange for a fee, in the amount of $34,000, to be used toward restitution and civil penalties. A consent judgment against Edward de la Flor, a mortgage broker involved in many of the transactions, for $41,204 was entered on May 5 of this year. According to the complaint, Sohmer preyed on homeowners facing foreclosure by promising them that they could avoid foreclosure with refinancing through Timeless Funding. Instead, Sohmer allegedly deceived the homeowners into conveying their properties to himself or to his wife. The complaint alleges that Sohmer concealed his fraud by deceiving homeowners into signing documents purporting to allow them to stay in their homes by making monthly payments to Sohmer, and then to "repurchase" their homes from Sohmer by obtaining new financing. The lawsuit alleges Sohmer knew the homeowners would not be able to afford the monthly payments, or obtain the required financing to repurchase their homes because of the homeowners' financial distress and the onerous "repurchase" terms, After homeowners were unable to make the monthly payments, Sohmer then sought to evict them from their homes, and to sell their homes to new buyers. Sohmer also stripped the homeowners’ equity by charging fees, commissions and other payments. In a related action, on July 20, 2010, the Attorney General’s Office obtained a favorable decision against Sohmer, resulting in the denial of Sohmer’s bankruptcy discharge. In October 2007, the Attorney General objected to Sohmer receiving a discharge from the Bankruptcy Court of all of his debts alleging, among other acts, that Sohmer filed false Schedules and a false Statement of Financial Affairs with the Bankruptcy Court, thereby concealing assets, and also failed to maintain adequate financial records to evaluate his financial condition. In her decision, Judge Joan Feeney found Sohmer knowingly and fraudulently made false oaths on his bankruptcy Schedules and Statement of Financial Affairs, intending to mislead the Bankruptcy Court Trustee and creditors. None of the attorneys involved in this scheme are currently practicing law in Massachusetts. The Supreme Judicial Court accepted Sohmer’s affidavit of resignation from the practice of law as a disciplinary sanction on Sept. 28, 2009, suspended Palmer from the practice of law for 21 months on June 29, 2009, and accepted Ellis’ affidavit of resignation from the practice of law as a disciplinary sanction on other grounds, on April 28, 2009. Two years ago, the Bankruptcy Court approved a settlement between the Attorney General’s Office and 10 mortgage lenders and servicers who funded or serviced the loans thereby facilitating Sohmer’s fraudulent foreclosure rescue transactions. With respect to the 26 properties, the agreement was designed to provide approximately $1.8 million in reduced mortgage obligations, and to return each homeowner to his or her financial position before the foreclosure rescue transaction occurred. The agreement also provided an opportunity for Sohmer’s victims to reacquire legal title to their homes. The Attorney General’s case against Sohmer and other defendants is part of a broad initiative to combat predatory lending practices through enforcement litigation, regulation and education. As the foreclosure rate skyrocketed in 2007, the Attorney General’s Office issued an emergency regulation banning predatory foreclosure rescue schemes, and later issued strict consumer protection regulations governing mortgage brokers and lenders. Over the past four years, the office has also undertaken other criminal and civil enforcement actions against individuals and entities who have engaged in mortgage fraud, foreclosure rescue schemes, and loan modification scams. For more information, visit www.mass.gov.