Justice John M. Galasso of the Nassau County Supreme Court in Long Island, N.Y. has issued a sweeping order shutting down one of New York’s largest mortgage scam operations pending trial. The order has been billed as one of the most substantial victories to date in a year-long legal campaign against “loan modification scams” in New York and nationwide. The court order ceases the operations of Homesafe America Inc. and its successor corporation, United Solutions Law Firm, which are alleged to have scammed more than 1,000 low- and middle-income homeowners by falsely promising to help customers modify the terms of their mortgages.
Judge Galasso's order also prevents Homesafe’s two founders, Guy Samuel and Scott Schreiber, from engaging in mortgage-assistance relief services.
The case, Mook v. Homesafe America Inc., began on June 28, 2011, when a group of 15 homeowners sued the companies and nearly two dozen employees for fraud, deceptive practices, false advertising, and various other claims. The original complaint stated "with the help of fast-talking salespeople and masterfully deceptive websites, the operation specifically targets lower- and middle-income families desperate for a solution to their financial troubles." Among their demands, the victims are seeking $1.5 million in punitive damages and an order permanently preventing all defendants from working in the mortgage assistance industry. The homeowners are being represented free of charge by the Lawyers’ Committee for Civil Rights Under Law and Davis Polk & Wardwell LLP.
Attorneys for the homeowners recently unearthed documents indicating that Samuel and Schreiber operated a string of companies that affected thousands of homeowners. On July 26, 2011, Justice Galasso ordered Defendants to turn over nearly 70,000 pages of customer files, which the Lawyers’ Committee and Davis Polk are currently reviewing to determine the breadth of the operation. These materials supplement documents discovered earlier this summer in which Samuel admitted to running an “illegal” operation that grossed more that $2 million in 2010.
“We are committed to fighting this scourge through lawsuits like this and through coordination with and assistance to federal, state and local law enforcement,” said Lawyers’ Committee Chief Counsel and Senior Deputy Director Jon Greenbaum.
Among other claims, the plaintiffs are alleging that the scam companies violated a New York statute known as the “Deceptive Practices Act,” which empowers injured consumers to operate as “private attorneys general:” under the Act, an individual victim may seek an injunction against an alleged scammer on behalf of all consumers. Using this forceful yet rarely used remedy, non-profit organizations like the Lawyers’ Committee, in partnership with the private bar, can step in and shut down scam operations when state and local enforcement agencies lack the resources to do so.