FTC Wins $2.6 Million Judgment Against Scamming Loan Mod Firm – NMP Skip to main content

FTC Wins $2.6 Million Judgment Against Scamming Loan Mod Firm

NationalMortgageProfessional.com
Jul 02, 2012

The Federal Trade Commission (FTC) has won a $2.6 million federal court judgment against three defendants behind a scheme that charged consumers large upfront fees and failed to deliver the loan modifications they promised. The court also banned the three defendants for 10 years from telemarketing financial products or services; from selling mortgage modification, foreclosure rescue, and debt-relief products or services; and from collecting or attempting to collect from consumers who had agreed to purchase a mortgage-assistance product or service. The court ordered the defendants to destroy any consumer information they have collected within 30 days after the order takes effect. The U.S. District Court for the Middle District of Florida, Tampa Division, entered permanent injunctions against three defendants. It also approved settlements with five more defendants in the case, and entered a default judgment against another defendant. The FTC filed a complaint against the nine defendants behind the Crowder Law Group in a 2009 law enforcement sweep as part of its continuing effort to keep homeowners from being targeted by mortgage-related scams. The FTC alleged that the defendants behind Crowder Law Group promised relief from burdensome mortgages by falsely claiming they could modify consumers’ mortgages and substantially reduce their monthly payments; exaggerating the role an attorney would play in obtaining a loan modification; and pretending to be affiliated with a government agency. All nine defendants were charged with violating the Federal Trade Commission Act and the Telemarketing Sales Rule. The operation involved a marketing company that contracted with a direct-mailing company to send oversized postcards to homeowners nationwide whose mortgage payments were at least two months in arrears. Each postcard offered financial relief to the homeowner and displayed a toll-free phone number and the signature of an attorney who was local to the homeowner and was paid $100 to accept the homeowner into the program. When homeowners called the toll-free number, a customer service representative collected financial documents and the $2,000 fee from the consumer. The court found that the defendants, through the postcards and telephone procedures, assured homeowners that they had qualified for loan modifications. In fact, homeowners still had to go through the modification process with lenders, and it which was usually unsuccessful. The judgment against defendants Richard Bishop, Brent McDaniel, and Tyna Caldwell, and the judgment against the defunct company Washington Data Resources included permanent injunctions and found them liable for a total of $2.6 million for the harm they caused consumers. After a five-day trial, the court found Bishop, McDaniel, and Washington Data Resources liable jointly for $1.97 million, and Caldwell liable for $665,000. If the defendants do not turn over their assets voluntarily, the Federal Trade Commission will move forward with seizing and selling them. The court also approved settlements for other defendants in the case: ►Bruce Meltzer and Crowder Law Group; Kathleen Lewis and Optimum Business Solutions: These defendants agreed to settlements in which the court entered a $3.1 million judgment against each of them. For the four defendants, the judgment is suspended, due to their inability to pay, upon the surrender of funds in corporate bank accounts that total $69,256. If it is later determined that the financial information the defendants gave the FTC was false, the full amount of their judgment will become due. Under the two settlements, Meltzer and his company, Crowder Law Group, and Lewis and her company, Optimum Business Solutions, are banned from telemarketing and from marketing mortgage loan modification and foreclosure services. The settlements prohibit them from misrepresenting the terms or rates that are available for a loan or line of credit, including closing fees, the payment schedule, and the savings. ►Douglas A. Crowder: The court entered a $3.1 million judgment against Crowder that is suspended except for $10,000 due to his inability to pay. If it is later determined that the financial information Crowder gave the FTC was false, the full amount of this judgment will become due. The settlement against Crowder, an attorney, allows him to practice bankruptcy law provided he meets certain conditions. Also under the settlement, Crowder is banned from telemarketing and from marketing mortgage loan modification and foreclosure services. It prohibits him from misrepresenting the terms or rates that are available for a loan or line of credit, including closing fees, the payment schedule, and the savings.
Published
Jul 02, 2012
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