Fla. Foreclosure Rescue Operator, Others Tagged With Federal Lawsuit; Allege RICO, Criminal Usury, Conspiracy, TILA Violation; Seek To Void Mortgages

The St. Petersburg Times reports:

• Calvin Lewendowski, a 55-year-old Sarasota house remodeler, turned to the Safe Harbour Foundation last year after he was promised the nonprofit would save his home from foreclosure. Instead, Lewendowski found himself in the jaws of a loan shark. Safe Harbour referred Lewendowski to a second company, Silverstone Lending, which used illegal fees and usurious interest to take away the home, an action Lewendowski called cold-blooded.

• On Friday [October 12], Lewendowski and other victims struck back, filing a $40-million federal lawsuit against 18 individuals and companies, including Safe Harbour, Silverstone Lending and Peter C. Porcelli, a Clearwater businessman who operated the lending business despite being banned by a federal judge in 2004 from offering such credit products to consumers.

• The lawsuit, filed in Tampa by attorney Michael A. Wasylik, tracks a St. Petersburg Times investigation of the questionable loan operation published in May. The suit accuses Porcelli and his associates of engaging in racketeering by making false promises through the mail in order to obtain borrowers' homes through fraud.

• The suit alleges that Porcelli and others arranged bailout loans with usurious rates as high as 500 percent, violated truth-in-lending laws and charged illegal brokerage or servicing fees.

• The plaintiffs seek millions in actual and punitive damages, an injunction declaring usurious loan deals unenforceable and an order restoring ownership of homes to the original owners.

For more, see Victims strike back at shady lenders (The companies promised foreclosure protection only to wind up taking the homes themselves).

For a prior St. Petersburg Times story on Peter Porcelli, who currently awaits an October 29 felony sentencing on an unrelated scam, see Facing new fields of fraud (Guilty in one scam, an Oldsmar man is scrutinized in a high-risk loan scheme that preyed on those facing foreclosure) (5-20-07).

Editor's Note: The typical equity stripping, foreclosure rescue transaction generally involves a home sale by a financially hard-up homeowner, coupled with a leaseback of the home, and an option to repurchase it at a future date. According to the lawsuit (paragraphs 46 through 54) filed in this case, however:

1. the money advanced by the foreclosure rescue operator actually took the form of a loan, and not a home sale with leaseback and repurchase option,
2. while most homeowners needed only a few thousand dollars to avoid foreclosure, loans were arranged that incorporated finance charges, origination fees, and underwriting fees that doubled or tripled the size of the loan,
3. the charges and fees were received by the operators and the others involved in the alleged conspiracy,
4. in some cases, the loans arranged had effective annual interest rates of 500% or greater. In all cases, they exceeded the 45% threshold set in Fla. Stat. Chapter 687 for criminal usury,
5. in addition to the criminally usurious interest rates, the loans incorporated a purchase option for the benefit of the lender, effective upon the default of the borrower; the option purchase price was calculated by subtracting the current equity in the home from the estimated value of the home, thereby allowing the purported option purchaser to obtain all the equity in the home by simply paying off any liens senior to its own, with little or no money going to the homeowner. Because of the criminal usury, the homeowners found it difficult or impossible to avoid default, thereby triggering the lender’s option and effectively forfeiting all of the homeowner’s equity. One member of the alleged conspiracy was an attorney who aided the operators in enforcing these purchase options by filing lawsuits for specific performance in state court against the financially strapped homeowners.

To view a copy of the lawsuit, see Heise, et al. vs. Porcelli, et al. (U.S. District Court, M.D. Fla.).

Representing the homeowners is Michael Alex Wasylik, Esq., with the law firm Ricardo & Wasylik PL, Dade City, Florida.

For story update, see Scam artist wants a break (Peter Porcelli says he deserves leniency for his cooperation).

For more on equity stripping scams, generally,see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).