Suit Against Notorious D.C.-Area Foreclosure Rescue Operator To Undo Sale Leaseback, Equity Stripping Scam Allowed To Continue

In a preliminary ruling back in November, a U.S. District Court in Washington, D.C. refused to dismiss a lawsuit brought by a homeowner who was allegedly screwed-over in a sale leaseback equity stripping ripoff by by notorious, D.C.-area foreclosure rescue operators Vincent Abell, Calvin Baltimore, and Modern Management Company.(1)

Also named in the lawsuit is Wells Fargo which, in a separate transaction, allegedly made a predatory loan.

The court described the basis for the lawsuit as follows:

• With respect to Abell, Baltimore, and Modern Management, [homeowner George R.] Hughes alleges violations of the D.C. Consumer Protection Procedures Act ("CPPA"), the Truth in Lending Act ("TILA") and the Home Ownership and Equity Protection Act ("HOEPA"), common law fraud, usury, and a claim for an equitable mortgage.

  As to Wells Fargo, Hughes alleges violations of CPPA and a common law negligence claim.

  And as against both Abell and Wells Fargo, Hughes seeks to quiet title to his primary residence after refinancing his mortgage.

  Hughes alleges that while he believed he was securing a loan to save his home from foreclosure, in fact, Abell, Baltimore, and Modern Management engaged in a scheme to defraud Hughes of his home.

  Arising from a separate transaction, Hughes alleges that Wells Fargo provided him financing on unconscionable terms and misrepresented material facts(2).

For the reasons discussed in its ruling, the court:

• dismissed the usury charge as to Abell, Baltimore, and Modern Management on statute of limitations grounds,
• allowed the lawsuit to proceed on the remaining allegations against all the defendants.

Representing the homeowner is the Legal Aid Society of the District of Columbia.(3)

For the ruling, see Hughes v. Abell, No. 09-220 (JDB) (D.D.C. November 17, 2010).

For the lawsuit, see Hughes v. Abell - Amended Complaint.

Go here for earlier posts on Vincent Abell.

(1) See DC High Court Affirms Punitive Damages Award Slamming Sale Leaseback Peddlers For $3.3M In Equity Stripping Foreclosure Rescue Ripoff for an example of earlier litigation involving Vincent Abell, Calvin Baltimore, and Modern Management.

Inasmuch as "both Abell and Baltimore have done time in federal prison for property schemes" according to a 2004 CBS News' story (see Loan Scam Targets Seniors' Homes (Washington Con Artists Preyed On Elderly People In Financial Trouble) (go here to watch related CBS News' video)), nothing short of additional criminal prosecution will put these guys out of business.

(2) With regard to the alleged predatory loan involving Wells Fargo, the D.C. Consumer Protection Procedures Act, according to the court, applies to real estate finance transactions like the one in this case, citing DeBerry v. First Gov't Mortgage & Investors Corp., 743 A.2d 699, 703 (D.C. 1999).

The court further noted:

• Hughes's claim, as alleged, is analogous to other CPPA claims that have been sustained in this Circuit. In Williams v. First Government Mortgage & Investors Corp., 225 F.3d 738 (D.C. Cir. 2000), the D.C. Circuit upheld a jury verdict finding that the defendant had knowledge that there was no reasonable probability of payment on a refinanced mortgage requiring 57% of the plaintiff's monthly income. Id. at 744.

  Similarly, in Johnson v. Long Beach Mortgage Loan Trust 2001-4, 451 F. Supp. 2d 16 (D.D.C. 2006), the court declined to dismiss a complaint under section 28-3904(r)(1) alleging that loan payments would require more than half of the plaintiff's income. Id. at 38.

  Here, Hughes similarly alleges that Wells Fargo's terms require payment of nearly half of his income, or even more, given potential increases in the rate in the future. Hughes has satisfied his pleading burden, then, because he has alleged that Wells Fargo was aware that its terms would require approximately half of his income and that he had no prospects for increased income.

(3) The Legal Aid Society of the District of Columbia was formed in 1932 to provide civil legal aid to individuals, families and communities in the District who could not otherwise afford to hire a lawyer.