A U.S. District Court in Charlottesville, Virginia
recently awarded a homeowner victimized in a sale leaseback, equity stripping racket $27,900 in actual damages, which was then tripled to $83,700 pursuant to the Virginia Consumer Protection Act ("CPA").
The homeowner also prevailed on various other claims as well (ie. Violations of Federal Credit Repair Organizations Act (15 U.S.C. §1679b(a)) and the Virginia Credit Services Business Act (Va. Code §59.1-335.5-8), as well as Fraud, Conspiracy, Fiduciary Duty violation, Conversion, Unjust Enrichment). (The court noted that, prior to the conclusion of this litgation, the homeowner recovered the title to her home, but that she had still suffered uncompensated monetary and emotional harm as a result of this racket).
In addition to the damages award to the homeowner, the court granted the homeowner's attorney, the Legal Aid Justice Center in Charlottesville, Virginia, prevailing party legal fees in the amount of $52,515, the tab for which is picked up by the sale leaseback peddler and the escrow agent who handled the real estate closing, who was also named as a defendant and co-conspirator in the suit.(1)
The court noted that the foreclosure rescue operator involved, one Nicholas McLeod, pleaded guilty to criminal charges in connection with equity-stripping scams for taking equity from homeowners in Virginia and Maryland through transactions similar, but unconnected to, the transaction at issue in this civil lawsuit. He was sentenced for those ripoffs to six years in Maryland state prison after pleading guilty to felony theft and embezzlement.
For the facts of the civil case and the court's ruling, see Kindred v. McLeod, Civ. Action No. 3:08CV00019 (W.D. Va., Charlottesville Division, November 19, 2010).
(1) The Legal Aid Justice Center provides legal representation for low-income individuals in Virginia. In awarding them $52,515 in legal fees, District Judge Norman K. Moon noted the relationship between this sum to the amount of the homeowner's damages award:
- I pause to note that the attorneys' fees amount to 62% of the trebled damages, and 188% of the actual damages. However, given Defendants' default, the protracted status of the litigation, and the merits of Plaintiff's claims — and considering that the fees are provided for by statute as an incentive, because if fees were not awarded in cases such as these, they typically would not be brought — I find that the fees are reasonable.