Thursday, November 17, 2016

Massachusetts AG Scores $600K+ Judgment In Civil Suit Against Loan Modification Racket For Violations Of State Consumer Protection Law; Outfit Cloaked Itself As Tax-Exempt Non-Profit Group To Peddle Bogus Foreclosure Avoidance Services To Financially Distressed Homeowners; State Acknowledges That Recovery Of Damages From Scammer Is "Uncertain"

From the Office of the Massachusetts Attorney General:
  • A Sutton man involved in the operation of a group of businesses that falsely advertised themselves as non-profit foreclosure prevention organizations has been ordered to pay more than $600,000 for soliciting and spending illegal advance fees received from distressed homeowners, Attorney General Maura Healey announced [].

    Suffolk Superior Court Judge Paul Wilson granted a motion for summary judgment filed by the AG’s Office holding Gailon Arthur Joy of Sutton liable for 68 violations of the Massachusetts Consumer Protection Act. Joy induced homeowners to give deposits of up to 25 percent of their gross monthly incomes, claiming the deposits were necessary to be eligible for federal and other mortgage relief programs.

    “This defendant made false promises to help people stay in their homes, but instead took their money to benefit himself and his colleagues,” said AG Healey. “This judgment should send a strong message that orchestrating foreclosure scams to prey upon vulnerable homeowners will not be tolerated in Massachusetts.”

    The order requires Joy to pay more than $600,000, including $367,371 in restitution, $170,000 for civil penalties and $65,535 in attorneys’ fees and costs. While recovery of this amount is uncertain, the judgment also includes injunctive provisions to protect consumers. Joy is prohibited from providing foreclosure-related services, serving as an escrow agent or accepting deposits from Massachusetts consumers for any goods or services to be provided at a later date.

    The AG’s complaint, filed in 2013, alleged that since 2009 a group of five individuals operated a series of organizations claiming to offer financial and legal services, including foreclosure-related services, to distressed homeowners in Massachusetts.

    Those named in the lawsuit included Joy, Paula Carvalho, Obeilson Roosevelt Matos, Pricila Trancoso Silva, John Charles Schumacher, the Alliance for Affordable Housing (AFAH) and the Global Advocates Foundation Inc., previously located in Everett; and the Alliance for Hope Network, Inc., previously located in Framingham.

    The businesses portrayed themselves as tax-exempt, non-profit organizations, but operated like for-profit businesses, seeking financial gain for their officers and directors.

    As alleged in the motion for summary judgment against Joy, between March 2010 and October 2012, he and the businesses collected and spent more than $350,000 in deposits that they received from homeowners and claimed would be placed in escrow for the homeowners to use to help mitigate their pending foreclosures.

    However, the defendants in this case never properly accounted for the use of those funds and allegedly used the funds to pay operating expenses, including salaries and marketing commissions for bringing in new customers, and personal expenses, including at least one defendant’s residential housing costs.
Source: Sutton Man Operating Foreclosure Relief Scheme Ordered to Pay $600,000 for Taking Illegal Fees From Distressed Homeowners (Defendant Operated Group of Businesses Falsely Advertised as Non-Profit Foreclosure Prevention Organizations).

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