FTC widens net in crackdown on mortgage relief scammers
The FTC has added as defendants Bradford R. Geisen; Maurice Jackson; Patrick Butler; Credit Services Alliance Inc.; and CreditLawGroup, a law firm run by two of the original defendants, John W. Smith and Glenn E. Gromann. The original defendants also included The Debt Advocacy Center LLC; Smith, Gromann & Davidson P.A.; and Kevin McCormick.
According to the FTC's revised complaint, the new defendants, along with Smith and Gromann, offered "forensic audits" – checking a homeowner's loan documents for violations that would give them leverage in negotiating with lenders to obtain more favorable mortgage payments or a "short sale" (the sale of a house for less than the mortgage balance).
Attempts to reach the companies for comment were unsuccessful."We have found that between 80-90% of all loans that we have audited have some form of rights violations," the defendant's ads stated. The complaint alleges they collected $995 in advance for each audit even though it was unlikely to assist in negotiations with lenders. The FTC accuses the defendants of misleading consumers by claiming a forensic loan audit would result in short sales or loan modifications that would make their mortgage payments much more affordable. They are also charged with telemarketing without paying the required annual fee to access telephone numbers on the National Do Not Call Registry.
The FTC's original complaint, filed in November 2009, alleged that The Debt Advocacy Center charged customers $1,500 based on the alleged false promise that it would get homeowners' loans modified to make their mortgage payments more affordable. The FTC alleged that defendants wrongly claimed they had helped more than 90 percent of their clients, and would refund consumers' money or pay a penalty if they failed. They are also charged with debiting consumers' bank accounts or charging their credit cards without their consent. The court halted the operations and froze the defendants' assets, pending resolution of the case.