August 8, 2014

that pocketed at least $4.7 million from distressed homeowners

Attorney General George Jepsen has obtained a temporary restraining order and appointment of a receiver in a joint lawsuit filed in U.S. District Court, Middle District of Florida against Connecticut-based Resolution Law Group, Florida-based Berger Law Group, and related entities and individuals over allegations that they took advantage of struggling homeowners through a scam that promised legal assistance but delivered none. The order prohibits the defendants from taking fees from consumers and making further misrepresentations regarding the alleged scam. It also freezes bank accounts that have allegedly been used to funnel profits to non-lawyers.

Acting in concert with the Florida Attorney General Pam Bondi under their authority under the federal Mortgage Assistance Relief Services Rule (MARS),and at the request of Connecticut Department of Consumer Protection Commissioner William M. Rubenstein under the Connecticut Unfair Trade Practices Act, the Attorney General filed a complaint alleging that four  individuals and four  businesses formulated and participated in a major mortgage rescue scam that targeted consumers in states across the country, including Connecticut.

The states allege that, since at least late 2011, an enterprise operating under the name of the Resolution Law Group, and later as the Berger Law Group, (“the RLG/BLG Enterprise”), –generated millions of dollars in illegal up-front fees by deceptively convincing consumers to pay to be included as plaintiffs in so-called "mass-joinder" lawsuits against their mortgage lenders or servicers. 

"Consumers who responded to the deceptive marketing efforts we allege in this lawsuit were typically having difficulty making their monthly mortgage payments and were lured in by false promises of help and relief," said Attorney General Jepsen. "To convince consumers to pay a large up-front fee and additional monthly fees, the defendants promised that the 'mass-joinder' lawsuits would induce banks to give them mortgage modifications, help them avoid foreclosure, reduce their interest rates and loan balances, and entitle them to monetary compensation – when, in fact, they did little or nothing to assist with mortgage problems –and often exacerbated the consumers’ financial issues. Through this action today, we are seeking to hold the responsible individuals accountable and to provide relief to consumers who were harmed. I thank Florida Attorney General Pam Bondi, Commissioner Rubenstein, and their respective staffs for their close partnership in this matter."

“As alleged, this scheme would violate the spirit and letter of laws protecting consumers from mortgage assistance scams and we are committed to seeking justice for those who have been wronged,” Commissioner Rubenstein said. “We are taking this action in an effort to halt the RLG/BLG Enterprise scheme, to hold the entities and individuals who run and profit from the Enterprise accountable, and to provide redress to consumers for the injuries that the Enterprise has caused.”

Organized and largely controlled by individuals who had been sanctioned for a similar mortgage relief scam in California, the RLG/BLG Enterprise allegedly sought to take advantage of regulatory exemptions for the practice of law by holding itself out as a law firm.

The suit names as defendants:

The suit alleges that the RLG/BLG Enterprise sent misleading mailers resembling class-action notices to consumers, notifying them that they were potential plaintiffs in a “national” lawsuit against their particular mortgage lender or servicer for “multiple claims of fraud and misrepresentation.” The mailers created a sense of urgency for consumers to enroll by a certain date or risk exclusion, and induced homeowners into believing that by “opting-in” they would receive a reduced interest rate, lower monthly payment, principal reduction, loan forgiveness and monetary damages. Consumers who responded to the mailers were put in touch with the RLG/BLG Enterprise’s telemarketing boiler room and were allegedly subjected to high pressure sales tactics by commission-based, non-attorney sales agents.

The lawsuit further alleges that the defendants charged consumers a large upfront enrollment fee – typically $6,000 –for participating in a mass-joinder lawsuit. The defendants also allegedly induced consumers to continue making $500 monthly payments by providing them with misleading information regarding the status and progress of the lawsuits and making further misrepresentations regarding the benefits of participating.

In reality, the RLG/BLG Enterprise allegedly provided little or no meaningful assistance to struggling homeowners. Rather, the defendants allegedly misled thousands of homeowners nationwide, pocketing at least $4.7 million. Before issuance of the temporary restraining order, the defendants continued to solicit new consumers and take payments from those already enrolled

The lawsuit was brought under the states’ respective unfair trade practices acts, and the attorneys general's authority under MARS, which prohibits collection of upfront fees from consumers before obtaining a loan modification, prohibits misrepresenting to consumers the services and relief they would receive, and requires several disclosures aimed at protecting consumers.

The states are seeking an order permanently halting the defendants from engaging in their alleged illicit business practices, granting restitution for affected consumers, imposing civil penalties, and granting all other relief available pursuant to their respective consumer protection laws and under federal regulation.

Assistant Attorneys General Joseph Chambers and Matthew Budzik, head of the Finance Department, are assisting the Attorney General with this matter. Staff Attorney Nicole Ayala of the Department of Consumer Protection is assisting the Commissioner with this matter.

Please click here to view the states' complaint, and click here to view the court's Temporary Restraining Order. 

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