DC High Court Affirms Punitive Damages Award Slamming Sale Leaseback Peddlers For $3.3M In Equity Stripping Foreclosure Rescue Ripoff

In Washington, D.C., notorious foreclosure rescue operators Vincent Abell ($2 million), the sole owner of Modern Management Company ($1.1 million), and Calvin Baltimore ($200K) are back in the news(1) as the District of Columbia Court of Appeals recently affirmed a jury verdict that slammed them with punitive damages of $3.3 million for scamming a local homeowner dealing with family health problems(2) and facing foreclosure out of her home that she owned for twenty-two years in an equity stripping, sale leaseback ripoff.(3)

The court also affirmed a jury award to the homeowner of $60,000 in compensatory damages as the group's liablity for common law fraud and for violating the D.C. Consumer Protection Procedures Act ("CPPA") for their various misrepresentations and omissions of material facts and for including "unconscionable terms" in the transaction, and which the trial judge tripled to $180,000 pursuant to the CPPA, D.C. Code § 28-3905 (k)(1).(4)

For the ruling, see Modern Mgmt Co. v. Wilson, Case Nos. 08-CV-18, 08-CV-85 & 08-CV-187 (D.C. June 3, 2010).

(1) For other stories on this foreclosure rescue racket, see:

• Hogan & Hartson Wins $3.3 Million Verdict in Pre-Foreclosure Scam Case,
• Md. couple wins $1M in rescue-scam lawsuit (homeowners awarded $350,000 for their mental anguish, which was then tripled after a finding the defendants "willfully and knowingly violated" Maryland's Protection of Homeowners in Foreclosure Act)
• Prince George's County Circuit Court awards $500K to victim of foreclosure scam (for the related court order, see Smith v. Abell, (Prince George's County Cir. Ct., Feb. 7, 2006),
• Loan Scam Targets Seniors' Homes (Washington Con Artists Preyed On Elderly People In Financial Trouble) (go here to watch related CBS News' video),
• From Foreclosure to the Cleaners (Indebted Homeowners Say 'Rescue' Services Bilked Them),
• Foreclosure Rescue Scam, Businessman Vincent Abell pays five homeowners $120,000 settlement,
• Testimony of Mr. Walter Malone [foreclosure rescue victim] Before Senate Aging Committee (U.S. Senate, Feb. 13, 2008),
• Wilson v. Modern Management Co. (homeowner's brief in an appeal of a lower court eviction order),
• Bilaal v. Abell, et al., 983 A.2d 349; 2009 D.C. App. LEXIS 573 (2009),
• Media Coverage Not New For D.C.-Area Foreclosure Rescue Operator,
• Anatomy Of An Equity Stripping, Sale Leaseback Foreclosure Rescue Scam.

(2) A severe head injury at work prevented her from being able to work consistently. After her injury, she suffered two additional head injuries causing her to develop epilepsy and suffer seizures. She also spent much of her time caring for her elderly mother after the death of her father.

(3) The victimized homeowner filed suit alleging common law fraud, and statutory fraud pursuant to:

• the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C.A. §§1961-1964.;
• the District of Columbia Consumer Protection Procedures Act ("CPPA"), D.C. Code §§ 28-3901 to 3-905 (2001 & 2009 Supp.);
• the Truth In Lending Practices Act ("TILPA"), 15 U.S.C.A. §§ 1635-1640;
• the District of Columbia Loan Sharking Act, D.C. Code § 26-901 (2009 Supp.);
• the District of Columbia Consumer Credit Services Amendment Act, D.C. Code §§ 28-4601 to -4603 (2001);
• the Home Ownership and Equity Protection Act ("HOEPA"), 15 U.S.C.A. §§ 1602, 1639; and
• the District of Columbia Usury Statute, D.C. Code § 28-3301 (2009 Supp.).

(4) The legal issues contested on appeal involved assertions by the defendants that:

• the award of punitive damages against them was constitutionally excessive;
• the trial court erred in permitting the victimized homeowner to pursue her RICO claims and admitting evidence that appellants had completed one hundred similar transactions, which caused the jury to inflate the punitive damages awards;
• the compensatory damage award must be reduced by the amount of the settlement agreement the victimized homeowner reached before trial with appellants' former co-defendant;
• the trial court erred in submitting to the jury the issue of whether the victimized homeowner was a "consumer" as defined in the CPPA; and
• the jury verdict finding appellants liable for common law fraud and for violations of the CPPA was against the weight of the evidence.

The court affirmed on all points, except it did kick the case back to the lower court with directions to modify the compensatory damage award. The Court of Appeals ruled that the three co-defendants are entitled to a pro rata setoff against the $180,000 trebled compensatory award in the amount of $40,000, the amount a former fourth co-defendant, the law firm Houlon Berman, coughed up to "buy" its way out of this litigation pursuant to a settlement agreement with the homeowner before trial, thereby reducing the total compensatory damages award to $140,000.