Colorado AG Announces Two Civil Lawsuits Targeting Alleged Sale Leaseback, Equity Stripping Foreclosure Rescue Ripoff Operations

From the Office of the Colorado Attorney General:

• Colorado Attorney General John Suthers announced [last week] that his office has filed separate lawsuits against three businesses and five individuals accused of defrauding homeowners in Denver, Boulder, Broomfield and Adams counties through deceptive foreclosure rescue schemes. [...] All of these defendants are suspected of defrauding homeowners out of substantial equity in their homes through an elaborate foreclosure rescue scheme in violation of the Colorado Foreclosure Protection Act.

• According to the complaints filed in Denver District Court, consumers facing foreclosure were approached by the defendants with a proposal to save their homes. The defendants promised to use the equity in the homes to halt the foreclosures and, in some cases, to make improvements to the properties.

• Homeowners were instructed to transfer title to their properties to investors arranged by defendants,(2) who would then lease the properties back to the original homeowner with an option to repurchase their homes. The complaints allege that many homeowners were subsequently evicted and that none of them were ever able to exercise their repurchase options. All of the equity in their homes was lost to the defendants.(3)

For the Colorado Attorney General press release, see Attorney General announces lawsuits against individuals, companies engaged in fraudulent foreclosure rescue activities.

(1) The first complaint, State of Colorado v. Lynn, et ano., charges Jason L. Lynn (DOB: 3/10/1977) and Lynn’s company, Superior Financial Group.

The second complaint, State of Colorado v. Brunner, et al., charges Patrick C. Brunner (DOB: 7/27/1979), Brunner’s company, Platinum Financial Group, Jerry Ohu (DOB: 6/10/1974), Ohu’s company, Fortune Financial Group, Gregory D. Hoffman (DOB: 8/21/1969) and William J. Schultz (DOB: 7/29/1974).

(2) According to the civil lawsuits filed by the Colorado Attorney General, the sale leaseback peddlers arranged for a sale of the homes to investors, converting any of the home equity into cash by financing the deal with a mortgage loan from a financial institution, and subsequently using assignments to divert those net proceeds into their own pockets.

Attorneys General in Massachusetts, Arizona, Maryland and Washington State have enjoyed recent success in bringing civil lawsuits prosecuting sale leaseback foreclosure rescue peddlers by invoking their respective state consumer protection statutes, See:

• Massachusetts: Massachusetts AG Concludes Civil Action Against Equity Stripping Attorney, Five Confederates For Using Sale Leaseback Racket To Rip Off Homeowners (for the lawsuit setting forth the allegations, see Commonwealth of Massachusetts v. Sohmer, et al.),

• Massachusetts: Mass AG Obtains Civil Judgments Against Five Accused In Equity Stripping, Sale Leaseback, F'closure Rescue Racket; Case Against 9 Others Still Pending,

• Arizona: Two Phoenix Cops Shelved On Administrative Leave After Agreeing To $458K Settlement With AZ AG For Roles In Alleged Illegal Sale Leaseback Deals (for the lawsuit setting forth the allegations, see State of Arizona v. Shaw, et al.),

• Arizona: Foreclosure Rescue Operator To Cough Up $690K+ To Resolve Arizona AG Civil Charges In Alleged Sale Leaseback Equity Stripping Scam (for the lawsuit setting forth the allegations, see State of Arizona v. Winer, et al.),

• Arizona: Arizona Foreclosure Rescue Operator Ordered To Pay $1.2M In Home Sale, Leaseback Program (for the Arizona Attorney General press release setting forth the allegations, see Terry Goddard Files Fraud Suit Against Virtual Realty),

• Maryland: MD AG Wins "Rescue" Scam Civil Suit; Settles w/ Lenders Who Financed Bogus Sale Leasebacks, Saves Homes For Some, Clips Closing Agent For $100K (for the Maryland Attorney General press release setting forth the allegations, see Attorney General Gansler Announces Judgment of More Than One Million Dollars in Restitution and Penalties in Foreclosure Rescue Scam),

• Washington State: Washington AG Scores Big Win In Bogus Equity Stripping, Land Trust/Sale Leasebacks & Surplus Ripoffs; Foreclosure Rescue Operator Tagged For $4.2M (for the lawsuit setting forth the allegations, see State of Washington v. Kaiser, et al.).

The New Jersey Attorney General's Office has also brought civil lawsuits in sale leaseback cases which are currently pending:

• Foreclosure Rescue Operator Violated State Consumer Fraud Act By Using Bogus Sale Leasebacks To Strip Equity From Homeowners, Says NJ AG In Civil Suit (for the lawsuit, see Milgram v. Property Solutions of NJ Inc., et al.),

• NJ AG Targets 39 In Suits Alleging Equity Stripping, Sale Leaseback Scams; Involved $13.5M In Bogus Loans & 48 Homeowners Screwed Out Of $3M+, Says AG (for the lawsuits, see Milgram v. Vest Financial LLC, et al. and Milgram v. JP Global Property Management, Inc., et al.).

(3) Although this action was brought as a civil lawsuit in which no criminal allegations have been made, the sale leaseback arrangements alleged by the Colorado AG, which employ the use of a third party investor to obtain institutional financing to sap the equity out of the target homes, appear to be simliar in nature to those deals that have been the subject of criminal prosecutions by various law enforcement authorities. See Criminal Prosecutions Of Sale Leaseback Peddlers In Equity Stripping Foreclosure Rescue Deals.