Ongoing NY Civil Litigation Triggered By Now-Convicted Crook's $8M Home Equity Refinance Swindle May Leave Lenders Liable For 21 L.I. Families' Losses

In Nassau County, Long Island, The New York Times reports:

• HOLDING banks accountable for all those disastrous mortgages has been remarkably difficult. But last week, a big bank agreed to pay a price: Bank of America announced that it would part with $8.5 billion to settle claims that its Countrywide Financial unit had packaged garbage loans into investments that were said to be safe.



• That is good news for investors, as these things go. But another, lesser-known case now winding its way through the courts may help others recover losses from lenders who dealt in risky mortgages and claimed that they had no duty to their customers.



• The case involves 21 families on Long Island and a convicted swindler named Peter J. Dawson. Mr. Dawson, a self-described financial planner, stole roughly $8 million from his clients, among them elderly parishioners at his church in Uniondale, N.Y. He pleaded guilty in state court in December 2007 and is serving 5 to 15 years in prison.



• What does this have to do with mortgage lenders? Home loans were central to Mr. Dawson’s theft. He persuaded people who had paid off all or much of their mortgages to take out new home loans and entrust him with the proceeds. He promised to pay off their new loans with income from investments. Instead, he absconded with their money. Many of his victims lost their life savings and now cannot afford to pay off the mortgages.

For more, see The Swindler and the Home Loans.

See Hennessy v. Dawson, No. 19368/06 (NY Sup. Ct. Suffolk Cty., May 20, 2011) for a 21-page trial court ruling detailing the allegations and allowing the case against the banksters to continue.