Massachusetts AG Concludes Civil Action Against Equity Stripping Attorney, Five Confederates For Using Sale Leaseback Racket To Rip Off Homeowners

(This post was originally published on August 9, 2010.)

From the Office of the Massachusetts Attorney General:

• [Last week], Attorney General Martha Coakley’s Office concluded its case against former Brockton attorney Alec G. Sohmer and five other defendants over their roles in a 2006 foreclosure rescue scheme. The judgments entered [] by Judge Thomas Connolly against Sohmer in the amount of $620,000 and against the four remaining defendants collectively in the amount of $364,000, together with the judgment obtained last May in the amount of $41,204, resolve allegations that Sohmer, with the assistance of the other defendants, orchestrated an unlawful foreclosure rescue scheme against 26 homeowners.(1)

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• According to the complaint, Sohmer preyed on homeowners facing foreclosure by promising them that they could avoid foreclosure with refinancing through Timeless Funding. Instead, Sohmer allegedly deceived the homeowners into conveying their properties to himself or to his wife. The complaint alleges that Sohmer concealed his fraud by deceiving homeowners into signing documents purporting to allow them to stay in their homes by making monthly payments to Sohmer, and then to "repurchase" their homes from Sohmer by obtaining new financing.

• The lawsuit alleges Sohmer knew the homeowners would not be able to afford the monthly payments, or obtain the required financing to repurchase their homes because of the homeowners' financial distress and the onerous "repurchase" terms, After homeowners were unable to make the monthly payments, Sohmer then sought to evict them from their homes, and to sell their homes to new buyers. Sohmer also stripped the homeowners’ equity by charging fees, commissions and other payments.(2)

• In a related action, on July 20, 2010, the Attorney General’s Office obtained a favorable decision against Sohmer, resulting in the denial of Sohmer’s bankruptcy discharge. In October 2007, the Attorney General objected to Sohmer receiving a discharge from the Bankruptcy Court of all of his debts alleging, among other acts, that Sohmer filed false Schedules and a false Statement of Financial Affairs with the Bankruptcy Court, thereby concealing assets, and also failed to maintain adequate financial records to evaluate his financial condition. In her decision, Judge Joan Feeney found Sohmer knowingly and fraudulently made false oaths on his bankruptcy Schedules and Statement of Financial Affairs, intending to mislead the Bankruptcy Court Trustee and creditors.

• None of the attorneys involved in this scheme are currently practicing law in Massachusetts. The Supreme Judicial Court accepted Sohmer’s affidavit of resignation from the practice of law as a disciplinary sanction on September 28, 2009, suspended [Andrew] Palmer from the practice of law for 21 months on June 29, 2009, and accepted [Shaun M.] Ellis’ affidavit of resignation from the practice of law as a disciplinary sanction on other grounds, on April 28, 2009.(3)

• Two years ago, the Bankruptcy Court approved a settlement between the Attorney General’s Office and 10 mortgage lenders and servicers who funded or serviced the loans thereby facilitating Sohmer’s fraudulent foreclosure rescue transactions. With respect to the 26 properties, the agreement was designed to provide approximately $1.8 million in reduced mortgage obligations, and to return each homeowner to his or her financial position before the foreclosure rescue transaction occurred. The agreement also provided an opportunity for Sohmer’s victims to reacquire legal title to their homes.(4)

For the Massachusetts AG press release, see Attorney General Martha Coakley Obtains Judgments Against Alec Sohmer and Other Defendants in Alleged Mortgage Foreclosure Rescue Scheme (Obtains Favorable Decision In Bankruptcy Court Case Denying Discharge To Sohmer).

(1) For some of the relevant court documents and other information, see:

• Commonwealth of Massachusetts v. Sohmer - Amended Complaint,
• Motion to Approve Settlement Agreement,
• Settlement Agreement,
• Massachusetts AG press release: Bankruptcy Court Approves Settlement Between Attorney General’s Office and Ten Mortgage Lenders and Servicers Involved in Foreclosure Rescue Transactions.

See also: Foreclosure Rescue Sale Leaseback Deals Are Usurious Equitable Mortgages, Says Massachusetts AG's Civil Lawsuit.

(2) With respect to the Sohmer's confederates in this racket, the AG states that the court also entered a consent judgment for $90,000 against Sohmer’s wife, Jennifer Sohmer, who served as the purchaser and mortgage loan borrower for six properties in the foreclosure rescue scheme. Also entered were a consent judgment for $200,000 against former Norwell attorney Andrew Palmer, who served as the closing attorney for the foreclosure rescue transactions and default judgments against Timeless Funding, the corporation through which Sohmer marketed his scheme, in the amount of $130,000 in civil penalties, and against former Sandwich attorney Shaun M. Ellis, who referred distressed homeowners to Sohmer in exchange for a fee, in the amount of $34,000, to be used toward restitution and civil penalties, according to the AG's press release. A consent judgment against Edward de la Flor, a mortgage broker involved in many of the transactions, for $41,204 was entered on May 5th of this year.

(3) The victims of this scam who are owed restitution from Sohmer and the other attorneys involved in this racket might consider filing a claim with the Massachusetts Clients' Security Board of the Supreme Judicial Court, which manages and distributes the monies in the court's Clients' Security Fund to members of the public who have sustained a financial loss caused by the dishonest conduct of a member of the Massachusetts bar acting as an attorney or a fiduciary.

For similar "attorney ripoff reimbursement funds" established to reimburse clients who have suffered a loss due to the dishonest conduct of attorneys in other states and Canada, see:

• Directory Of Lawyers' Funds For Client Protection (courtesy of the American Bar Association);
• Check the USA Client Protection Funds Map;
• Check the Canada Client Protection Funds Map.

A similar fund in Minnesota that reimburses the public for ripoffs involving licensed real estate brokers, salespeople, and closing agents made a distribution to a victim of the same type of foreclosure rescue scam. See State Recovery Fund To Cough Up $116K+ To Compensate Elderly Victim Of Bogus Sale Leaseback Equity Stripping Scam Involving Licensed Real Estate Agent.

(4) See Court Approves Foreclosure Rescue Scam Settlement Between Massachusetts, Ten Lenders; Case Involved State AG Claims Of Equitable Mortgage, Usury, Etc..