Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Mortgage assistance operation settles Arizona AG’s consumer fraud claims, (Nov 7, 2013)

By Tobias J. Gillett, J.D., LL.M.

A loan modification and foreclosure consulting company, its principal, and the principal’s wife have settled charges brought by the Arizona Attorney General that they engaged in deceptive telephone solicitations, the Arizona Attorney General has announced (State of Arizona ex rel. Thomas C. Horne v. Mortgage Relief Group, LLC, CaseNo. CV2011-005362).

The judgments against Mortgage Relief Group, LLC, doing business as Mortgage Assistance Group, Stan Nii-Addo Allotey, Jr., and Dennise Allotey bar the defendants from future foreclosure consulting and telephone solicitations and require Mortgage Assistance Group to pay $380,000 and the Alloteys to pay $90,000 in restitution and civil penalties.

According to the consent judgment with the Alloteys, Stan Nii-AddoAllotey, Jr., the sole owner of Mortgage Assistance Group, offered loan modification and foreclosure consulting services to Arizona consumers from approximately February 2008 until approximately January 2011. The operation allegedly charged upfront fees to Arizona consumers for foreclosure consulting services after July 29, 2010, despite an Arizona statute prohibiting such fees after that date. Allotey and his employees also initiated calls to consumers for the purpose of selling loan modification services without first filing a verified registration statement with the Arizona Secretary of State or obtaining a bond and filing a copy with the Arizona State Treasurer.

In addition to falsely stating that it would hold consumers’ funds in a trust account, the operation falsely represented its success rate in obtaining loan modifications, the amount of time it would take to obtain a loan modification, and the fact that the operation had “negotiating rights” making it more suited to negotiate with lenders than consumers. The operation falsely stated that it would remain in communication with consumers and would provide refunds within a 30-day cancellation period.

The Attorney General charged the operation with violations of the Arizona Consumer Fraud Act, the Arizona Telephone Solicitations Act, and Arizona’s foreclosure consultant statutes. The consent orders bar Allotey and his operation from future violations of those statutes; from engaging in any activity involving originating, closing, or modifying a consumer’s mortgage loan or obtaining a principal reduction on a consumer’s debt in Arizona; and from engaging in the sale of services or products through outbound telemarketing in Arizona.

Allotey is barred from misrepresenting a success rate; must clearly disclose and not misrepresent the terms of any refund policies; must obtain written acknowledgement of the terms of any refund policies and abide by those terms; and must honor requests for refunds made in accordance with the refund policies.

“We are giving priority to mortgage fraud cases because the people being cheated, who are facing foreclosure, can least afford to lose money,” said Attorney General Tom Horne. “ Cases such as this should be a reminder that nobody should ever agree to pay up-front fees for loan modification assistance services—these services are available for free.”

A default judgment obtained against Mortgage Assistance Group in May required it to pay $380,000 in restitution and civil penalties. The judgment against Stan and Dennise Allotey awards the state $250,000, but notes that the Alloteys had negative net worth according to their statement of financial condition. Therefore, if the Alltoeys pay $90,000 to the Attorney General under a payment plan and otherwise comply with the terms of the consent order, the judgment will be considered satisfied in full. However, if the Alloteys are later found to have misrepresented or failed to disclose their assets, the $250,000 civil penalty will immediately come due. The $90,000 will consist of $51,002 in restitution for consumers, $8,998 in investigative costs and attorneys’ fees, and $30,000 in civil penalties.

The case is No. CV2011-005362.

Companies: Mortgage Relief Group, LLC

News: ConsumerProtection Privacy ArizonaNews