Wednesday, March 19, 2008
Judge Shuts Down Mortgagors as Brown Denounces ‘Fly-By-Night’ Lenders
By SHERRI M. OKAMOTO, Staff Writer
A Los Angeles Superior Court judge has frozen the assets of six predatory lending companies and shut them down, Attorney General Jerry Brown said yesterday.
“As the mortgage crisis worsens, a growing number of fly-by-night companies are employing utterly brazen tactics to push homeowners into illegal and unconscionable loans,” Brown said in a release. “The illegal sales practices of these companies, run by Eric Pony and his family, included psychological pressure, forgery and outright lies.”
Brown accused Lifetime Financial Inc., Nations Mortgage Inc., Greenleaf Lending Inc., Virtual Escrow Inc., Olympic Escrow Inc., Direct Credit Solutions Inc., Eric Michael Pony, his sister Paulette Pony, his mother Wilma Pony, Eli Hassine, John D H N Nielson, Carol Pencille, and Sibpun Ampornpet of using “bait and switch” tactics as part of a complex predatory lending scheme.
These companies targeted homeowners with adjustable rate mortgages, according to the documents filed with the court, and telemarketers solicited customers in Spanish, English and Tagalog, falsely claiming that the customer was pre-approved to refinance their mortgage for fixed rate loan a five or six percent interest rate, Brown explained.
If the customer was interested, the state alleged in pleadings, the companies would send a notary customers’ homes, sometimes as late as 11:45 p.m., to have the homeowners sign documents that contained different terms than those promised, or containing blank portions. If the customer complained about the documents, the notary would pressure the homeowner to sign the documents to “keep this great deal,” or write in the fixed rate promised but fund the loan at a higher adjustable rate.
Luis Garcia, a 75-year old disabled man from Peru with a limited understanding of English fell victim to this scam, the attorney general alleged. A representative from Lifetime Financial contacted him and negotiated a 50 year loan with a $1,000 monthly payment with Garcia in Spanish, according to the state’s pleadings. But the notary presented Garcia with paperwork in English that falsified his income and work history, and after refinancing, the pleading stated, Garcia’s monthly payments increased to $2,254 a month, and he ultimately lost his home.
The state’s pleadings further alleged that if a customer refused to sign the documents, then the companies would forge the signatures or obtain signatures from cutting and pasting signatures from other documents. The signatures would occasionally be blatantly misspelled, according to the press release.
The state cited Ron and Barbara Fitzgerald, who allegedly decided not to go through with a transaction with Lifetime Financial, but later learned that the loan had been processed even though Ron Fitzgerald had not signed all the paperwork, and Barbara Fitzgerald’s medical condition would have prevented her from signing any documents.
The attorney general alleged the companies also engaged other fraudulent and unlawful practices, such as:
•Offering thousands of dollars in cash without disclosing that the money would be used to cover exorbitant fees of up to $20,000.
•Failing to provide copies of signed documents and appraisal reports.
•Falsely claiming that the customer’s monthly payments included payments for taxes, insurance or pay offs for other debts or that their monthly payments would be reduced.
•Failing to honor requests to cancel loans.
The Attorney General’s Office took declarations from more than twenty individuals who had been victims of the companies. The attorney general alleged that numerous consumers have lost their homes to foreclosure, or face default, foreclosure and the loss of their homes as a direct result of this “criminal enterprise.”
The court’s order affects 16 separate commercial and residential properties worth over $6 million in Tarzana, Canoga Park, Studio City, Las Vegas, San Antonio, Sherman Oaks, North Hollywood, and Los Angeles, and 13 luxury cars, and shut the companies down.
In a release, Brown said that he is seeking an estimated $20 million in penalties and restitution and a permanent injunction against operating these businesses. He further said that he also intends to bring additional civil and criminal actions against other mortgage lenders and foreclosure consultants in the coming weeks as well.
San Bernardino District Attorney Michael A. Ramos also announced in a release that several individuals affiliated with the companies were arrested yesterday morning on charges including conspiracy, grand theft, forgery and elder abuse.
“These predatory lenders have taken advantage of people who placed their trust, as well as their homes, in the hands of these unscrupulous business people,” Ramos said, “We are pleased to be working with the State Attorney General’s Office in putting these predators out of business and in jail where they belong.”
Pencille, Ampornpet, Hassine, and two other individuals, Jason Imperial Burbidge and Jacob Shawn “Coby” Franco, were all in custody, according to the San Bernardino District Attorney’s office, however Eric Pony and his sister Paulette Pony were still at large.
Larry Roberts, lead deputy district attorney for the real estate fraud unit, said “we’re really hoping that the brother and sister Pony turn themselves in.”
Roberts also said that Pencille had retained Los Angeles attorney Robert A. Schwartz and that Eric Pony had retained Encino attorney Gerald Fogelman. Neither attorney could be reached for comment.
An internet search indicated conducted yesterday afternoon indicated that the companies’ names were highly similar to other businesses operating around the country. Randy Lee, president of Orange-based Virtual Escrow Title and Technology Solutions L.L.C. said his business was flooded with calls yesterday and a spokesman for Encino-based Nation Mortgage Inc. said he had frequently received calls intended for Nations Mortgage in the past.
Copyright 2008, Metropolitan News Company