USTP Obtains $1.1 Million From 12 People Involved In A Foreclosure Defense And Loan Modification Scam
The U.S. Bankruptcy Court awarded the Bankruptcy Court’s U.S. Trustee Program (USTP) a $1.1 million judgment against 12 defendants. The defendants collaborated in a nationwide scheme to defraud vulnerable homeowners facing foreclosure.
The USTP’s complaint arose out of a chapter 13 bankruptcy case filed by a homeowner from West Monroe, Louisiana. The homeowner had sought mortgage assistance to avoid a foreclosure sale. The homeowner paid a $1,100 retainer for what he believed was legal representation. They followed that with payments of $500 monthly payments debited from his bank account.
The homeowner believed was represented by defendants’ local counsel in Louisiana. However, the attorney never communicated with him or provided any assistance. The fraudster’s associate sent the homeowner a bare-bones bankruptcy petition prior to the foreclosure sale. He instructed the homeowner to list the mortgage lender as his only creditor. He then instructed the homeowner how to file it on his own. The bankruptcy court dismissed the petition a month later. Apparently, the homeowner failed to provide proof of required pre-bankruptcy credit counseling. He also failed to pay the filing fee.
Foreclosure Defense And Loan Modification Scam Busted!
After an eight-day trial on the USTP’s complaint, the U.S. Bankruptcy Court entered judgment against NVA Financial Services LLC; its president and sole member Steven Nahas and Karen Kisch. In addition to the defendants’ managing attorney and nine associates involved in the business.
The court found evidence that the defendants used the scheme to push homeowners into frivolous pro se bankruptcy cases. This was done so the defendants could continue billing the homeowners. The USTP introduced evidence at trial showing that the scheme resulted in at least 186 abusive bankruptcy filings.
The defendants continued to debit the homeowner’s bank account for loan modification services. They did this while pressuring him to file another bankruptcy case.
The homeowner hired a local Bankruptcy attorney after he received notice of a rescheduled foreclosure sale. However, the defendants repeatedly pressured him to fire the attorney and allow them to continue to “work his file.”
The homeowner’s new attorney reopened the bankruptcy case and negotiated a loan modification for the homeowner.
The Court Lays Down The Gavel On The Defendants!
The bankruptcy court concluded that the 12 defendants had abused the Bankruptcy Code in at least 186 abusive bankruptcy filings. The defendants tried to earn as much money as possible. They also abused the bankruptcy process to hide their involvement in the scheme.
In addition to the $1.1 million verdict, the court temporarily suspended the defendants’ local counsel in Louisiana. The court suspended the attorney from practicing before the bankruptcy court. The court also referred them to Louisiana’s attorney disciplinary authorities for violations of professional conduct rules. Authorities also referred two associates involved in the business to disciplinary authorities for unauthorized practice of law.
Read More About Bankruptcy Fraudsters On MFI-Miami.com.
