A class action lawsuit seeking to recover millions of dollars in home equity allegedly bilked from hundreds of distressed homeowners in Maryland, Virginia and Washington was shifted to federal court yesterday, broadening its scope to multiple jurisdictions.
The 76-page suit, filed in U.S. District Court in Greenbelt, targets Metropolitan Money Store Corp. of Lanham and other defendants and supplants a similar lawsuit filed in Prince George's County Circuit Court last month. Lawyers who prepared both suits yesterday asked that the state suit be dismissed.
"As we kept investigating the case, it became clear that there were also federal charges to be asserted," said Scott C. Borison, an attorney with Legg Law Firm LLC in Frederick, which filed the lawsuit along with Civil Justice Inc., a Baltimore legal help group, and the Holland Law Firm PC, of Annapolis. "It was just better to go forward in federal court."
The lawsuit alleges violations of federal racketeering and real estate settlement laws and seeks unspecified damages for equity allegedly stolen from homeowners who thought they were being rescued from foreclosure. Under federal law those amounts can be tripled. It also charges the defendants with money laundering to evade taxes.
"Metropolitan Money Store was out stealing the equity in people's homes and on top of that, getting it tax free," said Borison.
Estimates of the number of people in the region caught up in the scheme range from 275 to 400.
Each is believed to have lost at least $85,000 in equity, Borison said.
Filed on behalf of three Prince George's County families, the new lawsuit covers everyone who was tricked into conveying the title of their properties, not just those in foreclosure, said Phillip R. Robinson, executive director of Civil Justice.
"It's just bigger than what we thought it was initially," he said. "Referrals come in every day. We're just getting inundated with calls."
His office received two referrals yesterday alone from the Maryland attorney general's office, he said.
In addition to Metropolitan Money Store, which billed itself as a foreclosure consultant and credit services business, the suit names its resident agent Jennifer McCall, of Beltsville; Joy Jenis Jackson, of Fort Washington, who participated in operating the company; Fordham and Fordham Investment Group Ltd., of Lanham and Kurt Fordham, of Beltsville, who took part in operating that company.
Also named were: RTE Title & Escrow LLC, of Largo; Sussex Title LLC, of Rockville; Diane Linda Jones, of Capitol Heights; Leticia Nicholls, of Takoma Park; Jamie Armand Clark, of Bowie; Alexander Jamil Chaudhry, of Rockville; Valerina Tomlin, of Lanham; Southern Title insurance Corp., of Baltimore; Chicago Title Insurance Company, of Baltimore; and 50 unnamed defendants.
Yesterday Chaudhry, resident agent for Sussex Title, said the company had also been tricked.
"It's my position that the company was a victim and that a fraud was perpetrated on the company," said Chaudhry. "We are aware of a state and federal investigation into this matter, and we're cooperating fully."
RTE Title & Escrow declined comment. Others named in the lawsuit did not return calls or could not be reached for comment.
The lawsuit claims that the perpetrators approached people who had significant equity in their homes but in many cases were facing foreclosure and offered to save their houses. They then arranged to sell the house to a straw buyer, telling homeowners they could remain in their house for a year and then repurchase it, according to the lawsuit. New, higher mortgages were then taken out on the property, allowing the equity to be siphoned off, the suit charges.
The state, as well as federal agencies, including the FBI and Secret Service, have been investigating Metropolitan Money Store.
"Obviously, we're very concerned about it, and we want to make sure that anyone who's been ripped off gets restitution," said Steven A. Silverman, chief of the consumer protection division of the Maryland attorney general's office. "It's under review as to how that might take place.
"If there's a sufficient basis for criminal indictment, that's the best way to get consumers back their money - especially if they're leaving or have left the jurisdiction," Silverman said. "The best news we've heard is that they appear to be out of business. It doesn't look like there will be additional consumers harmed. That's goal No. 1."