Nine tied to finance fraud

Md. says scheme targeted distressed homeowners

July 11, 2008|By Hanah Cho | Hanah Cho,Sun reporter

The Maryland attorney general is accusing nine people of bilking distressed homeowners in a foreclosure rescue scheme and seeking to recover equity the state says was siphoned off.

According to a complaint filed in Baltimore Circuit Court, the defendants promised to help homeowners behind on their mortgages avoid foreclosure if they temporarily transferred ownership of their homes. The defendants then recruited "straw buyers" to purchase the homes and used the new mortgages to pay themselves "exorbitant and unreasonable fees," thereby stripping the homes of equity. The straw buyers then failed to make payments on the new mortgages, the complaint said. The straw buyers received $5,000 to $10,000 per transaction.

The complaint was filed June 24, but the last defendant was served yesterday. The attorney general's office is still determining how much equity was involved and the number of affected homeowners. The Consumer Protection Division has so far interviewed 13 consumers who claim to be victims, spokeswoman Raquel Guillory said yesterday.

The defendants did business in Baltimore City and Anne Arundel, Baltimore, Harford, Howard, Montgomery and Prince George's counties.

The latest complaint comes on the heels of last month's federal criminal indictments of eight defendants in Prince George's County involving a similar "foreclosure reversal scheme," in which they allegedly tricked more than 100 people and banks out of more than $35 million.

Across the country, mortgage schemes are becoming more common as foreclosures skyrocket amid the subprime crisis and declining home values. The Federal Bureau of Investigation found that the suspicious activity reports related to mortgage fraud jumped to nearly 47,000 in fiscal year 2007, a sevenfold increase over the previous four years.

"I haven't seen one foreclosure rescue transaction that was legal and legitimate and suitable for the homeowner ... in the hundreds of ones I've reviewed in the last three years," said Phillip Robinson, executive director of Civil Justice Inc., a nonprofit group that offers legal services to low- and moderate-income residents.

Robinson said homeowners should be wary about entering any transaction without seeking independent advice.

The defendants involved in the civil complaint are Rodney Spellen, of Columbia, a resident agent of Mid Atlantic Consulting Firm LLC; Jemel Lyles, of Bethesda, a resident agent of Absoloot Ventures Inc.; Brian Boyd, of Upper Marlboro, a resident agent of First Choice Property Management Firm Inc.; and Phillip George, of Great Falls, Va., a resident agent of Certified Title & Escrow Inc.

Other defendants named are Sahar Begun Ali of Columbia; Reggie Simmons of Laurel; Alan Muniu of Parkville; Jason Ford of Washington; and Thuy Thu Nguyen of Beltsville.

Ford's attorney declined to comment. Attorneys for other defendants could not be determined yesterday.

The state attorney general's office is asking the court for an injunction ordering a halt to the group's activities as well as restoration of money and property to affected homeowners and fines for the defendants.

The civil complaint originated from an investigation launched in August 2006 by the Maryland Department of Labor, Licensing and Regulation, which oversees the mortgage industry, after it received a call from a homeowner, said Stephen Prozeralik, assistant commissioner for enforcement.

"When the subprime crisis started to bubble up to the surface, these things were all over the place," he said.

hanah.cho@baltsun.com

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