1) Sean Alan Rutledge, a California attorney, and United Law Group, Inc. (ULG), a California law firm he founded, have been charged in a lawsuit for bilking Ohioans who faced foreclosure out of thousands of dollars. The lawsuit alleges that the law firm promised foreclosure rescue and legal services to save homes and collected upfront fees but failed to deliver. In at least one instance a consumer was forced into foreclosure. ULG’s attorneys are not licensed to practice law in Ohio and never filed any court documents or provided legal representation on behalf of their clients.
According to the lawsuit, ULG solicited Ohioans over the phone and used high-pressure sales tactics to convince them to agree to foreclosure rescue services. Consumers then signed a Special Power of Attorney and Attorney-Client Fee Contract for representation on mortgages, loan modifications and foreclosures. To secure payment of the upfront fee ranging from $1,500 to $4,000, ULG asked for access to consumers’ bank accounts and then withdrew money without regard to scheduled payment dates. The lawsuit also states that ULG often cut off all contact with consumers after the final fees were debited.
In one case, a consumer was current on her mortgage, but defaulted into foreclosure after she hired ULG and they instructed her to stop making payments.
In November 2009, the State Bar Court of California ruled that ULG founder Sean Alan Rutledge was to be involuntarily enrolled as an inactive member of the State Bar of California for his conduct, which was found by the court to pose “a substantial threat of harm to his clients or the public.”
2) In a separate action, Ohio Attorney General Richard Cordray filed a lawsuit against Guardian Services Group, also based in California, for promising foreclosure rescue services to Ohioans, accepting upfront fees and never delivering. The suit accuses the company of charging consumers thousands of dollars and refusing to provide refunds even though the services were never provided.
In each case, Cordray is asking the courts for a permanent injunction, restitution to consumers and civil penalties of $25,000 for each violation of Ohio’s Consumer Sales Practices Act. The lawsuits are part of an ongoing statewide investigation into foreclosure rescue companies operating in Ohio. To date, Cordray has filed nine lawsuits against businesses targeting Ohio consumers and has issued more than 30 cease and desist orders.
In early January 2010, Cordray secured a judgment of $81,894 against Michael Brotherton, who operated Financial Emergency, Inc., a rescue business in Greene County, Ohio. The judgment, filed in the Common Pleas Court of Greene County, stemmed from a lawsuit filed in June charging Brotherton with promising to negotiate debt settlements and loan modifications, collecting upfront fees for up to $1,269 and then failing to deliver. The court ordered full reimbursement to the five victims named in the case.
With these lawsuits, Ohio Attorney General Richard Cordray has filed against nine foreclosure rescue scam operations targeting Ohioans since taking office in January 2009. The lawsuits are part of a full-on effort to hold companies accountable for violating Ohio law in the wake of the foreclosure crisis. Cordray has additionally sued three mortgage servicers for unfair or deceptive loan modification practices. The lawsuits against Carrington Mortgage Services, American Home Mortgage Servicing Inc. and Barclays Capital Real Estate dba HomEq Servicing for violations of Ohio’s Consumer Sales Practices Act introduce an unprecedented legal strategy. To date, Cordray is the only state Attorney General in the country to use this strategy to hold mortgage servicers accountable.