Homesafe America Inc. and its successor corporation, United Solutions Law Firm, is the subject of a court order issued by Justice John M. Galasso of the Nassau County Supreme Court requiring it to cease operations. The sweeping order shuts down one of New York’s largest mortgage scam operations pending trial. The order is the most substantial victory to date in a year-long legal campaign against loan modification scams in New York and nationwide.
The companies are alleged to have scammed more than a thousand low- and middle-income homeowners by falsely promising to help customers modify the terms of their mortgages. The order also prevents Homesafe‘s two founders ““ Guy Samuel and Scott Schreiber ““ from engaging in mortgage-assistance relief services.
The case, Mook v. Homesafe America Inc., began on June 28, 2011, when a group of fifteen homeowners sued the companies and nearly two dozen employees for fraud, deceptive practices, false advertising, and various other claims. Among their demands, victims are seeking $1.5 million in punitive damages and an order permanently preventing all defendants from working in the mortgage assistance industry. The homeowners are being represented free of charge by the Lawyers’ Committee for Civil Rights Under Law and Davis Polk & Wardwell LLP.
Among other claims, Plaintiffs are alleging that the scam companies violated a New York statute known as the “Deceptive Practices Act,” which empowers injured consumers to operate as “private attorneys general”: under the Act, an individual victim may seek an injunction against an alleged scammer on behalf of all consumers. Using this forceful yet rarely used remedy, non-profit organizations like the Lawyers’ Committee, in partnership with the private bar, can step in and shut down scam operations when state and local enforcement agencies lack the resources to do so.
Attorneys for the homeowners recently unearthed documents indicating that Samuel and Schreiber operated a string of companies that affected thousands of homeowners. On July 26, 2011, Justice Galasso ordered Defendants to turn over nearly 70,000 pages of customer files, which the Lawyers’ Committee and Davis Polk are currently reviewing to determine the breadth of the operation. These materials supplement documents discovered earlier this summer in which Samuel admitted to running an “illegal” operation that grossed more than $2 million in 2010.
These lawsuits are part of a broad anti-scam coalition, called the Loan Modification Scam Prevention Network (“LMSPN”). LMSPN also includes representatives from key governmental agencies, such as the Federal Trade Commission, the U.S. Department of Housing and Urban Development (HUD), the U.S. Department of Justice, the U.S. Department of the Treasury, the Federal Bureau of Investigation, and the offices of numerous state Attorneys General. Since the launch of the LMSPN database in February 2010, more than 15,000 homeowners have reported scams or potential scams, totaling over $35 million lost. Over 800 of those complaints come from New York State residents, with reported losses of over $3 million.
In addition to Mook v. Homesafe, the Lawyers’ Committee and Davis Polk have filed two other major lawsuits in New York, both against a network of companies operating in Nassau County, New York under the names “Express Home Solutions,“ “Save My Home,” and “Home Preserve Law Group.” On June 28, 2011, plaintiffs obtained a temporary restraining order against the companies and various owners and employees and are currently awaiting trial.
Homeowners who believe they have been the victim of a scam are encouraged to call either 311 in New York City or 888-995-HOPE (4673) or visit www.preventloanscams.org and click the link “Report a Scam!“ Those who have a complaint against the entities named in the Homesafe and EHS cases should email firstname.lastname@example.org.
“We are committed to fighting this scourge through lawsuits like this and through coordination with and assistance to federal, state and local law enforcement,” said Lawyers’ Committee Chief Counsel and Senior Deputy Director Jon Greenbaum.
The Lawyers’ Committee and Davis Polk are representing victims free of charge.