Attorney General Announces Three New Mortgage Fraud Complaints

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TRENTON – Continuing the state’s attack on mortgage fraud, Attorney General Anne Milgram announced yesterday the filing of three new fraud lawsuits charging a total of 14 individual and corporate defendants.

“The lawsuits we announce (on Thursday) involve three separate complaints, but they share a common thread of greed, human callousness and disregard for the law,” said Milgram. “In one way or another, each of the defendants in these complaints is charged with making money by selling false hope to trusting people during uncertain economic times.”

One of the state’s three complaints charges a disbarred lawyer, Martin Gendel of Montville, and his son, Seth Gendel of New York City, as well as their companies Casey Properties and Lee Alan LLP, with violating New Jersey’s Civil Racketeer Influenced and Corrupt Organizations (RICO) statute.

The suit charges the Gendels, along with six other defendants, with using deception—and the credit information of their unwitting victims – to obtain fraudulent mortgage loans and turn a profit via the sale of urban properties at grossly inflated prices. Casey Properties basically duped its victims into buying homes in Newark, Paterson, Irvington and East Orange that were the subject of bogus appraisals, then profited by taking fees out at closing from the inflated equity.

The defendants told investors Casey Properties would take care of all aspects of the sale, as well as property management—including finding tenants, collecting rents, paying the mortgages and making needed repairs. However, Casey never did maintain the homes or keep up the mortgage payments. In the end, victims had their credit ruined and were left responsible for dilapidated homes that had been foreclosed on and abandoned. At the same time, the municipalities were left to deal with dozens of nuisance properties. In some cases, tenants were left to live in squalor, without utilities, as conditions deteriorated and properties fell into foreclosure. Some renters ended up homeless when their houses were declared uninhabitable.

Altogether, Casey Properties is accused of persuading at least 32 investors to buy 63 properties that sold for a total of $18 million.

In the other two lawsuits announced today, two unrelated companies in South Jersey—Hope Now Financial Services Corp. of Cherry Hill and New Hope Modifications of Bellmawr—are charged with selling loan modification services that never materialized, and with creating the false impression they were affiliated with a non-profit foreclosure prevention organization known as the Hope Now Alliance. Among other services, the Hope Now Alliance offers free credit counseling with federally-approved counselors.

As part of the actions announced on Thursday, Milgram said, the state has asked the court to shut down a web site operated by Hope Now Financial. Since at least November 2008, Hope Now Financial has advertised loan modification services through a web site at www.hopenowmod.com.

By posting a video, news articles and links to federal government press releases, the profit-seeking Hope Now Financial has falsely suggested an affiliation with the non-profit Hope Now Alliance, Milgram said. In fact, Milgram noted, there is no connection. Moreover, Hope Now Financial is accused in the state’s lawsuit with charging significant fees for loan modification services that were never delivered.

To date, 23 consumers living in New Jersey and out of state have filed complaints against Hope Now Financial with either the Division of Consumer Affairs or the Better Business Bureau. The total amount of money paid by those victims to Hope Now Financial exceeds $29,000.

The third lawsuit announced today charges the Bellmawr-based New Hope Modifications with similar fraud for representing themselves as having an affiliation with the Hope Now Alliance, and for also selling loan modification services that were never provided. To date, the state has identified 80 victims of New Hope, and the total amount of money collected from those victims exceeds $98,000.

Like Hope Now Financial, New Hope Modifications is accused of victimizing New Jersey consumers and those living out of state.

“This kind of predatory activity is reprehensible, especially in this economic climate, and will not be tolerated,” said Department of Banking and Insurance Commissioner Steven M. Goldman. ”Struggling homeowners were led to believe these companies would help them, but instead the homeowners were exploited. Any individual or financial services organization that attempts to defraud consumers will be subjected to the maximum penalty the law allows.”

Among other things, each of the state’s three complaints asks the court to order a halt to the defendants’ business practices. The lawsuits also seek consumer restitution, imposition of the maximum civil penalties and a freezing of the defendants’ assets.

In its Casey Properties lawsuit, the state also asks that defendants be ordered to pay to repair or rehabilitate buildings that were allowed to deteriorate, and reimburse the cities of Newark, Paterson, Irvington and East Orange, as well as the state, for costs incurred in dealing with the dilapidation and foreclosure. The state also asks that the defendants pay “reasonable expenses” associated with relocating displaced tenants to clean, safe housing.

The Attorney General urged any member of the public who has been a victim of mortgage-related fraud to report it by calling the Division of Consumer Affairs. New Jersey residents can call the toll-free hotline at 1-800-242-5846. Consumers from out of state can call 973-504-6200. Those seeking to file a complaint can also visit the Division’s Web site at www.njconsumeraffairs.gov.

Milgram also reminded homeowners facing foreclosure that free help may be available to them through the state’s foreclosure mediation program. She urged distressed homeowners to explore what help is available through the program by calling the toll-free hotline number at 1-800-989-5277 or visiting the Web site at www.NJForeclosureMediation.org. Through the foreclosure mediation program, qualified homeowners who are in danger of losing their homes can receive help from housing counselors, attorneys and a neutral mediator to resolve loan delinquencies.


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