The Federal Trade Commission won a $2.6 million federal court judgment against three defendants behind a scheme that charged consumers large upfront fees and failed to deliver the mortgage modifications they promised.
The court also banned the three defendants for 10 years from telemarketing financial products or services; from selling mortgage modification, foreclosure rescue, and debt-relief products or services; and from collecting or attempting to collect from consumers who had agreed to purchase a mortgage-assistance product or service. The court ordered the defendants to destroy any consumer information they have collected within 30 days after the order takes effect.
The U.S. District Court for the Middle District of Florida, Tampa Division, entered permanent injunctions against three defendants. It also approved settlements with five more defendants in the case, and entered a default judgment against another defendant.
The FTC filed a complaint against the nine defendants behind the Crowder Law Group in a 2009 law enforcement sweep as part of its continuing effort to keep homeowners from being targeted by mortgage-related scams. The FTC alleged that the defendants behind Crowder Law Group promised relief from burdensome mortgages by falsely claiming they could modify consumers’ mortgages and substantially reduce their monthly payments; exaggerating the role an attorney would play in obtaining a loan modification; and pretending to be affiliated with a government agency.
All nine defendants were charged with violating the Federal Trade Commission Act and the Telemarketing Sales Rule. The operation involved a marketing company that contracted with a direct-mailing company to send oversized postcards to homeowners nationwide whose mortgage payments were at least two months in arrears. Each postcard offered financial relief to the homeowner and displayed a toll-free phone number and the signature of an attorney who was local to the homeowner and was paid $100 to accept the homeowner into the program. When homeowners called the toll-free number, a customer service representative collected financial documents and the $2,000 fee from the consumer.
The court found that the defendants, through the post cards and telephone procedures, assured homeowners that they had qualified for loan modifications. In fact, homeowners still had to go through the modification process with lenders, and it which was usually unsuccessful.
The judgment against defendants Richard Bishop, Brent McDaniel, and Tyna Caldwell, and the judgment against the defunct company Washington Data Resources included permanent injunctions and found them liable for a total of $2.6 million for the harm they caused consumers. After a five-day trial, the court found Bishop, McDaniel, and Washington Data Resources liable jointly for $1.97 million, and Caldwell liable for $665,000. If the defendants do not turn over their assets voluntarily, the Federal Trade Commission will move forward with seizing and selling them.
The court also approved settlements for other defendants in the case:
The court entered the order for Richard Bishop, Brent McDaniel, and Tyna Caldwell on June 8, 2012, and it entered the order for a default judgment against Washington Data Resources on June 20, 2012.
The Commission vote on August 17, 2011 approving the proposed consent order for Douglas A. Crowder was 5-0. The two Commission votes on November 17, 2010, to approve the proposed consent orders for Bruce Meltzer and Crowder Law Group, and Kathleen Lewis and Optimum Business, were 5-0. The U.S. District Court for the Middle District of Florida Tampa Division entered the orders for Meltzer and Crowder Law Group, and Lewis and Optimum Business, on March 25, 2011, and Douglas A. Crowder on September 28, 2011.
NOTE: The consent orders are for settlement purposes only and do not constitute an admission by the defendant that the law has been violated. Consent orders have the force of law when approved and signed by the District Court judge.
The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC's online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.