At the request of the Federal Trade Commission, a U.S. district court has halted a
nationwide scam operating from the Dominican Republic – but pretending to be in Chicago – that allegedly peddled fake mortgage assistance relief to financially distressed Spanish-speaking homeowners in the United States. The defendants promised to dramatically lower homeowners’ monthly mortgage payments in exchange for a hefty upfront fee, and collected more than $2 million in fees during the last three years, but failed to provide homeowners with the promised services, according to the FTC complaint.
Speaking in Spanish and targeting homeowners behind in their payments or facing foreclosure, the telemarketers would empathize about the tough economy and claim to provide information about federal mortgage assistance programs, according to the complaint. In lengthy sales calls, the telemarketers would lie to create a sense of trust, falsely claiming to be affiliated with or approved by the consumers’ lenders or the government, and “making sure to mention President Obama or the Making Home Affordable Program by name,” according to documents filed with the court.
Charging what they said was a one-time advance fee of $995 to $1,500, the callers allegedly falsely promised homeowners a mortgage modification in 30 to 90 days, often advising them to stop paying their lenders. The callers often promised that when the loan modification was finalized, the homeowners’ lenders would forgive any past-due payments and late fees, the complaint states.
Homeowners who signed up received a batch of forms in the mail that required them to provide extensive personal and financial information and pay an advance fee, according to the complaint. After paying the fee and not hearing further from the defendants for weeks afterward, some homeowners who managed to reach a live representative were told that the modification process was underway, but they needed to pay up to several thousand dollars in additional fees. In the end, the FTC alleged, few homeowners got any loan modification – or anything else of value from the defendants. And what they did receive, they could have gotten for themselves for free.
The court order stops the illegal conduct and freezes the operation’s assets while the FTC moves forward with the case.
As part of its continuing crackdown on scams targeting consumers in financial distress, the FTC charged Minnesota resident David F. Preiner, who allegedly owns and directs six companies named as corporate defendants in the scam:
The complaint charges the defendants with violating the FTC Act and the Mortgage Assistance Relief Services Rule, known as the MARS Rule, by:
The FTC would like to thank Pro Consumidor: Instituto Nacional de Protección de los Derechos del Consumidor of the Dominican Republic; the Idaho Department of Finance, Consumer Finance Bureau; the Utah Department of Commerce, Division of Real Estate; and the Better Business Bureau of Chicago and Northern Illinois for their assistance in this case.
The Commission vote authorizing the staff to file the complaint was 5-0. The FTC filed the complaint and request for a temporary restraining order in the U.S. District Court for the Northern District of Illinois, Eastern Division on July 23, 2012, and the court granted the FTC’s request the same day.
NOTE: The Commission files a complaint when it has reason to believe that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law.
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.