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The Federal Trade Commission has filed three separate suits in federal court to halt the allegedly deceptive tactics of three operations that preyed on distressed homeowners by falsely claiming they could save their homes from foreclosure, and then charging them thousands of dollars up-front, while delivering little or no help and often driving them deeper into debt.

“With many homeowners still struggling to hold onto their homes, the FTC takes a hard line against con artists who are seeking their next victim,” said Jon Leibowitz, Chairman of the Federal Trade Commission.

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Leibowitz appeared with U.S. Attorney General Eric Holder, FBI Associate Deputy Director Kevin Perkins, and HUD Secretary Shaun Donovan, and announced the FTC cases as part of the Distressed Homeowner Initiative, a federal effort to stop predatory foreclosure rescue, mortgage modification, short sales, and bankruptcy schemes that target distressed homeowners.   

Since 2008, the FTC has brought more than 40 cases against companies peddling fraudulent mortgage relief schemes, that caused hundreds of millions of dollars in consumer injury.  These law enforcement actions have helped tens of thousands of consumers who were victims of these scams, and have prevented tens of thousands more from becoming victims. 

In November 2010, the FTC issued the Mortgage Assistance Relief Services (MARS) Rule, which provided new protections and banned mortgage foreclosure rescue and loan modification services from collecting fees until homeowners have a written offer from their lender or servicer that they deem acceptable.

In all three cases announced today, the FTC took action against defendants who allegedly peddled bogus mortgage relief services, in violation of the FTC Act and the MARS Rule.  The agency also charged that two of the operations violated the Telemarketing Sales Rule.

Prime Legal Plans/Reaching U Network.  The FTC alleged that from at least mid-2010, the defendants behind this scheme marketed mortgage relief services in English and Spanish, including under the names “Reaching U Network,” and “American Legal Plans.”  They allegedly told consumers who were in debt that attorneys would review their mortgage loan documents to see if their lenders complied with state and federal mortgage laws, and would use the resulting “forensic audit” information to help save their homes and negotiate more favorable mortgage terms.  The defendants told consumers that “80 percent of mortgages contain some fraud,” and “Our network attorneys have helped hundreds of Americans stay in their homes,” according to the FTC complaint.

But instead of helping consumers, the defendants charged them up to $750 a month, while little or nothing was done to save their homes from foreclosure, and running an operation that a court found was “permeated with illegal practices” , according to the FTC.

The FTC alleged that on company websites, the defendants would falsely claim to be a “private charity working for struggling consumers that can’t afford legal representation.”  When responding to consumers who called the toll-free number on the websites, and when cold-calling consumers, including those listed on the Do Not Call registry, the defendants routinely failed to provide the disclosures required by the MARS Rule, collected up-front fees, and misrepresented the results that consumers could expect, according to the complaint. The FTC charged that the defendants violated the Telemarketing Sales Rule, the FTC Act, and the MARS Rule by:  calling consumers whose numbers were listed on the Do Not Call Registry; not paying the required annual fee to access the Registry; misrepresenting that they would get mortgage modifications to make consumers’ payments significantly more affordable and help prevent foreclosure, and that they would use so-called forensic audits to do this;  misrepresenting the amount of time it would take to get results; failing to provide required disclosures about mortgage modification relief; and collecting advance fees.      

 A federal judge granted the FTC’s request for a temporary restraining order and ordered a freeze of the defendants’ assets and the appointment of a receiver.  The preliminary injunction hearing is scheduled for October 11, 2012.        

American Mortgage Consulting Group.  The FTC alleged that since early 2011, the defendants claimed a phony affiliation with the U.S. government, pretended to be attorneys, and promised to substantially lower monthly mortgage payments in exchange for an up-front fee ranging from $1,495 to $4,495.  Along with two companies he controls – American Mortgage Consulting Group, LLC and Home Guardian Management Solutions, LLC – defendant Mark Nagy Atalla allegedly violated “nearly every provision of the Mortgage Assistance Relief Services Rule.”

The defendants telemarketed mortgage relief services to consumers nationwide, often stating that they were paid by the federal government to assist homeowners and obtain so-called “Home Saver” grants from the government to reduce consumers’ up-front fees, according to the FTC’s complaint.  They also allegedly proclaimed themselves to be “a California Professional Legal Team,” sent documents to consumers from their so-called “Legal Department,” and referred to their operation in e-mails as a “law office.”

The defendants claimed they were virtually certain they could obtain loan modifications for their clients, and that the clients would receive a full refund if that did not happen, even though they did little or nothing to help consumers and they failed to provide refunds, according to the FTC. 

Also, in violation of the MARS Rule, the defendants allegedly told consumers to stop communicating with their lenders, and failed to disclose that:

  • consumers would only have to pay the defendants if they accepted the terms of the mortgage assistance the defendants obtained from their lenders;
  • the defendants are not associated with the government and their services are not approved by the government or the consumer’s lender; and
  • even if a consumer used the defendants’ services, the lender may not agree to change the terms of the consumer’s loan.

By their actions, the defendants diverted consumers in danger of losing their homes from pursuing authentic, government-affiliated programs, and duped them into paying thousands of dollars based on false promises and misrepresentations, according to the complaint.

A federal judge granted the FTC’s request for a temporary restraining order and preliminary injunction, froze the defendants’ assets, and appointed a receiver.

Expense Management America.  Presenting themselves as the solution to all the consumer’s financial problems, the defendants have cold-called thousands of U.S. consumers from their call center in Montreal since at least mid-2010, including those whose numbers were registered on the Do Not Call Registry, according to the FTC complaint.

Whether the consumer was struggling with a mortgage, credit card debt, student loans, car payments, or a poor credit score, the defendants charged an up-front fee of $2,200 to $10,000 that they claimed was being used to pay off debts, according to the complaint.  The defendants allegedly claimed that their relationships with lenders and their ability to negotiate on behalf of large groups of consumers made it possible to substantially reduce their payments.  But according to the FTC, the defendants failed to produce any of the promised results.

The defendants – Expense Management America, six affiliated companies, and five individuals, who operated in Canada and the United States – also used a series of websites that lured consumers to call them, according to the complaint.  After pitching consumers by phone, the defendants allegedly would send brochures and financial documents to consumers via e-mail, and obtain their authorization to withdraw funds from their checking accounts.  One brochure, the Expense Management Guide, explicitly told consumers they must follow the “Golden Rule,” which was to cease communicating with their creditors and let the defendants do the talking:

“Sometimes [creditors will] go to extremes in an attempt to force you into an agreement by saying things such as ‘We’ve never heard of E.M.A.’  Or ‘We don't deal with them.’ ... Sometimes [creditors] even break the law.  Don't be fooled by them.  Let E.M.A. do the talking!” The FTC charged that the defendants violated the Telemarketing Sales Rule, the FTC Act, and the MARS Rule by:  falsely claiming they could secure more affordable payments and reduce the principal on consumers’ loans; making deceptive claims about the price and material aspects of debt relief and other goods and services; charging advance fees for debt relief; calling consumers whose phone numbers are listed on the Do Not Call Registry; telling consumers not to communicate with their lenders; and failing to make the disclosures required by the MARS Rule. 

For consumer information about avoiding mortgage and foreclosure rescue scams, see Your Home at the FTC website Money Matters.

The Prime Legal Plans/Reaching U Network complaint names as defendants:  Prime Legal Plans, LLC; Consumer Legal Plans LLC (Nevada); Consumer Legal Plans, LLC (Wyoming); Frontier Legal Plans LLC, 123 Save A Home, Inc.; American Hardship LLC; Back Office Support Systems LLC; Consumer Acquisition Network, LLC; Legal Servicing and Billing Partners LLC; Lazaro Dinh; Kim Landolfi; Derek Radzikowski; Andrew Primavera; Christopher Edwards; and Jason Desmond.  The complaint also names The 2007 San Lazaro Irrevocable Life Insurance Trust and its trustee, Maria Soltura, as relief defendants.

The Expense Management America complaint names as defendants: E.M.A. Nationwide, Inc., also doing business as EMA and Expense Management America; New Life Financial Solutions, Inc., also d/b/a New Life Financial, and New Life Financial Services; 1UC Inc., also d/b/a 1st United Consultants, and First United Consultants; 7242701 Canada Inc.;  7242697 Canada Inc.; 7246293 Canada Inc., 7246421 Canada Inc.; James Benhaim, a/k/a Jimmy Benhaim; Daniel Michaels, a/k/a Dan Michaels, a/k/a Dan Michles; Phillip Hee Min Kwon, a/k/a Phillip H. Kwon; Joseph Shamolian; and Nissim N. Ohayon.

The FTC would like to thank the California Bar Association for its valuable assistance in bringing the action announced today against American Mortgage Consulting Group.

The FTC would like to acknowledge the Royal Canadian Mounted Police and the Centre of Operations Linked to Telemarketing Fraud (Project COLT) for their valuable assistance in bringing the action announced today against Expense Management America.  Launched in 1998, Project COLT combats telemarketing-related crime, and includes members of the Royal Canadian Mounted Police, Sureté du Québec, Service de Police de la Ville de Montréal, Canada Border Services Agency, Competition Bureau of Canada, Canada Post, U.S. Homeland Security (U.S. Immigration and Customs Enforcement and the U.S. Secret Service), the U.S. Postal Inspection Service, the Federal Trade Commission, and the Federal Bureau of Investigation. Since its inception, Project COLT has recovered $22 million for victims of telemarketing fraud.

The Commission votes authorizing the staff to file the complaints and seek temporary restraining orders against defendants in the Prime Legal Plans/Reaching U Network, Expense Management America, and Home Guardian Solutions cases were all 5-0.  The FTC filed the Prime Legal Plans/Reaching U Network complaint and request for a temporary restraining order in the U.S. District Court for the Southern District of Florida, and the court entered the documents on September 24, 2012.  The preliminary injunction hearing is scheduled for October 11, 2012.  The agency filed the American Mortgage Consulting complaint and request for a temporary restraining order in the U.S. District Court for the Central District of California, Southern Division, and they were entered by the court on September 18, 2012.  The agency filed the American Mortgage Consulting complaint and request for a temporary restraining order and preliminary injunction in the U.S. District Court for the Central District of California, Southern Division, on September 18, 2012. The TRO was entered by the court the same day, and the preliminary injunction was entered on October 1.  The FTC filed Expense Management America complaint in the U.S. District Court for the Northern District of Ohio on September 25, 2012.

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 cases will be decided by the court.

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.

Contact Information


Betsy Lordan
Office of Public Affairs