Lawyers’ Committee Files Suit on Behalf of Distressed Homeowners who Lost Thousands to Alleged Loan Modification Scam
New York, NY – December 21, 2012 – (RealEstateRama) — The Lawyers’ Committee for Civil Rights Under Law (Lawyers’ Committee) and pro bono counsel McDermott Will & Emery LLP (McDermott) filed a lawsuit, Culliver et al. v. Alarcon Law Group, P.C. et al., in Kings County, New York on behalf of 17 homeowners from New York and nine other states against a network of for-profit loan modification companies. The suit alleges that defendants, led by New York attorney Rory M. Alarcon, defrauded vulnerable homeowners out of tens of thousands of dollars by falsely promising—for substantial upfront fees and also monthly membership fees—to obtain much-needed mortgage modifications on their behalf, but consistently failing to deliver results.
According to the complaint, defendants advertised their loan modification services widely and used referral companies as agents to reel in struggling homeowners as victims of their scam. In exchange for advance fees of up to $8,085 collected in violation of New York and federal law, defendants (through their agents and employees) promised that they would work directly with plaintiffs’ lenders to renegotiate their home loans, secure lower monthly payments and interest rates, and, in some instances, avoid impending foreclosure. In some cases, defendants indicated that the payments would be applied to plaintiffs’ modified mortgage payments. The complaint alleges that defendants lured plaintiffs by using Mr. Alarcon’s status as an attorney to gain trust, touting their specialized experience in the industry, claiming high success rates with prior loan modifications, and often guaranteeing success with, in some cases, a money-back promise if no modification was achieved. Defendants, their employees, and their agents promised to work directly with homeowners’ lenders to expedite the approval process, and they instructed homeowners to cease all contact with their lenders and to stop making mortgage payments, falsely stating that these steps would help homeowners obtain a modification and avoid foreclosure.
As set forth in the lawsuit, despite these promises, defendants performed little to no work on plaintiffs’ loan modification applications, in some cases failing to make any contact with plaintiffs’ lenders and in all cases failing to fulfill the promises they made to plaintiffs. After working with defendants for months, not a single plaintiff received a refund. While some plaintiffs have been able to overcome the negative effects of defendants’ scam, others face a significant risk of foreclosure as a result of their interactions with defendants. Some have even lost their homes. “This is our seventh case filed in Long Island, New York since 2011, targeting this type of egregious scam activity which continues to have a severe impact on financially distressed homeowners who are desperately trying to save their homes,” said Linda Mullenbach, senior counsel for the Fair Housing and Fair Lending Project of the Lawyers’ Committee. “This case follows a disturbing trend of attorneys using their status as attorneys in an attempt to paint their loan modification ‘business’ as lawful. As a result of the scam activities, homeowners are placed in an even worse position when they are defrauded out of thousands of dollars in illegal fees, incur late fees, experience damage to credit scores, and face an increased risk of foreclosure as a direct result of the scammers who falsely claim to have specialized expertise.”
“This is a serious issue that has affected many struggling homeowners across the United States and in New York. We are grateful for the opportunity to partner with the Lawyers’ Committee on this important matter,” said Stephen Riccardulli, a trial partner in McDermott Will & Emery’s New York office. The complaint alleges that the loan modification scam in this case has resulted from a cooperative relationship among entity and individual defendants.
The entity defendants named are: Alarcon Law Firm, P.C., Alarcon Law Group, P.C., and Alarcon & Associates, P.C., all New York professional corporations operating out of offices on Long Island, and R.M.A. Legal Network, an unincorporated entity operating out of offices on Long Island. The individual defendant, New York attorney Rory M. Alarcon, runs each of the entity defendants. The lawsuit seeks monetary damages, including the return of the illegal upfront fees and monthly membership fees paid by Plaintiffs, and injunctive relief to put a halt to the deceptive practices of the named Defendants. [Click here to view Compliant]
Culliver et al. v. Alarcon Law Group, P.C. et al. is the Lawyers’ Committee’s twelfth loan modification scam lawsuit and its seventh in New York. As part of the Lawyers’ Committee’s work with the Loan Modification Scam Prevention Network (LMSPN), this litigation effort has sought to put an end to the fraudulent and deceptive behavior of so-called loan modification “specialists” in California, Florida, Virginia, Georgia and New York. LMSPN is a broad coalition that 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, the Consumer Financial Protection Bureau, and the offices of numerous state Attorneys General.
Since the launch of the national LMSPN database in March 2010 through November 30, 2012, more than 28,000 homeowners nationwide have reported loan modification scams or potential scams that have resulted in losses totaling over $66 million. New York homeowners have submitted 1,495 of these reports and have reported losses of nearly $5 million.
Homeowners who believe they have been victims of a scam are encouraged to call 888-995-HOPE (4673) or visit www.preventloanscams.org and click the “Report a Scam!” link. The Lawyers’ Committee and McDermott are representing the victims free of charge.
Read more about our loan modification scam litigation here:
http://www.lawyerscommittee.org/projects/fair_housing/page?id=0107
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The Lawyers’ Committee for Civil Rights Under Law (LCCRUL), a nonpartisan, nonprofit organization, was formed in 1963 at the request of President John F. Kennedy to involve the private bar in providing legal services to address racial discrimination. We are celebrating our 50th anniversary in 2013 as we continue our quest of “Moving America Toward Justice.” The principal mission of the Lawyers’ Committee is to secure, through the rule of law, equal justice under law, particularly in the areas of fair housing and fair lending, community development, employment; voting; education and environmental justice. For more information about the LCCRUL, visit www.lawyerscommittee.org.
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Stacie B. Royster
Director of Communications
Lawyers’ Committee
(202) 662-8317
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Christopher Rieck
Director of Media Relations
McDermott Will & Emery LLP
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