Nevada Attorney Used Loophole in New York Law to Scam Homeowners

There’s a new kind of fraud in the mortgage scam market – it’s called ‘upfront loan modification fraud.’ It’s only done by lawyers. While according to a 2010 rule issued by the U.S. Federal Trade Commission, upfront fees cannot be charged by loan modification companies, a loophole in a similar law allowed scamming of homeowners.

A similar law to that of the FTC passed in New York in 2008 gained a flaw when in 2009; an amendment was made to provide an exception for attorneys providing legal advice on loan modifications to home owners.

Anthony Blackwell, who is licensed to practice as an attorney in Nevada set up branches in New York and worked in collusion with mortgage modification company Homesafe America Inc, to extract thousands of dollars in upfront fees from homeowners, purportedly for loan modifications that were never made.

Among several lawsuits involving upfront-loan-modification scam filed in Nassau County, Blackwell’s is the latest. Linda Mullenbach, senior counsel at the Lawyers’ Committee for Civil Rights Under Law, told the media that Blackwell’s scheme is part of a disturbing trend in which lawyers charge upfront money to homeowners for advice, and then disappear without providing promised service.

The Lawyers’ Committee has filed seven similar lawsuits against different parties over loan modification schemes since 2010, with five of them in Nassau County.

In an earlier case filed on March 5, the Lawyers’ Committee alleged that the Law Offices of David Green were involved in frontend-loan-modification fraud. Green has since stated that the allegations are unproven and that he intends to contest the suit.

In the case of Blackwell, both the law firms, Consumer First Law Group and United Solutions Law Firm seem to have vanished and no working phone number could be traced for either company. While the plaintiffs in the Blackwell case are seeking at least one million dollars in damages, Blackwell could not be contacted by anyone. The phone number listed for Blackwell in Nevada attorney registration records was found not working.

Talking on behalf of the plaintiffs, Mullenbach said “Victims who are desperate to try to find a resolution are trusting of the fact that when someone is a lawyer and they need legal advice, they’re actually getting legal advice.” This trust of the public in the profession is being abused and misused in the present cases.

The case is Squassoni et al. v. Blackwell et al., in the Supreme Court of New York, Nassau County, No. 3571/12.