TAMPA, Fla. (CN) - Attorneys general from two states sued five law firms in Federal Court, claiming they took millions of dollars in upfront fees for putative mass-joinder lawsuits for homeowners facing foreclosure, but never provided services.
The attorneys general say in the 39-page lawsuit that the U.S. foreclosure crisis led to a drastic rise in predatory practices by firms like the defendants, who "made money by charging distressed homeowners upfront fees on the promise that they could obtain mortgage modifications for these homeowners, often providing little or no actual assistance."
Despite federal and state regulations curbing the activity, the AGs say "veterans of such scams have shifted to selling homeowners' participation in so-called 'mass-joinder' lawsuits. Homeowners are led to believe that they will be represented by real law firms and that joining a mass-joinder lawsuit will help them avoid foreclosure, reduce their interest rates and loan balances, and entitle them to monetary compensation."
The prosecutors claim the defendants "misled thousands of homeowners nationwide and ... pocketed at least $4.7 million" by "sending misleading mailers that resemble class action notices to consumers notifying them that they are a potential plaintiff in a 'national' lawsuit against their particular mortgage lender or service for 'multiple claims of fraud and misrepresentation.'
"The mailers create a sense of urgency for consumers to enroll by a certain date or risk exclusion and induce consumers into believing that by 'opting-in' they will receive a reduced interest rate, lower monthly payment, principal reduction, loan forgiveness, and monetary damages."
Here are the defendants - the Resolution Law Group and Berger Law Group together are called the RLB/BLG Enterprise:
Berger Law Group, P.A., of Tampa;
Ian Berger, of Tampa, an attorney, president of the Berger Law Group, and "the Enterprise's newest front man;"
Litigation Law LLC, an administratively dissolved Florida LLC founded by defendant DiGirolamo in May 2011, which operated out of Pinellas Park, Fla.;
Gary DiGirolamo, a nonattorney, of Mission Viejo, Calif., "the RLB/BLG enterprise's most senior manager;"
The Resolution Law Group, of Greenwich, Conn. and Tampa, Fla., a Connecticut corporation formed by defendant Broderick in November 2011;
Robert Geoffrey Broderick, of San Clemente, Calif., an attorney licensed in Connecticut, president of The Resolution Law Group, and "the Enterprise's front man;"
The Resolution Law Center, of Tampa, a Florida LLC former by defendant Friedman in December 2011;
David Friedman, of Tampa, a nonattorney who "manages and controls the RLG/BLG Enterprise's sales operation and is the president of defendant Resolution Law Center."
The attorney's general say that "although the RLG/BLG Enterprise charges consumers varying amounts, typically there is an initial upfront payment of typically $6,000, often described as an 'investigation fee,' followed by a $500 monthly 'maintenance fee.'
"The RLG/BLG Enterprise later induces consumers to continue making monthly payments by providing them with misleading information regarding the status and progress of the lawsuits and by making further misrepresentations regarding the benefits of participating in the lawsuits," according to the complaint.
DiGirolamo oversaw a similar operation in California that was challenged by that state's attorney general and resulted in the "entry of a final judgment and permanent injunction against DiGirolamo and two companies that he controlled," the attorneys general say in the complaint.
Despite being enjoined from contacting consumers regarding any real or imaginary lawsuits against lenders, DiGirolamo established the current scam in Florida and Connecticut almost immediately after the judgment, the prosecutors say.
The states seek an injunction preventing the defendants from contacting any more consumers regarding mass-joinder lawsuits, and civil penalties for misrepresentation, civil theft and violations of both the Connecticut and Florida Deceptive and Unfair Trade Practices Acts.