Arizona AG Sues Two for Loan Modification Fraud

AUG 23, 2012 3:08pm ET

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On Aug. 15, Arizona Attorney General Tom Horne announced two lawsuits have been filed against Arizona companies selling mortgage modification services to distressed homeowners
The lawsuits are against Phoenix-based Making All Homes Affordable LLC and its owner Albert Figueroa; and Tucson-based La Paz Source LLC, its owners, Maria Beltran and her husband, Francisco Ramos and their new operation La Placita Multi Services LLC owned and operated by Beltran and an individual named Arturo Gomez Leon.
The lawsuit against MAHA alleges that MAHA and Defendant Figueroa violated the Consumer Fraud Act by misrepresenting the nature and value of the MAHA program, which MAHA advertises exclusively in Spanish language media and sells in face-to-face meetings in MAHA’ office and at several “retail outlets” in Phoenix and Tucson, including at the office of La Placita. The lawsuit alleges that MAHA salespersons tell potential clients that MAHA can help them obtain specific, favorable mortgage modifications, including lower interest rates and principal reductions. After homeowners pay MAHA nearly $1,900, homeowners discover that the MAHA program is nothing more than a do-it-yourself program, allowing them access to various standardized forms and information on MAHA’s website; forms and information that are available for free on government websites. The lawsuit also alleges that MAHA uses dozens of fake consumer testimonials on its website and that MAHA charges its clients a fake sales tax of 9.3%. 
The lawsuit against La Paz Source and La Placita alleges that La Paz Source  was an Arizona LLC who advertised as providing foreclosure consultant services. Consumers have reported that La Paz Source promised to stop the foreclosure process, obtain loan modifications for its consumers and communicate with lenders/servicers on behalf of its clients. As La Paz Source, the defendants allegedly claimed they were authorized to conduct such business in Arizona when they were not duly licensed to conduct their business here. Oftentimes, La Paz Source charged very large upfront fees, which were prohibited by state and federal law, and then failed to provide the mortgage loan modification services required to earn those fees. In some cases, the clients lost their homes in the process. 
In November 2011, Beltran and Ramos dissolved La Paz Source LLC. The same day that the defendants dissolved La Paz, Beltran and Arturo Gomez Leon started La Placita which also held itself out as being a provider of mortgage loan modification services to Arizona consumers. 
The defendants deceptively and willfully target the Spanish-speaking community in Arizona to obtain a benefit through the exploitation of the consumers’ Spanish/English language barrier. The defendants provide contracts written only in English. Many times, the defendants verbally explain terms of the agreement to consumers, in Spanish, that are in direct contradiction to the written provisions of the contract provided in English. 

The La Paz and La Placita defendants now claim to have changed their business model to that of a retail outlet for MAHA. The complaint further alleges: the defendants continue falsely to guarantee consumers that the defendants’ services will result in foreclosure prevention and a favorable loan modification; the defendants hold themselves out to the community as experts in mortgage loan modifications and use deceptive means to lure distressed homeowners into parting with hundreds or thousands of dollars, then the dfendants take their money without providing the efficacy, nature, or kind of services for which the consumer bargained; and that the defendants charge consumers a fee they call a “sales tax,” but those monies are not remitted to the Arizona Department of Revenue. Furthermore, the defendants represent that they are compliant with state and federal laws when they routinely violate the FTC M.A.R.S rule banning upfront fees for mortgage assistance relief services. (azag81512)


I wonder if the attorney general is seeking an “asset freeze.” If so it is going to be difficult for the individual defendants to pay for their attorneys. You can follow along by going to the Maricopa County and Pima County court web sites and check on the case numbers. Usually the calendar is printed there and the type of documents filed. So sometimes you can see who is saying what to whom and how they are defending.



On July 24, California Attorney General Kamala D. Harris announced defendants who ran a national loan modification scam were ordered to pay more than $4 million in penalties and restitution, including $2 million to consumers who were falsely promised modifications of their mortgage loans.

More than 1,000 customers paid more than $2 million for loan modification services to Statewide Financial Group Inc., which did business as US Homeowners Assistance and Webeatallrates.com, and was based in Orange County.

The Orange County Superior Court ordered that every US Homeowners Assistance loan modification customer should receive a full refund upon request. The defendants were also permanently enjoined from engaging in the conduct that led to the lawsuit and were ordered to pay $2 million in civil penalties

The prosecution of this action took nearly three years, culminating in a multi-week bench trial in March. The business’ owners, Zulmai Nazarzai and Hakimullah Sarpas and Fasela Sheren (who went by the name Sharon Fasela), were all found liable for violating California’s Unfair Competition Law and False Advertising Law.

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