AZCentral: Maricopa County officials are trying to find the root causes of legal claims lodged against their agencies in hopes of reducing future legal exposures and costly payouts.
Over the last six months, the county’s risk-management department has launched a new program to work more closely with department officials to determine whether policies should be changed and whether staff should be retrained to prevent future legal claims.
Arizona Republic: “The Goldwater Institute is asking the state Supreme Court to overturn a November Court of Appeals ruling that validated Mesa’s practice of assessing new-home buyers a fee that is used to enhance the city’s museums and cultural programs.”
The following is the text of Arizona Attorney General Terry Goddard’s press release dated December 8, 2010:
Goddard Announces $458,000 Judgment in Fraud Case Involving Two Police Officers
“Attorney General Terry Goddard today announced a judgment totaling $458,000 in civil penalties and restitution for consumers as a result of a mortgage fraud investigation and lawsuit. These enforcement actions come as part of Goddard’s continued crackdown on businesses and individuals that prey upon homeowners struggling to avoid foreclosure.
On November 24, 2010, Goddard filed a lawsuit on behalf of his Office and the Arizona Department of Financial Institutions against Lee Brent Shaw of Gilbert and Mark Tallman of Chandler and their limited liability companies, Better Choice Investments, LLC, and Better Solutions, LLC, alleging that they defrauded some 148 Arizonans of their homes. Both Shaw and Tallman are also Phoenix Police Officers.
In the suit, Goddard alleged that between 2003 and 2007, the two defendants, through their Better Choice Investments, LLC, purchased sale-leaseback transactions from solicitors who had convinced homeowners to sell their homes for far less than the market value, promising to save them from foreclosure.
The solicitors persuaded struggling homeowners to deed them their homes in return for assuming their monthly mortgage payments and paying off the full value of their delinquent payments, often using funds advanced by defendants. The lease agreement provided for a monthly fee equivalent to the mortgage payment to remain in the home as a renter. Neither the owner’s mortgage lender nor servicer was notified of the transfer of title.
After the initial paperwork was signed, the deal was quickly turned over to defendants Shaw and Tallman, in return for a commission paid to the solicitors. The defendants recruited a pool of investors willing to assume co-ownership and refinance, for a 50 percent share in the profits
The owners-turned-renters had the option to repurchase the house within one year for a fee of approximately $15,000, if they met all of the conditions of the sale-leaseback agreement. If the owner-turned-renter violated any of the conditions, such as by making a late rental payment or being evicted, the option to repurchase the home became void and the individual was subject to immediate eviction.
Almost all of the owners-turned-renters proved unable to repurchase their properties, at which time the defendants sold or refinanced the home at full market value, earning profits in the tens of thousands of dollars.
“The Attorney General’s Office will continue to fight those profiting from mortgage foreclosure fraud at all stages of the process, whether it is the door-to-door solicitors or the investors who make the scheme possible.” Goddard said.
In November 2009, the Attorney General resolved the case against the solicitors who found the properties and initiated the transactions: Richard Winer and his companies Taken Care of Investments, LLC, Homeowner Solutions, LLC, Bourbon Street Property Management, LLC, and Filibuster, LLC.
The lawsuit claims that the defendants acted in concert with Winer to violate numerous state laws, including the Arizona Consumer Fraud Act, and the Arizona Debt Management Companies Act, by knowingly purchasing the fraudulently obtained properties.
According to the terms of the settlement, defendants must:
● Pay $310,000 in restitution to homeowners victimized by their scheme.
● Pay $148,000 in civil penalties to the Attorney General’s Office and the Arizona Department of Financial Institutions.
● Pay $27,717 in costs and attorney’s fees.
● Refrain from participating as a director or officer in any financial institution or enterprise licensed by the Arizona Department of Financial Institutions.
● Refrain from engaging in any activity requiring the issuance of a license under the authority of the Arizona Department of Financial Institutions.
● Refrain from any ownership interest in a sale-leaseback transaction.This case was handled by Assistant Attorney General Rebecca Salisbury. Copies of the complaint and consent judgments are attached.
The Attorney General’s Office website includes a page dedicated to helping homeowners avoid foreclosure rescue scams and loan modification scams, as well as locate legitimate services and programs available to them. To access this page, go to www.azag.gov and click on “Foreclosure Resource Center.”
BCI complaint
ConsentJudgement-Shaw
ConsentJudgementTallman
ConsentJudgement-BetterChoiceBetterSolutions
Arizona Republic: “An unlikely Arizona political trio stood outside the U.S. Supreme Court on Wednesday and expressed confidence that the nation’s high court would uphold an Arizona law that punishes employers who knowingly hire illegal immigrants.”
The following is the text of a December 6, 2010, press release from the office of the Arizona Attorney General:
Phoenix, Ariz. – Dec. 6, 2010) Attorney General Terry Goddard today filed complaints against two Arizona companies, alleging violations of the Arizona Consumer Fraud Act in connection with the marketing of purported “principal reduction” services for home mortgages.
One lawsuit was filed against Principal Reduction Group, LLC, of Scottsdale, and its owner, Brian Cutright. It alleges that between July and September of this year the company has charged some 100 Arizona homeowners up to $6,000 to participate in its principal reduction program.
The complaint alleges that Principal Reduction Group mailed hundreds of thousands of mailers to Arizona homeowners that were designed to appear as if they were from the homeowners’ lenders announcing the lenders’ principal reduction program and the possibility that the homeowners might qualify for it. The complaint further alleges that Principal Reduction Group misled consumers by emphasizing its purported relationship with investors who would purchase homeowners’ mortgage notes at a discount and then pass on some of the savings to the homeowner in the form of a lower mortgage payment.
The company allegedly failed to disclose that the company had no binding agreement with any investor to do anything for its clients and misrepresented successful results when, in fact, the company had not achieved principal reductions for any of its clients. The company is also accused of falsely telling consumers that federal programs and funds were a component of its services.
Goddard, together with Superintendent Lauren W. Kingrey of the Arizona Department of Financial Institutions, filed a second lawsuit today against Queen Creek Mortgage, LLC, of Mesa, a licensed mortgage broker, which has marketed its service to some 180 homeowners this year at fees of up to $5,500. The complaint alleges that the company touted its partnership with investors who would purchase its clients’ mortgage notes at a discount and pass on some of the savings to consumers in the form of lower mortgage payments. In fact, Queen Creek Mortgage had no binding agreement with any investors to do anything on behalf of the company’s clients.
The complaint also alleges that Queen Creek Mortgage misrepresented the relevancy of federal programs and funds to its program. The company is alleged to have misled clients by telling them they could expect significantly lower mortgage payments if they joined the program. The company is further accused of failing to disclose that it would send clients’ files and personal information to an out-of-state third party for work on their files once Queen Creek Mortgage collected the clients’ fees. The out-of-state company was not licensed to engage in mortgage broker or mortgage banker activities in Arizona.
In both cases, the State is requesting that the court prohibit the companies from engaging in unlawful activities and that it order them to provide restitution to consumers who paid for principal reduction services and pay the State civil penalties and fees. Assistant Attorneys General Cherie Howe and Natalia Garrett are handling these cases.
For more information, contact Janey Pearl at (602) 542-8019.
If you believe you have been a victim of consumer fraud, please contact the Attorney General’s Office in Phoenix at 602.542.5763; in Tucson at 520.628.6504; or outside the Phoenix and Tucson metro areas at 1.800.352.8431. To file a complaint in person, the Attorney General’s Office has satellite offices throughout the state with volunteers available to help. Locations and hours of operation are posted on the Attorney General’s Web site, www.azag.gov. Consumers can also file complaints online by visiting http://www.azag.gov/consumer/complaintform.html.
Principal Reduction Group Complaint
Queen Creek Mortgage Complaint