ATLANTA, GA – February 21, 2013 – (RealEstateRama) — On February 15, 2013, the Lawyers’ Committee for Civil Rights Under Law (Lawyers’ Committee) and pro bono counsel King & Spalding filed a lawsuit in the United States District Court for the Northern District of Georgia, Atlanta Division, against a purported loan modification company and other individuals. The case is brought on behalf of 18 African American plaintiffs, 17 of whom live in the Atlanta metro region and one who lives in Alabama. The suit alleges that the defendants, who operate in the metro Atlanta area, defrauded African American homeowners by inducing them to pay up to thousands of dollars in up-front fees for mortgage loan modification services that were never provided. Plaintiffs seek both monetary damages, including recovery of the illegal up-front fees, and injunctive relief to put an end to the defendants’ deceptive practices. The Lawyers’ Committee and King & Spalding are representing the plaintiffs free of charge. (Click here to view Complaint.)
“This case provides a sad example of how minority communities have been hit hard by foreclosure rescue scams and, in some cases, targeted for such scams,” said Linda Mullenbach, senior counsel, Fair Housing and Fair Lending Project of the Lawyers’ Committee. “We hope this action will send a message that targeting minority communities for scams will not be tolerated.”
The defendants named in the complaint are All American Home Assistance Services, Inc. (All American) and 12 individuals: Derek Harris, Lawrence Spear, Timothy Spear, Asim Spear, Lynette Townes, Taylor Yvet Bailey, Rick Davidson, Karen Johnson, Saleemah Cannon, ShAunta Moore, Tenephius Williams and Derrick Millin. The plaintiffs allege that the individual defendants initially operated the loan modification scam through National African American Relationships Institute, Inc. and NAARI Housing Counseling Agency, Inc. (the NAARI Entities). The complaint alleges that the individual defendants, through the NAARI Entities, engaged in a scheme to defraud and extract thousands of dollars from African American homeowners by promising to obtain loan modifications in exchange for up-front fees ranging from $900 to $3,500. The individual defendants represented that they would work with plaintiffs’ lenders to obtain mortgage loan modifications that would reduce their monthly payments, it is alleged. In most instances, the individual defendants instructed plaintiffs not to make their mortgage payments during the loan modification process. The individual defendants often guaranteed they would obtain a loan modification or touted a 90-99 percent success rate. The complaint alleges that instead of securing the loan modifications, the defendants performed little or no work on behalf of the plaintiffs. Rather, the individual defendants quickly became hard to reach. Eventually, the NAARI Entities closed their offices with no notification to plaintiffs beyond a recording on their old phone number. The NAARI Entities then filed a petition for bankruptcy.
After the NAARI Entities filed for bankruptcy in 2012, the fraudulent and illegal scam operation continued through a new corporation—Defendant All American, according to the complaint. The complaint alleges that the key individual defendants who operated the NAARI Entities —Timothy Spear, Lawrence Spear, and Derek Harris — together with Asim Spear, continue “business as usual” at Defendant All American, where they operate the same or substantially similar mortgage modification scamming activities to those that they previously engaged in through the NAARI Entities. The complaint also alleges that the individual defendants, operating through the NAARI Entities and then All American, targeted their scam operations on African American homeowners, in violation of the federal Fair Housing Act and other federal and state laws.
The plaintiffs’ claims against the defendants include violations of the Fair Housing Act and the Credit Repair Organizations Act, and claims of false advertising, unfair or deceptive practices, deceptive practices toward the elderly, fraud, breach of fiduciary duty, negligent misrepresentation, and unjust enrichment.
Sampson, et al. v. All American Home Assistance Services, Inc., et al., Civil Action No. 1:13-cv-495-WSD, is the Lawyers’ Committee’s 13th loan modification-scam lawsuit filed nationally as part of its work with the Loan Modification Scam Prevention Network (LMSPN). LMSPN is a broad coalition that 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 and the offices of numerous state attorneys general.
Since the launch of the national LMSPN database in March 2010, more than 29,000 homeowners nationwide have reported loan modification scams or potential scams that have resulted in total losses of over $69 million. More than 1,100 of these reports have been submitted by Georgia homeowners, with reported losses of over $1.6 million in loan modification scams. 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.
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About the Lawyers’ Committee
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.
Stacie B. Royster
Lawyers’ Committee for Civil Rights Under Law
Telephone: (202) 662-8317