FTC Settlement with Foreclosure Scammers

On December 4, 2015, The Federal Trade Commission (“FTC”) reached an agreement to end litigation with five of the six defendants stemming from the complaint filed April 15, 2015, against Chad Caldaronello, Derek Nelson, Brian Pacios, Cortney Gonsalves, and Justin Moreira, DBA HOPE Services and HAMP Services.  Litigation against a sixth defendant, Denny Lake, has not settled.

The original complaint, which was filed under seal, sought to obtain permanent injunctive relief, rescission of contracts restitution, refund of monies paid, and disgorgement of ill-gotten gains against the defendants for violating §5(a) of the FTC Act, the FTC’s Telemarketing Rule and the Mortgage Relief Servicers Rule (“MARS Rule”).

The defendants offered services to borrowers in foreclosure under the names HAMP and HOPE, the names associated with the $75 billion federal government program which was instituted to stabilize the U.S. housing market by preventing foreclosures.

The defendants allegedly made material misrepresentations by stating that the borrowers were pre-approved for the government programs and that their mandatory trial payments would be held by their own lenders in a trust account and refunded if a permanent modification was not approved.  The defendants allegedly conspired to keep borrowers from contacting their lenders where they would have easily discovered the fraud.  Borrowers claimed they did not receive modifications or refunds and the lenders never received the stolen trial payments which had been deposited into the bank of account of another one of the defendants’ businesses Trial Payment Processing. 

The HOPE defendants allegedly scammed distressed borrowers through a telemarketing program where callers implied that they were part of the government programs.  The telemarketers went so far as to complain about government cut backs as an excuse for phone calls that were not returned in a timely manner.  The defendants used the actual government forms from the Making Homes Affordable website but omitted the seventh and final page which contained a disclosure warning consumers not to pay mortgage payments to anyone but their lenders.  Defendants also used a sophisticated mailing program in conjunction with the telemarketing scam where they used the HAMP government seal, making their correspondence look official.

The settlement included a 2013 contempt action against Brian Pacios.  Defendants Pacios and Caldaronello are permanently banned from selling credit related products and from using aliases (four of the defendants used multiple aliases).    Pacios, Caldaronello and Moreira are also permanently banned from telemarketing.  Moreira and Nelson are prohibited from using material misrepresentations and unsubstantiated claims to sell financial services and products.  Nelson is banned from telemarketing without strict record keeping in accordance with the terms of the settlement. 

Pacios and Caldaronello have been ordered to pay $2.7 million, the amount consumers paid in fees.  Moreira is subject to the same judgment which will be satisfied upon the surrender of assets delineated in the settlement agreement.   Nelson will pay $859,839 and Gonsalves will pay $218,760, the amount profited from the scam.

The FTC had a unanimous vote to authorize the stipulated final orders.  The U.S. District Court for the Central District of California entered the order On November 3, 2015, for Caldaronello, Pacios and Moreira and on December 4, 2015, for Nelson and Gonsalves.

For more information, please contact:

Nadine Lewis
Nadine@lewislawassociates.com 
8560 W. Sunset Boulevard
5th Floor
West Hollywood, CA 90069
310.617.8584

Consumer Financial Services Committee

Chair
Jennifer Duncan  
ResortCom International LLC
jduncan@resortcom.com

Vice Chair of Communications 
Alicia Tortarolo
Hudson Cook LLP
atortarolo@hudco.com

Vice Chair of Programming
Andrew Noble
Severson & Werson
awn@severson.com

Vice Chair of Membership
Scott M. Pearson
Ballard Spahr LLP
pearsons@ballardspahr.com

Vice Chair of Legislation
Brian Farrell
Sheppard Mullin Richter & Hampton LLP
bfarrell@sheppardmullin.com

Secretary
Avital Samet
TrueAccord
avital@trueaccord.com