Ariz. AG secures restitution from mortgage loan firm

Bryan Cohen Apr. 11, 2011, 2:46pm


PHOENIX (Legal Newsline) - Arizona Attorney General Tom Horne announced a default judgment on Friday against a Scottsdale, Arizona-based mortgage loan firm that allegedly bilked consumers out of almost $4 million.

A Maricopa County Superior Court judge entered into the default judgment against Luis Belevan and Bryan Prehoda, who operated Guardian Group LLC until the company was shut down by the Department of Financial Institutions in May for engaging in unlicensed mortgage broker activities. Horne than filed a lawsuit against the company in July, alleging consumer fraud.

To protect consumers, Horne obtained an order to prohibit Prehoda and Belevan from engaging in any trade or occupation related to mortgage loans in Arizona in the future. The judgment requires that the two defendants comply with the Arizona Consumer Fraud Act.

"This default judgment is the result of a great deal of hard work on the part of the attorney general's office and the Department of Financial Institutions," Horne said. "Since the mortgage collapse began in 2008, predators such as those involved in this case have proliferated in Arizona, ripping off thousands of vulnerable, innocent victims. I am committed to investigating and prosecuting such actions to the fullest extent possible to defend Arizonans and to send a clear message that consumer fraud is a serious crime with serious consequences."

Guardian Group allegedly represented that it could help struggling homeowners to reduce the principal amount of their mortgage loan by negotiating with lenders to purchase a consumer note for less than face value and selling it. The company said it would modify the rate and terms of the consumers' mortgage loans to reduce the loan principal to 90 percent of the home's market value. Court documents allege that after collecting up-front fees, the company failed to provide the promised principal reduction program.

A cease and desist order was imposed on the Guardian Group in May and a civil monetary penalty of $100,000 was imposed.

"A number of loan modification scams have plagued our communities in recent months," Robert Charlton, the assistant superintendent of the Arizona Department of Financial Institutions, said. "Our department, in cooperation with the Arizona attorney general's office, moved quickly to stop the Guardian Group and limit the damages to Arizona consumers who can least afford this type of predatory activity."

The default judgment requires Guardian Group, Belevan and Prehoda to pay consumer restitution totaling $3,979,525 to reimburse 2,495 consumers $1,595 each. Horne obtained the maximum civil penalties allowed by the Arizona Consumer Fraud act of $10,000 per violation, which led to a civil penalty award of $24,950,000.

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