Madigan alleges debt settlement scams

Bryan Cohen Oct. 19, 2011, 1:28pm


CHICAGO (Legal Newsline) - Illinois Attorney General Lisa Madigan filed lawsuits against three Chicago area companies on Tuesday for allegedly fraudulent mortgage rescue and debt settlement schemes.

The lawsuits, filed in Cook County Circuit Court, allege the defendants took large upfront fees from consumers with a promise to help them obtain a loan modification on their mortgage or to reduce their growing debt. The companies allegedly did little or no work on the consumers' behalf.

The defendants are: Debt Care Financial Group Inc., and its president Malgorzata Baran; Starlex Financial Consulting LLC; Flagship Mortgage Corporation and employees Jeffrey M. Entratter and Neil Borland; and E.A.C. Financial LLC and its owners Everett D. Pope and Colbi Andry.

"These companies are nothing more than scam operations, illegally charging consumers upfront fees but doing no work to help modify their loan or negotiate with creditors," Madigan said. "They scammed families out of thousands of dollars while putting people deeper in debt and at higher risk for foreclosure."

The lawsuit against Baran and Debt Care Financial Group alleges that the defendants advertised debt settlement and loan modification services in the Chicago area's Polish community promising to reduce the debt of consumers by 50 percent to 70 percent. Baran allegedly charged consumers a total of at least $66,000 for work she never performed and repeatedly ignored consumers' refund requests. Baran also allegedly harassed or intimidated consumers.

Starlex Financial and Flagship Mortgage allegedly charged consumers between $500 and $950 in upfront fees for loan modification services that were never performed. Consumers allegedly lost more than $4,800 in the schemes.

Madigan alleged that E.A.C. also charged consumers fees of as much as $2,000 each upfront for help in obtaining debt settlement or loan modification. Consumers were allegedly told to stop making payments to their creditors while the alleged services were being provided, leaving some consumers facing higher payments in the end.

Coakley is asking that the courts shut down the businesses and obtain restitution for consumers. The lawsuits also seek to bar the defendants from providing debt settlement or mortgage rescue services in Illinois and to order each defendant to pay civil penalties for the alleged violations of the Consumer Fraud or Mortgage Rescue Fraud Act.

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