Colo. AG puts end to alleged scheme
DENVER (Legal Newsline) - Colorado Attorney General John Suthers and John Walsh, the U.S. Attorney for the District of Colorado, announced the end of an alleged national foreclosure rescue scheme on Wednesday.
A civil action against Bella Homes LLC, Mark Stephen Diamond, Daniel Delpiano, David Delpiano and Michael Terrell resulted in a consent judgment against the company that permanently restricts its ability to work in the mortgage industry and businesses related to residential real estate.
As part of the judgment, Bella Homes and its associates must return any vehicles in their possession, return money frozen in the defendants' bank accounts, safe deposit cash, gold coins and an additional $300,000 paid by Mark Stephen Diamond to homeowner victims, and make an additional payment of approximately $200,000 over the next five years.
"This agreement not only will help Bella Homes' victims, but it also will bar the defendants from engaging in any kind of mortgage or foreclosure activity ever again," Suthers said.
"Foreclosure-rescue scams prey on distressed homeowners' desire to save their homes and to find any means to help fix their dire financial situations. Our work in cooperation with the U.S. attorney's office quickly shut down this scam and should send a message that we and our partners in law enforcement will vigorously pursue any foreclosure or mortgage scam preying on Colorado homeowners."
The defendants, through Bella Homes, allegedly engaged in a fraudulent scheme to solicit homeowners to convey the titles to their homes to Bella Homes for no consideration. This was allegedly set up to allow the homeowners to enter into supposed lease agreements to pay Bella Homes monthly rent instead of making their mortgage payments.
The defendants allegedly made multiple material misrepresentations to homeowners, including that Bella Homes would stop any foreclosure on the home and that Bella Homes would purchase or otherwise settle existing mortgage on the home from the lender. The defendants also allegedly misrepresented that federal law would give the homeowner the right to stay in the home for the duration of the lease with the company and that the homeowner would have the ability to repurchase the home in three years from the company for much less than the amount that was owed on the mortgage.
The defendants allegedly made the representations on a website and in documents and solicitations sent to homeowners throughout the country.
Bella Homes admitted in response to a subpoena that it had not purchased any mortgages as of October and that it lacked the capacity financially to buy mortgages. In total, 560 homeowners were allegedly victimized by Bella Homes. During the scheme, the company only acquired one mortgage before the lawsuit was filed. As part of the judgment, the one mortgage can be sold and the proceeds can be used to return the money to the victims.
The defendants confessed liability to counts six and seven of the complaint, which allege violations of the Mortgage Assistance Relief Services Rule. The defendants specifically confessed liability to violating Section 322.3(c) of the MARS rule by making a representation by implication or expressly about the efficacy, performance or benefits of any mortgage relief service without reliable and competent evidence that substantiates the representation is true, and violating Section 322.5(a) of the MARS Rule, which makes it a violation to receive or request payment of any fee or other consideration until a consumer has executed a written agreement between the consumer and the consumer's dwelling loan servicer or holder incorporating the mortgage assistance relief offer the provider obtained from the consumer's dwelling loan servicer or holder.