As part of his crackdown on foreclosure rescue schemes, Arizona Attorney General Terry Goddard has filed a lawsuit against a foreclosure rescue operation that allegedly defrauded as many as 400 Arizona homeowners, according to a news release from the Office of the Attorney General (“Terry Goddard Files Lawsuit to Stop Foreclosure Rescue Operation,” March 5, 2009).

Goddard’s lawsuit alleges that Richard Winer and his associates purportedly identified homeowners facing imminent foreclosure through public records, approached these homeowners claiming to be experienced “distressed property consultants,” and fraudulently promised to stop foreclosure, in many cases, in as little as 24 hours.

“Instead of offering legitimate help to homeowners, this operation misled and exploited them to turn a handsome profit,” Goddard said. “The housing crisis has given rise to a number of rescue scams, and we are going after them aggressively.”

According to court documents, Winer was able to persuade troubled homeowners to sign over the deed to their house to one of his four limited liability companies: Taken Care of Investments, LLC; Homeowner Solutions, LLC; Bourbon Street Property Management, LLC; and Filibuster, LLC, without notifying the homeowner’s mortgage lender or servicer. He then promised homeowners that his company would pay off the full value of their delinquent mortgage payment and assume current payments on their home.

Homeowners were able to remain in their home as a renter and were promised that, within a year of the initial transaction, they could repurchase the property for a $15,000 fee under a sale-leaseback agreement. The lawsuit specifies that most homeowners weren’t able to repurchase their home because a clause in the sale-leaseback agreement nullified the offer after the homeowner-turned-renter made a single late rent payment.

Within two weeks of assuming responsibility of the homeowners’ properties, Winer was able to resell most of the homes to investors at wholesale prices and collect a commission from the sales. Investors were then able to flip the properties of homeowners who were unable to repurchase their properties, reselling them at full-market value.

If convicted, the court may require Winer to perform several actions:

• Pay full restitution to all victimized homeowners

• Forfeit $10,000 in civil penalties to the State of Arizona for each violation of the Consumer Fraud Act

• Forfeit $5,000 in civil penalties to the state’s Department of Financial Institutions for each violation of state debt management and mortgage acts

• Reimburse the State for all costs associated with the lawsuit

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