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Federal Trade Commission v. US Foreclosure Relief Corp.

March 11, 2010

FEDERAL TRADE COMMISSION, THE PEOPLE OF THE STATE OF CALIFORNIA, AND THE STATE OF MISSOURI, PLAINTIFFS,
v.
US FORECLOSURE RELIEF CORP., A CORPORATION, ALSO D/B/A U.S. FORECLOSURE RELIEF, INC., LIGHTHOUSE SERVICES, AND CALIFORNIA FORECLOSURE SPECIALISTS, H.E. SERVICING, INC., A CORPORATION, CRESIDIS LEGAL, A PROFESSIONAL CORPORATION, A CORPORATION, ALSO D/B/A HOMEOWNERS LEGAL ASSISTANCE AND F/K/A CITADEL LEGAL, A PROFESSIONAL CORPORATION, GEORGE ESCALANTE, INDIVIDUALLY AND AS AN OFFICER OF US FORECLOSURE RELIEF CORP. AND OF H.E. SERVICING, INC., CESAR LOPEZ, INDIVIDUALLY AND ALSO TRADING AND DOING BUSINESS AS H.E. SERVICE COMPANY, ADRIAN POMERY, ESQ., INDIVIDUALLY AND ALSO TRADING AND DOING BUSINESS AS POMERY & ASSOCIATES, AND BRANDON MORENO, ESQ., INDIVIDUALLY AND AS AN OFFICER OF CRESIDIS LEGAL, A PROFESSIONAL CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Hon. James V. Selna United States District Judge

STIPULATED FINAL JUDGMENT FOR PERMANENT INJUNCTION AND SETTLEMENT OF CLAIMS AS TO DEFENDANTS US FORECLOSURE RELIEF CORP., H.E. SERVICING INC., GEORGE ESCALANTE, ADRIAN POMERY, AND CESAR LOPEZ

Final Judg. - Escalante, Pomery, Lopez

Plaintiffs Federal Trade Commission ("FTC" or "Commission", the People of the State of California, and the State of Missouri ("Plaintiffs") and Defendants US Foreclosure Relief Corp.; H.E. Servicing, Inc.; George Escalante; Cesar Lopez; and Adrian Pomery ("Defendants") have stipulated to the entry of a Final Judgment as to Defendants US Foreclosure Relief Corp., H.E. Servicing Inc., George Escalante, Adrian Pomery, and Cesar Lopez ("Judgment") by the Court to resolve all claims against Defendants set forth in the First Amended Complaint and all matters in dispute between Plaintiffs and Defendants in this action. Defendants have consented to entry of this Judgment without trial or adjudication of any issue of law or fact herein and have agreed that entry of this Judgment in the docket by the Court will constitute notice to Defendants of the terms and conditions of the Judgment. Defendants waive service of the First Amended Complaint.

FINDINGS

By stipulation of the parties and being advised of the premises, the Court finds:

1. This is an action by the FTC, People of the State of California, and the State of Missouri instituted under Sections 5 and 13(b) of the FTC Act, 15 U.S.C. §§ 45 and 53(b); various provisions of the Telemarketing Sales Rule ("TSR"), 16 C.F.R. Part 310; §§ 17200 et seq. and 17500 et seq. of the California Business and Professions Code; and §§ 407.020 and 407.935 to 407.943 of the Missouri Merchandising Practices Act, §§ 407.020 and 407.935-407.943 Mo. Rev. Stat. The Amended Complaint seeks both permanent injunctive relief and consumer redress for Defendants' alleged deceptive acts or practices in connection with the marketing and sale of mortgage loan modification and foreclosure relief services.

2. Plaintiff FTC has the authority under Sections 13(b) and 19 of the FTC Act, 15 U.S.C. §§ 53(b) and 57b, and the Telemarketing and Consumer Fraud Abuse Prevention Act ("Telemarketing Act"), 15 U.S.C. §§ 6101-6108, to seek the relief it has requested.

3. Plaintiff the People of the State of California, by and through Edmund G. Brown Jr., Attorney General of the State of California, have authority under Section 4(a) of the Telemarketing Act, 15 U.S.C. § 6103(a), under the California unfair competition law ("UCL") codified at California Business and Professions Code § 17200 et seq., and under the false advertising law ("FAL") codified at California Business and Professions Code § 17500 et seq., to seek the relief they have requested.

4. Plaintiff the State of Missouri, by and through its Attorney General Chris Koster, has authority under Section 407.100 of the Missouri Merchandising Practices Act to seek the relief it has requested.

5. This Court has jurisdiction over the subject matter of this case and has jurisdiction over Defendants. Venue in the Central District of California is proper.

6. The activities of Defendants, as alleged in the Complaint, are in or affecting commerce, as defined in Section 4 of the FTC Act, 15 U.S.C. § 44.

7. The parties stipulate and agree to entry of this Judgment, without trial or final adjudication of any issue of fact or law, to settle and resolve all matters in dispute arising from the conduct alleged in the Complaint to the date of entry of this Judgment. This settlement does not settle and resolve any matters not alleged in the Complaint. Defendants do not admit any of the allegations set forth in the Complaint, other than the jurisdictional facts, merely by stipulating and agreeing to the entry of this Judgment.

8. Defendants waive all rights to seek judicial review or otherwise challenge or contest the validity of this Judgment. Defendants also waive any claim that they may have held under the Equal Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this action to the date of this Judgment. Each settling party shall bear its own costs and attorneys fees.

9. Defendants waive any claim that they may hold against the Permanent Receiver, his employees, representatives, or agents.

10. This action and the relief awarded herein are in addition to, and not in lieu of, other remedies as may be provided by law, including both civil and criminal remedies.

11. Entry of this Judgment is in the public interest.

DEFINITIONS

For purposes of this Judgment, the following Definitions shall apply:

1. "Assets" means any legal or equitable interest in, right to, or claim to, any real or personal property, including, without limitation, chattels, goods, instruments, equipment, fixtures, general intangibles, leaseholds, mail or other deliveries, inventory, checks, notes, accounts, credits, contracts, receivables, shares of stock, and all cash, wherever located.

2. "Assisting others" includes, but is not limited to, providing any of the following goods or services to another person: (A) performing customer service functions, including, but not limited to, receiving or responding to consumer complaints; (B) formulating or providing, or arranging for the formulation or provision of, any telephone sales script or any other marketing material, including but not limited to, the text of any Internet website, email, or other electronic communication; (C) providing names of, or assisting in the generation of, potential customers; (D) performing marketing services of any kind; (E) providing legal services; or (F) acting or serving as an owner, officer, director, manager, or principal of any entity.

3. "Charitable contribution" means any donation or gift of money or any other thing of value.

4. "Credit" means the right granted by a creditor to a debtor to defer payment of debt or to incur debt and defer its payment.

5. "Debt relief good or service" means any good, service, plan, or program, including debt management plans, debt settlement, debt negotiation, and for-profit credit counseling, represented, expressly or by implication, to renegotiate, settle, or in any way alter the terms of payment or other terms of the debt between a consumer and one or more unsecured creditors, servicers, or debt collectors, including but not limited to, a reduction in the balance, interest rate, or fees owed by a consumer to an unsecured creditor, servicer, or debt collector.

6. "Defendants" means all of the Individual Defendants and the Corporate Defendants, individually, collectively, or in any combination. "Corporate Defendants"means H.E. Servicing, Inc., and US Foreclosure Relief Corp., also dba U.S. Foreclosure Relief, Inc., Lighthouse Services, and California Foreclosure Specialists. "Individual Defendants"means George Escalante, Cesar Lopez, and Adrian Pomery.

7. "Document" is equal in scope and synonymous in meaning to the terms "document" and "electronically stored information," as described and used in Federal Rule of Civil Procedure 34(a).

8. "Established business relationship" means a relationship between the seller and a person based on: (a) the person's purchase, rental, or lease of the seller's goods or services or a financial transaction between the person and seller, within the eighteen (18) months immediately preceding the date of the telemarketing call; or (b) the person's inquiry or application regarding a product or service offered by the seller, within the three (3) months immediately preceding the date of a telemarketing call.

9. "Financial related good or service" means any good, service, plan, or program that is represented, expressly or by implication, to (A) provide any consumer, arrange for any consumer to receive, or assist any consumer in receiving, credit, debit, or stored value cards; (B) improve, or arrange to improve, any consumer's credit record, credit history, or credit rating; (C) provide advice or assistance to any consumer with regard to any activity or service the purpose of which is to improve a consumer's credit record, credit history, or credit rating; (D) provide any consumer, arrange for any consumer to receive, or assist any consumer in receiving, a loan or other extension of credit; (E) provide any consumer, arrange for any consumer to receive, or assist any consumer in receiving, debt relief good or services; (F) provide any consumer, arrange for any consumer to receive, or assist any consumer in receiving any service represented, expressly or by implication, to renegotiate, settle, or in any way alter the terms of payment or other terms of the debt between a consumer and one or more secured creditors, servicers, or debt collectors.

10. "Federal homeowner relief or financial stability program" means any program (including its sponsoring agencies, telephone numbers, and Internet websites) operated or endorsed by the United States government to provide relief to homeowners or stabilize the economy, including but not limited to (A) the Making Home Affordable Program; (B) the Financial Stability Plan; (C) the Troubled Asset Relief Program and any other program sponsored or operated by the United States Department of the Treasury; (D) the HOPE for Homeowners program, any program operated or created pursuant to the Helping Families Save Their Homes Act, and any other program sponsored or operated by the Federal Housing Administration; or (E) any program sponsored or operated by the United States Department of Housing and Urban Development ("HUD"), the HOPE NOW Alliance, the Homeownership Preservation Foundation, or any other HUD-approved housing counseling agency.

11. "Material fact" means any fact that is likely to affect a person's choice of, or conduct regarding, goods or services.

12. "Mortgage loan modification or foreclosure relief service" means any good, service, plan, or program that is represented, expressly or by implication, to assist a consumer in any manner to (A) stop, prevent, or postpone any residential mortgage or deed of trust foreclosure sale; (B) obtain or arrange a modification of any term of a residential loan, deed of trust, or mortgage; (C) obtain any forbearance from any mortgage loan holder or servicer on any residential loan, deed of trust, or mortgage; (D) exercise any right of reinstatement of any residential mortgage loan; (E) obtain, arrange, or attempt to obtain or arrange any extension of the period within which the owner of residential property sold at foreclosure may cure his or her default or reinstate his or her obligation; (F) obtain any waiver of an acceleration clause contained in any promissory note or contract secured by a deed of trust or mortgage on a residence in foreclosure or contained in that deed of trust; (G) obtain a loan or advance of funds that is connected to the consumer's home ownership; (H) avoid or ameliorate the impairment of the consumer's credit record, credit history, or credit rating that is connected to the consumer's home ownership; (I) save the consumer's residence from foreclosure; (J) assist the consumer in obtaining proceeds from the foreclosure sale of the consumer's residence; (K) obtain or arrange a pre-foreclosure sale, short sale, or deed-in-lieu of foreclosure of a consumer's residence; (L) obtain or arrange a refinancing, recapitalization, or reinstatement of a residential loan, deed of trust, or mortgage; (M) audit or examine a consumer's mortgage or home loan application; or (N) obtain, arrange, or attempt to obtain or arrange any extension of the period within which the renter of residential property sold at foreclosure may continue to occupy the property. The foregoing shall include any manner of claimed assistance, including, but not limited to, debt, credit, budget, or financial counseling; receiving money for the purpose of distributing it to creditors; contacting creditors or servicers on behalf of the consumer; giving advice of any kind with respect to filing for bankruptcy; and any services delineated in California Civil Code Section 2945.1(a).

13. "National Do Not Call Registry" means the National Do Not Call Registry, which is the "do-not-call" registry maintained by the Commission pursuant to 16 C.F.R. § 310.4(b)(1)(iii)(B).

14. "Outbound telephone call" means a telephone call initiated by a telemarketer to induce the purchase of goods or services or to solicit a charitable contribution.

15. "Person" means a natural person, organization, or other legal entity, including a corporation, partnership, proprietorship, association, cooperative, or any other group or combination acting as an entity.

16. "Plaintiffs" means the Federal Trade Commission; the People of the State of California, by and through Edmund G. Brown Jr., Attorney General of the State of California; and the State of Missouri, by and through its Attorney General Chris Koster.

17. "Receiver" or "Permanent Receiver" means Thomas McNamara and La Bella & McNamara, LLP.

18. "Receivership Defendants" means US Foreclosure Relief Corp and the Individual Defendants doing business as US Foreclosure Relief Corp., U.S. Foreclosure Relief, Inc., Lighthouse Services, California Foreclosure Specialists, H.E. Service Company, H.E. Servicing Inc., Pomery & Associates, and Homeowners Legal Assistance.

19. "Seller" means any person who, in connection with a telemarketing transaction, provides, offers to provide, or arranges for others to provide goods or services to the customer in exchange for consideration whether or not such person is under the jurisdiction of the Commission.

20. "Servicer" means any beneficiary, mortgagee, trustee, loan servicer, loan holder, or other entity that performs loan or credit account administration or processing services and/or its authorized agents.

21. "Telemarketing" means a plan, program, or campaign which is conducted to induce the purchase of goods or services or a charitable contribution, by use of one or more telephones and which involves more than one interstate telephone call. The term does not include the solicitation of sales through the mailing of a catalog which: contains a written description or illustration of the goods or services offered for sale; includes the business address of the seller; includes multiple pages of written material or illustrations; and has been issued not less frequently than once a year, when the person making the solicitation does not solicit customers by telephone but only receives calls initiated by customers in response to the catalog and during those calls takes orders only without further solicitation. For purposes of the previous sentence, the term "further solicitation" does not include providing the customer with information about, or attempting to sell, any other item included in the same catalog which prompted the customer's call or in a substantially similar catalog.

22. "Telemarketing Sales Rule" or "Rule" means the FTC Rule entitled "Telemarketing Sales Rule," 16 C.F.R. § 310, attached hereto as Appendix A or as may be hereafter amended.

TERMS OF FINAL JUDGMENT

I. BAN ON MORTGAGE LOAN MODIFICATION AND FORECLOSURE RELIEF SERVICES

IT IS THEREFORE ORDERED that Defendants, whether acting directly or through any other person, are permanently restrained and enjoined from

A. Advertising, marketing, promoting, offering for sale, or selling any mortgage loan modification or foreclosure relief service; and

B. Assisting others engaged in advertising, marketing, promoting, offering for sale, or selling any mortgage loan modification or foreclosure relief service.

II. PROHIBITED REPRESENTATIONS RELATING TO FINANCIAL RELATED GOODS AND SERVICES

IT IS FURTHER ORDERED that Defendants and their successors, assigns, officers, agents, servants, employees, and attorneys, and those persons or entities in active concert or participation with any of them who receive actual notice of this Judgment by personal service, facsimile transmission, email, or otherwise, whether acting directly or through any corporation, subsidiary, division, or other device, in connection with the advertising, marketing, promotion, offering for sale or sale of any financial related good or service, are hereby permanently restrained and enjoined from:

A. Misrepresenting or assisting others in misrepresenting, expressly or by implication, any material fact, including but not limited to:

1. The terms or rates that are available for any loan or other extension of credit, including but not limited to:

(a) closing costs or other fees;

(b) the payment schedule, the monthly payment amount(s), or other payment terms, or whether there is a balloon payment; interest rate(s), annual percentage rate(s), or finance charge; the loan amount, the amount of credit, the draw amount, or outstanding balance; the ...


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