New York AG Obtains Default Judgment Against Two Law Firms for Mortgage Rescue Scheme

Foreclosure  •  Mortgage  •  State AGs  •  UDAP/UDAAP

On May 13, New York Attorney General Eric T. Schneiderman annouced that the AG obtained default judgment against Brooklyn and Florida Law Firms and the firms’ principal attorney for participating in a fraudulent mortgage rescue scheme. The AG’s petition alleged that, directly and through their third-party marketers, the firms collected hundreds of dollars in fees from consumers nationwide and routinely failed to deliver on their promises. The petition further alleged that respondents provided misinformation to consumers, misrepresented the nature and quality of the legal representation provided, and used misleading advertisements that falsely appeared to be government-sponsored. The AG brought New York state-law claims for false advertising, deceptive business practices, fraud, and improper solicitation of business on behalf of an attorney. The default judgment permanently enjoined the respondents “from engaging in the fraudulent, deceptive, and illegal practices alleged in [the] Petition” and ordered that respondents disclose all affected consumers. The Court also ordered respondents to provide an accounting of the two firms–which are now in bankruptcy–so that it could appropriately determine the “measure of restitution, identity of the amount subject to disgorgement by the Bankruptcy Court, damages, civil penalties, and costs” at a later date.

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