Syracuse Area Families Sue to Stop Mortgage Fraud Scheme

August 13, 2009

Thirteen area families have sued the operators of a large mortgage fraud in New York State Supreme Court. The defendants, including two local lawyers and several real estate and mortgage companies, sold substandard homes for at least twice their value to low-income families. These families, and possibly many other victims of the scam, could lose theit homes. Eleven families are represented by Legal Services of Central New York, Inc. and two by the Securities Arbitration and Consumer Clinic of the Syracuse University College of Law.

"The defendants targeted first-time home buyers, holding out the promise of the American Dream - home ownership," commented Dennis Kaufman, the executive director of Legal Services. "Instead, these families got empty promises and houses in need of repair at prices way beyond their value."

Sam Young speaks at a press conference held 8/13/2009

Sam Young, the director of advocacy for Legal Services and the lead attorney, described the fraud. "The defendants bought foreclosed houses at rock-bottom prices and then sought out working families with little experience buying real estate. The defendants promised to make substantial repairs before the families moved in, but the repairs were either slip-shod or never completed. The families began making payments to the defendants believing they would arrange for legitimate mortgages. Some families got mortgages, fraudulently obtained by the defendants; others invested money and sweat equity to make the homes livable only to have the defendants try to evict them."

"The families making substantial mortgage payments every month live in fear that they may lose their homes as fhe defendants have defrauded lenders by submitting false information on the loan applications and inflated property appraisals." commented Gary Pieples, the attorney from the College of Law.

Mr. Young described what happened to families who thought they bought their homes. "The familes were rushed through the closing and told that one of the co-conspirators would act as their attorney. For the first time, the families were told to sign an additional mortgage owed to the defendants, as more money was needed to complete the deal. With their heads spinning, the families left the closing with two mortgages, but no deed."

Plaintíffs' lawsuits allege fraud, deceptive business practices, breach of contract and violations of federal laws designed to protect consumers in real estate transactious. On August 5, 2009, Hon. Anthony Paris, Justice of the State Supreme Court, issued a preliminary injunction to prevent the defendants from continuing their attempts to evict the families since they are not renters but have signed a contract to purchase a home. Judge Paris ordered the defendants to stop advertising on their website - www.bestdream.biz - that two of the families' homes are for sale.

"We believe this scam is continuing," said Mr. Kaufman, "At least one new family a week has contacted our office. If you are buying a house, be sure to have a lawyer of your choice review the deal."

The lawsuits filed in Onondaga County are: Davis, et al. v. Sanders, et al.,lndex No 2009-2055, Rockwell v. Sanders, et al., Index No. 2009-4487 and Flandera, et al. v. AFA America, et al., Index No. 2009-2467.