Racketeering Claimed in Home Solar Systems

      LOS ANGELES (CN) - Van Nuys-based Titan Solar extorted and defrauded Southern Californians, threatening liens and foreclosures over bogus installation contracts, 10 homeowners say in a RICO class action.

Lead plaintiff Walter Aguirre sued Titan Solar aka Memeged Tevuot Shemesh and its CEO and its president on Sept. 21 in Federal Court.

Spurred by tax credits, rebates and creative financing, residential solar power is a booming industry in Southern California, where salesmen walk the streets pitching deals door to door.

But the 10 plaintiffs, from three counties, claim Titan and the men who run it use "an ongoing pattern of racketeering activity ... to extort and defraud money from Southern California homeowners and thereby gain an unfair competitive advantage."

The plaintiffs, from Kern, Riverside and San Bernardino counties, say they tried to cancel solar projects before they had accepted financing and before any work had been done, "because they found the actual financing terms unacceptable once they had been disclosed."

Titan refused to cancel, and made "threatening misrepresentations, stating the exact opposite of the law, specifically that under California law plaintiffs had no right to cancel the contracts, and if they did not continue with these projects, defendants would proceed against them for the entire value of the contract and their attorneys fees by filing liens on their homes and foreclosing on their homes," the complaint states.

Titan gave them three options: continue with the projects, pay "invoices" for an "exorbitant unjustifiable sum," or "have their home foreclosed upon," the plaintiffs say. Titan then "proceeded to record perjurious mechanic's liens, stating they had provided services to plaintiffs, which in fact they had not," the lawsuit states.

The homeowners say Titan's CEO negotiated with them over the phone, then its presidentn signed and recorded the fraudulent liens, "attesting that defendants were entitled to tens of thousands of dollars per system for 'solar installations' that had in fact never been installed."

The actions were meant to "induce fear" and "intimidate" homeowners, and constituted a pattern of racketeering, the lawsuit states. The homeowners say the defendants have filed $600,000 in fraudulent liens since February this year.

After receiving a 30-day notice of this lawsuit, Titan released all the fraudulent liens known to plaintiffs' counsel, the complaint states. That included 15 liens from people not party to the case, also on homes where no solar systems had been installed, many of whom had no ideas the liens had been placed, according to the complaint.

The defendants targeted the three counties where the plaintiffs live, and Los Angeles County, because of the local government-backed HERO program (Home Energy Renovation Opportunity), which offers financing to homeowners for solar and other green-energy home renovations, the plaintiffs say.

Since 2011, 35,000 homeowners have used HERO to make $800 million in improvements to their homes, the lawsuit states, saving users $1.6 billion in future energy costs and $1.3 billion gallons of water.

"Making green energy projects more feasible is clearly a laudable endeavor, but unfortunately, instances of fraud often lurk at the margins of programs operating on such a large scale," the lawsuit states.

But the plaintiffs say Titan used HERO as an invitation to racketeering.

"The prospect of a secure and easy payday led them to use to extortionate and fraudulent tactics, including fraudulently recording liens on homes for solar installations that were never installed, to force homeowners to go forward with solar projects that the homeowners did not wish to proceed with and were under no obligation to continue."

Plaintiff Aguirre claims that in January he and his wife, both in their 70s, agreed to pay Titan $25,000 in cash and financed a $14,330 balance for a solar system.

In the following "days or weeks," a credit union told them a lien would be placed on their home, which Aguirre found unacceptable, "and he did not agree to the financing." Titan refused to return their money, they say.

An 80-year-old plaintiff from Kern County claims that she signed a document believing it was "only a proposal to allow defendants access to her property to see if installing a system was feasible," but it was a contract for $35,530, which Titan refused to let her cancel, then filed a $33,330 lien on her home.

Titan declined to comment, while the plaintiffs' attorney had nothing to add beyond the complaint.

The plaintiffs seek class certification, restitution, and punitive damages for RICO violations, elder abuse, felony extortion, wire fraud, violations of consumer and debt collection laws, unfair competition, malicious prosecution, abuse of process and intentional infliction of emotional distress.

They are represented by David Hiller of Pasadena.

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