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Sleazy Scam Took $1.6 Million, USA Claims

LOS ANGELES (CN) - Two scammers posing as government agencies defrauded people of $1.6 million in a "mortgage assistance" scam they called the National Legal Help Center and other names, the U.S. Consumer Financial Protection Bureau claims in court.

Read Courthouse News' Securities Law Review.

The bureau, a federal agency, sued a long list of defendants in Federal Court.

The lead defendant, Najia Jalan, also goes by the names Sara St. John, Sarah Johnson, Sarah Kim, Najia Jalah, Sarah Love, Najia Ebrahimi and Sarah John. She created the so-called National Legal Help Center, formerly known as iModify Law, Inc. the government says.

Jalan and her cohorts took the $1.6 million by making more than 90,000 phone calls to distressed homeowners and creating 165 fake websites, the government says.

It also sued Jalan's so-called chief financial officer, Richard K Nelsen aka Rick Nelson.

Jalan founded the Santa Ana-based company on Jan. 11, 2011 under the name iModify Law, but changed its name to National Legal Help Center around Aug. 29, 2011, the government says.

The woman with many names and her companied claimed to offer "financial advisory services ... including but not limited to loan modification and foreclosure relief services," according to the complaint.

Actually, Jalan and Nelson simply stole $1.6 million from desperate people facing foreclosure, the bureau says.

The complaint filed on Dec. 3, was unsealed this week.

"Since at least early 2010," the complaint states, the defendants "have engaged in an ongoing, unlawful mortgage relief scheme that preys on financially distressed homeowners nationwide by falsely promising mortgage assistance relief services in exchange for an advance fee. Defendants have used websites, mailers, unsolicited emails, and outbound phone calls - more than 90,000 phone calls were placed over a three-month period to consumers in all 50 states - to attract struggling homeowners by deceptively promising foreclosure relief or mortgage modifications that will make consumers' payments substantially more affordable. They also promise that they will obtain such results within a certain period of time. In exchange for these promises, defendants have charged homeowners unlawful advance fees, ranging from $1,000 to $3,000 and in some cases more than $10,000.

"Defendants have collected at least $1.6 million from consumers since early 2010.

"Defendants gain consumers' confidence by misrepresenting that they are a government agency or are approved by or affiliated with the government. For example, one of defendant's domain names, makinghomeaffordable.ca, has contained content indistinguishable from that of makinghomeaffordable.gov, the official webpage of the federal government's Making Home Affordable Program ('MHA'). The only apparent difference is the phone number consumers are given to call for help."

The bureau claims Jalan and Nelson created about 165 "mortgage assistance" websites, often using logos from well-known lenders to lure people into the scam.

They also sent spam emails using logos from federal agencies to make their services appear legitimate, the bureau says.

"Additionally, defendants are innovative in updating their marketing to keep pace with the latest government programs. Some of defendants' recent marketing materials reference 'Independent Foreclosure Review,' which is, in reality, a program overseen by the OCC [Office of the Comptroller of the Currency] and the Federal Reserve, in which borrowers who believe that they have suffered injury as a result of deficiencies in foreclosure proceedings may request free third-party review of their causes. Defendants' recent marketing materials also reference the nationwide mortgage servicing settlement that state and federal authorities recently reached with the five largest mortgage servicers," the complaint states.

"Defendants also misrepresent that NLHC is a 'full-service law firm' and that consumers will be represented by attorneys who are experienced in negotiating or litigating foreclosure relief or negotiating mortgage loan modifications. In reality, defendants merely affiliate with attorneys who neither represent consumers nor have any attorney-client relationship with them."

Jalan and Nelson designed their scam to try to skirt Regulation O, a federal regulation intended to protect homeowners from foreclosure relief scams, the government says.

"For example, defendants charge some homeowners for a 'forensic audit' or 'securitization report,' which is a purported analysis of mortgage loan documents to find law violations. They claim that they will use this document to gain leverage over, and improve the outcome of negotiating foreclosure relief or a mortgage loan modification with, consumers' lenders or servicers. In some instances, defendants provide contracts to consumers stating that their upfront fee is for only the 'forensic audit' or 'securitization report,' apparently so they can assert that they provide the promised foreclosure relief or loan modification for 'free' and not in exchange for an advance fee," the complaint states.

"In reality, defendants do little or nothing to assist consumers. Rather, defendants direct consumers to avoid interactions with their lender and to stop making their mortgage payments. In numerous instances, defendants also do not obtain mortgage loan modifications for consumers that will make their payments substantially more affordable or will help them avoid foreclosure."

Because people believed that the Help Center was negotiating with their lenders, they did not explore other options, such as "working directly with their lender, using a HUD-certified nonprofit housing counselor, or entering foreclosure mediation."

"As a result of all the foregoing conduct, many consumers suffer significant economic injury, including foreclosure and the loss of their homes," the complaint states.

The bureau seeks restitution, disgorgement and penalties for unjust enrichment and a dozen other claims.

Here are the defendants: Najia Jalan (aka Sarah Johnson, Sarah or Sara St. John, Sarah Kim, Najia Jalah, Sarah John, Sarah Love, or Najia Ebrahimi), dba National Legal Help Center, dba NationalLegalHelp.com, dba National Legal Assistance, dba Legal Modification Firm CP, dba First Class Doc Prep, dba Williams Law Center JW, dba Williams Litigation Center/Cash Entertainment, dba Najia Jalan; National Legal Help Center, Inc., National Legal Help Center, dba NationalLegalHelp.com, fka iModify Law, Inc., dba National Legal Help Center EP, dba National Consumers Bank & Trust, dba First Class Doc Prep/NCHC, dba National Legal Help Center HB; Richard Nelson, National Legal Help Center, dba NationalLegalHelp.com, dba National Legal Assistance, dba First Class Doc Prep, dba Williams Litigation Center/Cash Entertainment, aka Richard or Rick Nelson, dba National Consumers Help Center.

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