Judge Enters $950,000 Default Judgment, Certifies Class against Participants in Alleged Loan Modification Fraud


A class action against participants in an alleged loan modification fraud received a huge boost on May 30th when Santa Clara County Superior Court Judge Peter H. Kirwan entered a default judgment for just under $1 million against four participants in the alleged fraud.  The judge also agreed with the plaintiffs that the case should go forward as a class action, which will allow hundreds of alleged victims to pursue their claims together.

The complaint in the case alleges that the class of approximately 250 California homeowners had entered into contracts for loan modification services with the defendants, paid upfront fees of between approximately $3,000 and $5,000 per property for these services, and then were not provided with the promised loan modification services.  The complaint alleges that the defendants promised refunds to anyone who didn’t get a loan modification, but then refused to give those refunds to homeowners whose loan modifications didn’t come through. The complaint alleges that many class members negotiated primarily with the defendants in Spanish but did not receive a translation of the written agreements as required by California law.  As a result of this alleged loan modification fraud, the victims lost hundreds of thousands of dollars. 
The Law Foundation of Silicon Valley, the Lawyers’ Committee for Civil Rights Under Law, and Orrick, Herrington & Sutcliffe LLP—who are representing the victims free of charge—filed this class action lawsuit in June 2011 alleging that these homeowners were victimized by the loan modification scheme called RewireMyLoan.com. The $950,000 default judgment that the Court just entered is against defendants American Brother Corporation, Inc., Gallant Group, Ltd., Troy Holland, and TMG Financial Services, Inc.  The complaint alleges that ABC and Gallant were front companies for defendant Adeel Amin.
“With this ruling, our clients have made a huge step forward after years of waiting for resolution,” said James Zahradka, supervising attorney at the Law Foundation of Silicon Valley.  “We’re determined to keep making our case and working hard to continue the fight for justice for our clients.”

“We are delighted with the prospect that we may soon be able to bring some relief to our clients,” said Elizabeth Howard, partner at Orrick, Herrington & Sutcliffe LLP, which is also representing the plaintiffs pro bono. “We are looking forward to our day in court to prove our case of fraud against the rest of the defendants.”
“The Judge’s rulings send a strong message to those who prey on vulnerable homeowners trying to save their homes,” said Linda Mullenbach, senior special counsel at the Lawyers’ Committee who heads the organization’s loan modification scam cases.  “California has been hard hit by loan modification fraud. It is gratifying to be able to move forward with our case as a class action against these defendants.”

Since the launch of the Lawyers’ Committee’s Loan Modification Scam Prevention Network database in February 2010, more than 41,000 homeowners nationwide have reported scams or potential scams, resulting in over 94 million in total reported losses, with an average loss per homeowner of over $3,200.  In California, more than 7,000 homeowners have reported scams, resulting in over 24 million in total reported losses, with an average loss per homeowner of over $4,400.

About the Law Foundation of Silicon Valley

The Law Foundation of Silicon Valley advances the rights of under-represented individuals and families in our diverse community through legal services, strategic advocacy, and educational outreach.

About the Lawyers’ Committee for Civil Rights Under Law

The Lawyers’ Committee for Civil Rights Under Law, a nonpartisan, nonprofit organization, was formed in 1963 at the request of President John F. Kennedy to involve the private bar in providing legal services to address racial discrimination. The Lawyers’ Committee celebrated its 50th anniversary in 2013 and continues its quest of “Moving America Toward Justice.” The principal mission of the Lawyers' Committee is to secure, through the rule of law, equal justice under law, particularly in the areas of fair housing and community development; employment; voting; education; and environmental justice.  For more information about the Lawyers’ Committee, visit www.lawyerscommittee.org.