CFPB Secures $12 Million From Ringleaders of Foreclosure Relief Scam
Long-running action against four attorneys and their company, Consumer First Legal Group, comes to an end
FEB 8, 2024 | REPUBLISHED BY LIT: FEB 29, 2024
FEB 29, 2024
Above is the date LIT Last updated this article.
WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) today announced that it resolved an appeal in a long-running enforcement suit against a foreclosure relief scam operation for $12 million in consumer redress and penalties. Consumer First Legal Group, LLC and four attorneys, Thomas G. Macey, Jeffrey J. Aleman, Jason Searns, and Harold E. Stafford, charged millions of dollars in illegal advance fees to financially-distressed homeowners for legal representation the defendants promised but did not provide.
This case was part of a coordinated effort against various foreclosure relief scam operations by the CFPB, Federal Trade Commission (FTC), and 15 states in 2014.
The CFPB filed three lawsuits, the FTC filed six lawsuits, and the states took 32 actions.
The CFPB won a judgment against the defendants in 2019.
The case has been ongoing given multiple appeals. Today’s settlement brings the case to an end.
Under the resolution announced today, the defendants will pay $10.9 million in consumer redress and a $1.1 million penalty into the CFPB’s victims relief fund. The individual defendants are covered by 8- or 5-year bans from the mortgage assistance industry, under the district court’s original order.
OPERATION CLEANUP
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The Mortgage Law Group, LLP d/b/a The Law Firm of Macey, Aleman & Searns, Consumer First Legal Group LLC, Thomas G. Macey, Jeffrey J. Aleman, Jason Searns, and Harold E. Stafford
FEB 8, 2024 | REPUBLISHED BY LIT: FEB 29, 2024
On July 22, 2014, the Bureau filed a complaint against The Mortgage Law Group, LLP (TMLG), the Consumer First Legal Group, LLC (CFLG), and attorneys Thomas Macey, Jeffrey Aleman, Jason Searns, and Harold Stafford.
The Bureau brought suit alleging that the defendants violated Regulation O, formerly known as the Mortgage Assistance Relief Services Rule, by taking payments from consumers for mortgage modifications before the consumers signed a mortgage modification agreement from their lender, by failing to make required disclosures, by directing consumers not to contact lenders, and by making deceptive statements to consumers when providing mortgage assistance relief services.
A trial was held in April 2017. On June 21, 2017, the district court entered a stipulated judgment against the bankruptcy estate of TMLG, which sought Chapter 7 bankruptcy.
The court enjoined TMLG from operating and ordered TMLG to pay $18,331,737 in redress and $20,815,000 in civil money penalties.
On May 29, 2018, the Bureau filed an unopposed motion to increase the redress amount ordered by the court to $18,716,725.78, based on newly discovered information about additional advance fees paid by consumers.
The amended stipulated judgment against TMLG increasing redress to $18,716,725.78 was issued by the court on November 15, 2018.
On November 15, 2018, the court issued an opinion and order ruling that defendants CFLG, Macey, Aleman, Searns, and Stafford violated Regulation O by taking upfront fees and by failing to make required disclosures, and that some of the defendants also violated Regulation O by directing consumers not to contact their lenders and by making deceptive statements.
The court directed that the parties submit briefs addressing what damages, injunctive relief, and civil money penalties, if any, should be awarded.
On November 4, 2019, the court issued an opinion and order against defendants CFLG, Macey, Aleman, Searns, and Stafford, imposing a total of $21,709,022 in restitution ($18.7 million of which TMLG is also jointly and severally liable for) and $37,294,250 in civil money penalties.
CFLG, Macey, Aleman, and Searns were permanently enjoined from marketing, selling, providing, or assisting others in selling or providing any mortgage-assistance-relief or debt-relief products or services.
Stafford was enjoined from marketing, selling, providing, or assisting others in selling or providing mortgage-assistance-relief services for five years.
CFLG, Macey, Aleman, Searns, and Stafford filed an appeal with the Seventh Circuit on December 4, 2019.
On July 23, 2021, the Seventh Circuit affirmed the district court’s rulings that defendants violated Regulation O, vacated the remedial order, and remanded to the district court for further proceedings on remedies.
On August 1, 2022, the district court awarded $10,854,510.85 in restitution and $18,410,500 in penalties against the defendants, and imposed an eight-year ban on all the defendants except Stafford, whose five-year ban remained in place, on mortgage-assistance relief services.
On August 11, 2022, defendants filed a notice of appeal, and the Bureau filed a notice of cross-appeal on September 15, 2022. On February 5, 2024, the remaining defendants entered into a settlement under which the parties dismissed their respective appeals, and on February 7, 2024, the Seventh Circuit dismissed the appeals.
The settlement requires defendants to pay $10.9 million in consumer redress and a $1.1 million penalty.
The individual defendants remain subject to the bans from the mortgage assistance industry under the district court’s August 1, 2022 order.
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