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FTC: Group surrenders $3.6M to settle fraud claims

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January 14, 2014 02:03 PM EST | AP

NEW YORK (AP) — The Federal Trade Commission said Tuesday that a group of defendants in Florida have agreed to surrender assets totaling approximately $3.6 million as part of a settlement agreement related to an alleged mortgage relief scam.

The defendants also will be permanently banned from providing mortgage relief and debt relief services to consumers.

In 2012 the FTC charged 11 companies and five people with running an illegal mortgage relief scheme that operated under various names, including Prime Legal Plans. The action was part of the Distressed Homeowner Initiative, a multi-agency federal enforcement crackdown.

The FTC said that the mortgage relief scheme used a fake nonprofit called Reaching U Network and several other companies to lure consumers with false promises that enrollment would save their homes from foreclosure or result in lower mortgage payments. The defendants charged consumers as much as $750 a month in illegal advance fees but offered little or no help.

Aside from alleging that the scheme deceived consumers, the FTC charged that it violated the Mortgage Assistance Relief Services Rule's ban on advance fees for mortgage relief and that the defendants made numerous calls to numbers listed on the national Do Not Call Registry.

The FTC received a court order shutting down the operation and freezing the defendants' corporate and personal assets pending settlement of the case.

A $25.1 million judgment imposed on Derek Radzikowski, Jason Desmond, Prime Legal Plans LLC and five other corporate defendants will be suspended when the defendants surrender an estimated $3.5 million in assets. Desmond's wife, Shelie, must also turn over an estimated $110,000 that she received from the scheme.

Prime Legal Plans did not immediately respond to an email seeking comment.

Judgments totaling approximately $1.4 million were imposed on Andrew Primavera, Lazaro Dinh and four corporate defendants. The judgments were suspended after Dinh surrendered about $20,000 in assets and Primavera surrendered $1,600. The Dinh order also resolved allegations against two relief defendants: the San Lazaro Irrevocable Life Insurance and its trustee: Dinh's sister, Maria Soltura. The $336,929 judgment against Soltura and the trust was suspended when the FTC received the $1,575 that was frozen in the trust's bank account when the FTC shut down the operation last year.

A $392,215 judgment imposed against Christopher N. Edwards and Reaching U Network, Inc. and a $102,417 judgment imposed against Kim E. Landolfi was suspended when they surrendered frozen assets to the FTC. This included about $950 from Edwards and Reaching U Network and $40,000 from Landolfi.

The FTC said that if it's determined at a later date that a defendant provided false financial information, the full amount of the judgment against them will be due.