A dozen South Florida businesses have been banned temporarily after an investigation suggested that they were involved in mortgage fraud, the Attorney General’s Office announced Wednesday. The businesses, along with their owners, are accused of billing Florida homeowners’ upfront fees of $3,500 for a purported fail-safe turnaround of the homeowners’ upside-down mortgages. The ban will temporarily block each business from offering homeowners any type of facilities.
The business owners implicated in the crime are Edward Cherry, Lawrence Diodato, Paul Gellenbeck, Shane Frankovic, and Anthony C. Pintsopoulos. No arrests have been made, though it is unclear whether the accused will face criminal charges as the details of the suspected fraud unfold. It is also not yet known whether any of the defendants has retained a private criminal defense lawyer.
According to reports, the scheme targeted distraught Florida homeowners seeking help with their defunct mortgages. The businesses purportedly offered these desperate homeowners the ability to cancel “upside-down mortgages,” which occur when then balance of a loan exceeds the home’s market value. In those cases, the homeowner often finds him or herself unable to make mortgage payments, forcing the bank to foreclose.
Reports indicate that the South Florida businesses offering the allegedly fraudulent services included about a dozen LLCs, including The Fidelity Land Trust Company LLC, The Sunshine State Land Trust Company LLC, Florida Land Trust Services LLC, Click Media Consulting LLC, American Federal Trust LLC, and Zion Partners Irrev Trust LLC.
The order issued by the Attorney General claims that Cherry, Diodato, Gellenbeck, Frankovic, and Pintsopoulos, under the guise of their firms, billed homeowners in advances of $3,500 for their purported services. Many of the details or the purported scheme have not yet been made public. The current ban, sources say, is only temporary. It restricts the suspects and the businesses from promoting their company or services within the state of Florida. It is not yet clear how many victims could have lost money or their homes due to the fraudulent activity. Some of these victims could likely press legal charges against the accused parties; it remains to be seen how many victims pursue that course of action.
“This mortgage relief scam targeted hundreds of distressed homeowners who were already facing financial hardship,” an attorney spokesperson said in release. “By obtaining a temporary injunction and asset freeze, we have stopped this company from preying on even more of Florida’s homeowners.”
Reports indicate that South Florida is a hot spot for mortgage fraud. During the fiscal year of 2011, records showed that Fort Lauderdale was among the top three areas in the nation when it came to mortgage-related fraud. Analysts have offered up one explanation: the combination of defunct estates and a rich field of ready investors make Florida a prime area for real-estate fraud, they claim.
In one recent case, a Fort Lauderdale real estate agent, along with her sibling, were accused of filing falsified mortgage requests to procure houses at a South Florida expansion. The two women were indicted before a federal grand jury on Tuesday.