“Our objective is to ensure that the public is not taken advantage of when they have fallen on hard financial times. Distressed homeowners are particularly vulnerable to this type of fraud. An important message has been sent today to those who prey on upon homeowners who are seeking financial assistance with their mortgage. This type of fraud not only affects individual families, it also affects the housing market.”Stated James Todak, the Special Agent in Charge of HUD-OIG.
Terrill Meisinger agreed to the penalty to resolve a June 2011 federal civil lawsuit accusing him of orchestrating a foreclosure rescue scheme that bilked homeowners and lenders, that is said to be among the largest such civil actions undertaken by authorities.
He will pay $5 million in civil penalties to resolve allegations by federal authorities that he took control of hundreds of homes that were in default and then rented them out without paying anything toward their mortgages.
U.S. District Court Judge Virginia A. Phillips on Tuesday signed an order giving final approval to the deal, which also prohibits Meisinger from participating in the home finance or real estate industries for 10 years, federal authorities said.
"This is one of the largest civil mortgage fraud cases ever brought against an individual," U.S. Atty. André Birotte said. "The $5-million judgment and injunction against Meisinger demonstrate our commitment to using civil remedies ... to protect everyone, including vulnerable victims like those seen in this case."
Meisinger allegedly contacted homeowners facing imminent foreclosure and promised that he could help them avoid foreclosure and save their credit, according to the suit.
He allegedly told distressed homeowners that if they deeded their houses to him and immediately moved out, they would receive a small cash payment, typically from $500 to $1,000, with the promise that Meisinger would bring their mortgage payments current and pay them an additional $5,000 to $10,000 when he eventually sold their properties.
But instead Meisinger allegedly transferred the properties to third parties whose identities he had stolen, and then fraudulently filed bankruptcy petitions in these names, the suit stated. Those petitions would trigger successive automatic stays that prevented lenders from foreclosing.
The move allowed Meisinger to rent the properties out for up to three years as he allegedly transferred the properties.
Federal authorities allege that between 2000 and 2004, Meisinger collected more than $1.5 million in rent from more than 100 properties -- most of which were in the Inland Empire -- without paying the mortgages.
During this five-year period, authorities estimate that he caused more than 300 bogus bankruptcy petitions to be filed in the names of numerous individuals who had no knowledge their identity was being used. When the lenders finally got control of the properties, some renters were evicted and left homeless, officials said.
As part of the agreement, Meisinger is barred from filing any bankruptcy petitions for himself, any other person or entity without prior court approval, according to the news release.
The suit was the result of an investigation conducted by special agents and auditors from the Housing and Urban Development's Office of the Inspector General.
To report financial fraud crimes, and to learn more about the President’s Financial Fraud Enforcement Task Force, please visit www.stopfraud.gov.
By Michael S. Richardson
Author of “An American Epidemic, Mortgage Fraud… a Serious Business