Defendants in Two Financial Services Schemes Banned from Providing Mortgage and Debt Relief Services

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The defendants in two separate alleged scams have settled charges with the Federal Trade Commission and will be banned from providing mortgage- and debt-relief services.  The cases are part of the FTC’s continuing crackdown on scams targeting consumers in financial distress, including debt relief and credit repair scams, and mortgage relief scams.

American Mortgage Consulting Group; Home Guardian Management Solutions:

Last year, as part of the federal Distressed Homeowner Initiative, the FTC charged Mark Nagy Atalla and his companies, American Mortgage Consulting Group and Home Guardian Management Solutions, with offering false promises of mortgage-rate reductions to consumers trying to hold onto their homes.  Under the settlement with the FTC, the defendants will surrender their assets and be banned from providing mortgage relief or debt relief services to consumers.

According to the FTC’s complaint, Atalla and his companies violated the FTC Act and the Mortgage Assistance Relief Services Rule (known as the MARS Rule or Regulation O) when they promised to substantially lower consumers’ monthly mortgage payments in exchange for an up-front fee ranging from $1,495 to $4,495.  The FTC’s complaint alleged that in addition to misrepresenting the likelihood that consumers would obtain a mortgage modification, the defendants falsely represented that consumers who did not receive a modification would receive full refunds, falsely represented that they were affiliated with the U.S. government, and falsely claimed to provide legal representation to consumers.  Also, in violation of the MARS Rule, the defendants allegedly told consumers to stop communicating with their lenders, and failed to make Rule-mandated disclosures intended to ensure that consumers understand transactions with mortgage-assistance relief service providers and their rights under the Rule.  A federal judge granted the FTC’s request for a temporary restraining order and preliminary injunction, froze the defendants’ assets, and appointed a receiver to take over the companies.       

Under the terms of the agreed-upon settlement, in addition to being banned from participating in the debt relief and mortgage relief industries, the defendants are prohibited from misrepresenting the features of any product or service, and making claims without competent and reliable evidence.

Also under the settlement, Atalla faces a $514,910 judgment, which will be suspended when he turns over various items of personal property and proceeds from the sale of other assets.

Southeast Trust, LLC:

The defendants in this case – Southeast Trust, LLC (formerly known as The Debt School, LLC, also doing business as Financial Freedom Credit Counseling) and the company’s principal, Paul A. Wexler – allegedly violated both the FTC Act and the agency’s Telemarketing Sales Rule by charging cash-strapped consumers hundreds of dollars based on misrepresentations that they could obtain credit card interest rates as low as zero percent.  The operation also routinely called consumers on the Do Not Call Registry, according to the FTC.  

Under the agreed-upon settlement, the defendants are banned from providing debt- and mortgage-relief services and from making robocalls and prohibited from calling consumers on the Do Not Call list.

The complaint alleged that the defendants claimed to be a non-profit group that targeted consumers with robocalls, and with ads on websites such as southeasttrust.com and   thedebtschool.com.  The defendants promised a single monthly payment, an interest rate ranging from zero percent to six percent, and that consumers would be debt free in three to five years.

The defendants are prohibited from collecting money from consumers who used their

services, making unauthorized withdrawals from consumers’ bank accounts, misrepresenting the features and characteristics of financial or other types of products and services, and making unsupported claims about products and services.  They also are required to keep any consumer information they have confidential, and destroy it promptly.

The order imposes a $2.7 million judgment against Wexler, which is suspended due to his inability to pay.  If it is determined that the financial information the defendants gave the FTC was untruthful, the full amount of the judgment will become due.

For more information about how to handle robocalls and debt relief offers,

see Hang Up on Illegal Robocalls, and Settling Your Credit Card Debts. For more information about avoiding mortgage and foreclosure rescue scams see Homes and Mortgages. The Commission vote approving both proposed consent decrees was 4-0.  The FTC filed the proposed consent decree for the American Mortgage Consulting Group and Home Guardian Management Solutions case in the U.S. District Court for the Central District of California Southern Division, and the court signed and entered it on September 23, 2013.  The FTC filed the proposed consent decree for the Southeast Trust, LLC case in the U.S. District Court for the Southern District of Florida, and the court signed and entered it on September 23, 2013.

NOTE:  Consent decrees have the force of law when approved and signed by the District Court judge.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them.  To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357).  The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad.  The FTC’s website provides free information on a variety of consumer topics.  Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

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