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Hundreds of homeowners hit by mortgage scam

By Star-Advertiser Staff

POSTED:
LAST UPDATED: 01:30 p.m. HST, Apr 15, 2014


More than 500 Hawaii homeowners facing foreclosure may have claims against New York attorneys for a Florida corporation that's believed to have taken more than $1.5 million from Hawaii consumers, the state Department of Commerce and Consumer Affairs and Office of Consumer Protection said in a news release Tuesday.

A state investigation concluded that distressed homeowners were likely misled by a loan modification program operated by the Homeowner Legal Assistance Association for about 17 months in 2009 and 2010, the news release said.

The HLAA loan modification program was marketed and sold to Hawaii homeowners by local agents affiliated with companies such as 1st Choice Family Solutions, Inc. and Family 1st Solutions, Inc., both Nevada corporations. The local agents arranged to have residents retain HLAA attorneys based in New York.

The attorneys would then outsource the work back to Florida companies, such as Justice Paper Processing, Inc. and E3 Finance, LLC, who in turn would outsource the work back to the local agents.

From January through sometime in September 2009, HLAA referred all of its Hawaii cases to Marc Zirogiannis, a New York lawyer, who charged a $2,750 as a retainer. For about nine months after that, HLAA referred its Hawaii cases to David Galanter, another New York attorney, who charged Hawaii homeowners a retainer of $2,950.

 Zirogiannis has been disbarred by the State of New York. Galanter is the subject of a pending disciplinary action before the New York Departmental Disciplinary Committee, the news release said.

Hawaii residents who were clients of Galanter and who sustained losses can submit claims for recovery of their money from the Lawyers' Fund for Client Protection of the State of New York.

The Office of Consumer Protection also obtained a permanent injunction prohibiting Galanter, HLAA, and other targets of OCP's investigation from engaging in the home mortgage finance industry in the State of Hawaii, and fines and penalties totaling $87,000.

"All of the money that was paid by Hawaii consumers was paid under retainer agreements with these New York attorneys for legal services, and yet it does not appear as though the lawyers provided any legal services. 

Neither of these out-of-state lawyers could legally provide the promised services here in Hawaii since both attorneys were not licensed to practice law in our state," according to OCP Executive Director Bruce Kim. "The HLAA loan modification program was specifically structured to circumvent our laws, and hundreds of consumers were affected."

Anyone who believes they may have been the victim of a mortgage rescue scam and have not filed a complaint with the State of Hawaii's Office of Consumer Protection may contact the Consumer Resource Center at (808) 587-4272 or go online to the OCP website at http://cca.hawaii.gov/ocp/ for more information about filing a complaint.






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