Marketers who helped promote a Utah-based home loan modification scheme will be banned from the mortgage relief and debt relief industries, the FTC has announced. The newly-announced court settlement resolves FTC charges that the marketers violated the law by promoting the loan modification scam, which conned consumers into paying hefty fees for worthless mortgage relief services. Under the stipulated final order, Linden Financial Group is prohibited from violating the FTC’s Telemarketing Sales Rule, and is required to have competent and reliable evidence to support claims made about the benefits, performance, or efficacy of any financial product or service. The proposed order also imposes a judgment of $28.6 million against Linden Financial Group and requires the company to turn over its financial accounts to the agency.
The settlement stems from a case filed by the FTC in July 2014 against Phillip Danielson, the Danielson Law Group, and several closely associated companies and individual, including Linden Financial Group. The FTC’s 2014 complaint was filed as part of a multi-agency federal and state law enforcement sweep targeting operations that fraudulently pitched loan modifications to consumers. According to the FTC’s complaint, the defendants lured consumers into paying $500 to $3,900 by falsely promising that attorneys would negotiate loan modifications that would substantially reduce the consumers’ mortgage payments. In the face of rising consumer complaints against Danielson Law Group, Linden Financial Group was formed to serve as the marketing arm for the defendants’ enterprise, the FTC contends. Linden Financial Group prepared and mailed ads for mortgage relief services that were designed to look like they were coming from lawyers in the recipients’ states. The FTC also alleges that Linden Financial Group received money from the payment processor set up to collect funds from consumers and then used this money to fund expenses and funnel cash to Philip Danielson and others.
In early 2015, several of the defendants, including Phillip Danielson and his Danielson Law Group settled their charges with the FTC. Under those settlements, the defendants are banned from participating in the mortgage relief and debt relief industries, and are prohibited from misrepresenting various features of any product or service or making advertising claims that are unsupported by competent and reliable evidence. The settlements also impose a $28.6 million judgment against all the defendants, reflecting the total amount of fees taken in by the scheme. The proposed judgment is suspended as to the individual defendants provided they surrender certain of their assets, including a $200,000 house in Utah as required by the settlement orders. If it is later determined that any defendant provided false financial information to the FTC, the full amount of the judgment against them will become due. The settlement also requires relief defendant April Norton to turn over unearned ill-gotten gains that she received from the scheme. The full judgment remains in effect against the corporate defendants.
This case is of obvious interest to those living in Utah, but it is also of interest because of the hefty fine it imposed on Linden Financial Group. Under the settlement, Linden Financial Group is required to pay a whopping $28.6 million fine as well as turn over all financial accounts to the FTC. The FTC’s fine and other orders under the settlement agreement are quite imposing, and should make any would-be home loan modification scammers think twice before trying to pull off any such scams.