California judge bans ‘sham mortgage relief operation,’ issues $19M penalty

A judge in the U.S. District Court for the Central District of California has ordered that the operators of Home Matters USA — described as a “mortgage relief scam” by the Federal Trade Commission (FTC) and the California Department of Financial Protection and Innovation (DFPI) — be banned from the telemarketing and debt relief businesses, and ordered them to pay $19 million in consumer refunds and civil penalties.

The FTC and DFPI originally brought the case against the parties in September 2022, alleging that they operated “a sham mortgage relief operation that misled consumers and cost them millions.”

The case was the first to be brought jointly by the FTC and DFPI. The government bodies alleged that the defendants “charged consumers thousands of dollars with false promises they would negotiate with consumers’ mortgage lenders to alter their loans, at times even representing they were affiliated with government COVID-19 relief programs.”

They sued the companies doing business as Home Matters USA, Academy Home Services, Atlantic Pacific Service Group and Golden Home Services America, along with owners Michael R. Nabati, Armando Solis Barron, Dominic Ahiga (aka Michael D. Grinnell) and Roger S. Dyer.

“Our win in this case sends a clear message to scammers who target consumers facing financial hardship: the FTC and our law enforcement partners are focused on fighting fraud and halting it,” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in an announcement of the verdict. “We look forward to more opportunities to partner with the California DFPI on behalf of consumers.”

DFPI Commissioner Clothilde Hewlett added that the ruling reinforces the value of California’s Consumer Financial Protection Law.

“Fraudsters everywhere should take note — DFPI will find you, expose you, and hold you accountable,” she said in a statement. “Victims of fraud should likewise take heart. The DFPI has your back.”

The DFPI was established in 2020 by a package of bills signed into law by Gov. Gavin Newsom, which aimed to reform the state’s Department of Business Oversight (DBO) and convert it into the DFPI.

At the time, Newsom said that the aim of the state agency was to serve as a more muscular regulatory body in light of a more relaxed enforcement posture by the Consumer Financial Protection Bureau (CFPB) during the Trump administration.

“While the federal government is getting out of the financial protection business, California is leaning into it,” Newsom said when announcing the bills’ signings. “It’s at this moment especially — when so many Californians are strapped for cash and struggling to pay their bills — that families are likely to fall victim to predatory and abusive financial products. These bills ensure that financial predators are subjected to alert oversight and agile enforcement.”