SANTA ANA — With millions of homebuyers facing foreclosure after the collapse of the housing bubble, the Federal Trade Commission (FTC) claims two Southern California law firms bilked people for $15 million in a single year in a mortgage scam.
The Brookstone Law and Advantis Law firms have marketed themselves as expert litigators in mortgages issues since 2011, the FTC says in a May 31 federal lawsuit. They lure customers with promises of $75,000 payouts, “then extract thousands of dollars in upfront fees [and] (i)n return, they provide little or nothing,” the FTC says.
Both law firms have or had multiple offices in Orange County cities.
Lead defendant Damian Kutzner is a founder and COO of Brookstone and a principal and controlling person in Advantis, but he’s not a lawyer, the FTC says.
He and co-defendant Vito Torchia Jr. “founded Brookstone after their prior business, United Law Group, a mortgage assistance ‘law firm,’ was dissolved following an investigation and raid by multiple federal and local agencies,” according to the complaint.
Torchia, who was licensed to practice law in California, co-founded Brookstone and Advantis and was counsel of record for all of Brookstone’s mass joinder cases, the FTC says. However, it adds: “In August 2014, the California Bar found Torchia violated his ethical duties to his clients with respect to the provision of mortgage-related services, and declared him indefinitely ineligible to practice law in California.”
Defendant Jonathan Tarkowski, admitted to the California bar in June 2014, “is or was an attorney with Advantis” and was Brookstone’s sole attorney when Brookstone hired him in July 2015, according to the complaint.
The FTC says the defendants “prey on distressed homeowners,” finding people who are at risk of losing their homes to foreclosure and sending them letters claiming, among other things, that they can “void your note” to the lender, that they already are suing the lender and their new “potential victim” can join in, that they can “give you your home free and clear,” and so on.
Then they demand $895, or more, to do a “legal analysis” of their claim. The complaint continues: Defendants then provide homeowners a “legal analysis,” stating that the fraud in their mortgage paperwork was obvious. Defendants told such homeowners that they were likely, or even certain, to prevail, if they retained the defendants for a mass joinder suit against their lender. On numerous occasions, defendants told homeowners that they would recover “at least $75,000.”
Then come the demands for thousands of dollars more in upfront fees and continuing payments. The defendants raked in at least $15 million in such fees in 2014, which they used for expenses instead of depositing into client trust accounts as required by law, the FTC says.
Moreover, their legal services are a sham: Most of their mass joinder suits have been dismissed, and none have prevailed on the claims, the FTC says.
Though the defendants promise to quickly add homeowners to the mass joinder cases, the process takes months, if it happens at all. Clients who do get added never get status updates from the defendants, even when their case is dismissed, and end up paying the monthly fees until they find out that their case was tossed, the FTC says.
Neither law firm responded to emailed requests for comment Thursday.
The FTC seeks freezing of assets, disgorgement, rescission of contracts, appointment of a receiver, an injunction and penalties.