In the case, the Defendant was a consumer finance company that generally made small, unsecured, high interest loans. The typical loan was usually in the range of $5,000-10,000. However, during the mid-1990’s, the manager of one of the Defendant’s branches delved into the business of making real estate loans under a program designed to assist borrowers in purchasing and rehabilitating distressed properties. The program, however, was a scam, part of an elaborate scheme to obtain funds on worthless properties from other mortgage companies through a series of forged and fraudulent documents.
The firm’s client engaged in all the due diligence procedures required for making real estate loans including obtaining appraisals, title reports and payoff letters setting forth the amount allegedly due on each mortgage. Unfortunately, the documents provided to the client were false as a result of the conspiratorial fraudulent work of the appraisers and the branch manager of the Defendant. For example, even though the properties were almost all worthless, the client was provided with appraisals which significantly overstated the value of the properties and indicated that each of the properties had been recently rehabilitated. Similarly, loan packages provided to the client contained false payoff letters which significantly overstated the amount actually due and outstanding on the loans it had made. Had the consumer finance company’s payoff letters identified the amount actually necessary to release its lien, the client would have known the appraisals were false.
Our client made dozens of mortgage loans relying upon the fraudulent documents that it had received. Not surprisingly, these loans all went into default, ultimately resulting in the client going out of business. At that point, the company retained David A. Axelrod & Associates.
Through detailed examination and investigation into the loan documentation, David A. Axelrod & Associates was able to trace the money funneled through the fraud scheme. Armed with this information and knowledge, the firm was able to obtain admissions from members of the Defendant finance company regarding its business practices and participation in the fraud. Consequently, with all of the overwhelming evidence against it, the consumer finance company eventually settled the matter with our client for an undisclosed amount on the first day of trial.
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