When people are in foreclosure, they can fall victim to a host of scammers and scams. Unfortunately, by the time many of these folks are scammed, they are worse-off than they were before they stumbled into foreclosure. So when I come across a scammer who preys on people who need real help, you’ll read about here. Here’s the story behind David Coleman and his bogus outfit: Mortgage Finders of New England.
In April 2008, a Virginia couple contacted Coleman’s firm about an upcoming foreclosure on investment property in Newbury, MA. Coleman told the couple he could help them by filing a bankruptcy petition on their behalf. He also told the couple that he was experienced in filing bankruptcy cases, although at no time did he mention that he wasn’t a lawyer and that by law, he could not give legal advice. Only after the case was filed did the couple learn for the first time that Coleman wasn’t a lawyer at all.
Coleman waited for the debtor (the wife only) in the lobby of the Tip O’Neill building where he collected a $1,000 cash “fee” and had her sign a skeletal bankruptcy petition he prepared. But he did not properly complete the portion of the petition acknowledging that he was a petition preparer. In fact, in an effort to presumably fly below the radar and to keep his scam going, he left it blank. The case was dismissed on May 5, 2008 because no other documents were filed.
On May 21, 2008, a New Bedford woman was contacted by Coleman after he obtained information about a looming foreclosure from a local paper. Coleman told the woman that he could stop the foreclosure and it would cost $1,000 cash to retain his services. The next day, he met the woman in the lobby of the Tip O’Neill building where he collected his $1,000 cash fee, filed a chapter 13 petition, but did nothing more. When the clerk asked Coleman if he was representing the woman, he said he was only assisting her. It was at that time that the woman learned that Coleman wasn’t a lawyer. The woman’s friend demanded that he return the money, but Coleman refused.
On May 6, 2008, a Roxbury man filed a chapter 13 case after being contacted by Coleman, who learned of a foreclosure in the local paper. Again, he met the man for the first time in the lobby of the Tip O’Neill building in Boston and collected the $1,000 case. Again, the filing was deficient. And in this case was dismissed because required documents were not filed. Again, the forms were not completed correctly. Again, the people were not properly advised.
There are many more cases. There are many more violations. There are many more victims.
Who is he?
David Coleman is a predator. He operated Mortgage Finders of New England at 70 Worcester Street in Methuen. He’s not a lawyer. He has no formal education. He has no training with regard to the bankruptcy process or how to properly and fully prepare bankruptcy documents. Yet despite this, he contacts distressed homeowners, convinces them that he can help them, takes their money (and I’m willing to bet, money they cannot afford to lose), files a bare bones petition and does nothing more. Since April 2008, when he started this operation, he has collected money and prepared bankruptcy documents for over thirty people.
He advertises in the Verizon Yellow Pages and by distributing cards and flyers. He makes calls to people, using “411″ to get a homeowner’s name after getting personal information from a foreclosure notice or other public record. He tells his victims to meet him in at the Bankruptcy Court in Worcester or Boston. He downloads forms on line, completes them in his own handwriting, and files them. He doesn’t tell his victims that he is not an attorney and that he may not give legal advice. He does not disclose to the court that he is a petition preparer. He does not even give copies of the documents he files to his victims. And then he does nothing more – ultimately letting their cases fail because other necessary documents are never filed.
He holds himself out as a bankruptcy expert. Folks, David Coleman is no expert.
And it gets worse.
In July 2008, US Bankruptcy Judge Hillman issued an injunction requiring that Coleman comply with the Code and properly disclose on cases that he is a petition preparer as defined by Section 110 and his fees. Even with this order, Coleman continued this unlawful and illegal scam. He continued to file documents without disclosing who he was and what he was doing. He continued to rip people off. He continued to hurt people.
In an order dated February 18, 2009, the US Bankruptcy Court issued an order finding that Coleman had violated Section 110(b)(1) of the Code. He was fined a total of $34,500 for violation of the code, and among other things was ordered to disgorge (return) the fees he unlawfully received.
It was also found that he was engaging in the illegal practice of law, and therefore, he has been barred as “(1) acting as a bankruptcy petitioner; (2) soliciting, assisting, advising, providing legal guidance, advice, assistant or consultation of any king to any person in connection with the filing or prosecution of any bankruptcy case or any document in any bankruptcy case, whether for a fee or for free” in Massachusetts. The order includes not only Coleman but also includes “any person or entity acting in concert with him.”
When it comes to helping people keep their homes out of foreclosure, Coleman serves no legitimate purpose. He preys on people who are probably feeling as if they are at the lowest point in their lives. What people facing foreclosure need is sound counsel given by people who are trained in and who study the law and know what they are doing. That’s not Coleman, and it never was. He’s only taking money and selling false hope. He’s the lowest of the low.
If you’re facing foreclosure, talk to an attorney. Don’t be scammed by Coleman, or anyone else.
Read the Court decision here: US v. Coleman, 08-04132 (2/18/2009).
Reactive vs. Proactive
I’ve mentioned that sometimes it’s better to proactive than reactive. Being proactive is calling a bankruptcy attorney when you sense that the barn out back may be a fire hazard. Being reactive is calling a bankruptcy attorney when the barn is burning, you can’t remember where you put the garden hose while you wonder if water bill has been paid.
When clients do nothing until faced with a foreclosure notice, they are being reactive… which unfortunately places me in a reactive posture. After years of doing both, I’m certain that being reactive makes an otherwise average case more difficult and more expensive, because but for a scheduled auction some people would just hope that the finances will get better. But it’s that auction that pushes some people into finally getting their ‘house in order’, albeit quickly… and hopefully not too late. And for one of my clients, getting his house in order was what he wanted me to help them with.
After being retained by a reactive client, one of the first things I did was send a letter off to an attorney representing a lender. I let them know that I was representing the client for a bankruptcy case, and I asked that he please send copies of notices to me so that I may ensure everyone is properly listed on the petition and creditor matrix. A few weeks later, I received a copy of a notice of scheduled auction which I sent off to my client with note reminding him that his petition needed to be filed before the scheduled auction. The letter also reminded my client of the documents and information I needed to ensure that the paperwork was properly completed when filed.
About 10 days later, and about 2 weeks before the auction, the lender’s attorney calls me and leaves me a message. He wants to know if I still plan on filing a petition, since he has to hire an auctioneer, and go through the costs of publishing. He tells me he wants to avoid all of those costs if my client is going to file bankruptcy.
That put me into a bit of a predicament. (more…)
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