An operator of a mortgage relief scam and an attorney agreed to court orders banning them from the debt relief business in order to resolve allegations brought by the FTC that they swindled millions of dollars from financially distressed homeowners.
According to the FTC’s Complaint, in the scheme, Damian Kutzner and four attorneys operating as Brookstone Law and Advantis Law told unsuspecting homeowners they could save their homes from foreclosure and likely obtain “at least $75,000” or their homes “free and clear” through so-called “mass joinder” lawsuits. However, no consumer ever achieved, or was likely to achieve, any mortgage relief. Kutzner and the attorneys sued several well-known banks but never won any cases, and most were dismissed. The FTC also filed a contempt action against Kutzner, alleging his actions violated a 2003 FTC court order against him.
The stipulated order against Kutzner resolves the FTC’s allegations in the Complaint and the contempt charges. It also bans Kutzner from providing certain financial products and services, and from making misrepresentations about any products or services. In addition, the order imposes a judgment of more than $18.3 million, representing the amount of consumer harm.
Another stipulated order bans Jonathan Tarkowski, an attorney with the law firms, from the debt relief business and prohibits him from making misrepresentations about financial and other products and services. The order imposes a judgment of more than $1.1 million, which will be suspended upon payment of essentially all of his assets, valued at $5,307.00. However, the full judgment will become due immediately if he is found to have misrepresented his financial condition.
Litigation continues against the remaining three attorney-defendants in the Central District of California. “Preying on homeowners who already are financially distressed and struggling to pay their mortgages is appalling,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “That’s why stopping phony mortgage relief operations, like this one, is a priority at the FTC.”