Connecticut Attorney General's Office

Press Release

Attorney General Sues Ring Of Companies Involved In Predatory Lending Scheme

August 25, 2009

Attorney General Richard Blumenthal today announced a lawsuit against several companies and individuals allegedly engaged in a massive predatory lending scheme to provide unaffordable mortgages to Hispanic consumers, many of them unable to speak English.

Many of these consumers have already lost -- or are on the verge of losing -- their homes to foreclosure.

Blumenthal sued on behalf of Department of Banking (DOB) Commissioner Howard F. Pitkin and Department of Consumer Protection (DCP) Commissioner Jerry Farrell, Jr.

The lawsuit names VRM Mortgage Company, Inc.; Roman Realty, Inc.; Victor Roman; Jose Flores, d/b/a Harvard Financial Services; and Tony Mojica.

The defendants allegedly colluded to mislead consumers and mortgage lenders by falsifying loan applications and luring borrowers into unaffordable loans. The defendants enjoyed significant profits from real estate and brokers' commissions and other fees, while consumers and lenders continue to suffer from failed mortgages.

"This lawsuit stops a renegade real estate ring that turned the American dream into a nightmare for dozens of homeowners and lenders," Blumenthal said. "Targeting Hispanic consumers, these companies allegedly falsified loan applications and fabricated salaries -- purposefully putting homebuyers in danger of financial catastrophe. Many first-time homeowners were doomed to foreclosure or financial failure.

"Enriching themselves with endless commissions and fees, these alleged scammers concocted key facts and lured borrowers into unaffordable loans. This massive predatory lending scheme deepened economic despair for homeowners and damaged property values in the region. My office will fight for stiff penalties, restitution for consumers and a court order blocking these companies from committing future harm."

Blumenthal's investigation found that, starting around April 2002, Roman operated VRM as a licensed mortgage brokerage business upstairs from his Roman Realty company at 219 Bedford Street, Stamford.

Blumenthal alleges that Roman began directing prospective buyers to VRM for mortgage brokering services, often personally escorting consumers upstairs to VRM's offices.

Many of Roman's consumers were Hispanic, spoke little or no English and were self-employed. As a result, the consumers qualified solely for stated income loans that required no income verification.

Although lenders typically didn't require income verification for such loans, they often required a so-called "accountant's letter" from the consumer's tax preparer to verify the consumer was self-employed and for how long.

Roman had introduced Jose Flores to VRM's agents as a tax preparer who could provide an accountant's letter to qualify a consumer for a loan. Flores operated a tax preparation business known as Harvard Financial Services (HFS).

VRM's agents and employees would often contact Flores when they needed an accountant's letter to qualify a consumer for a loan when the consumer did not have a regular tax preparer.

Flores allegedly provided accountant's letters to VRM for numerous consumers knowing that the letters would be submitted to lenders to qualify consumers for mortgage loans. In fact, Flores had not prepared taxes for these consumers and had no basis to make any representations regarding their employment status.

VRM paid Flores a fee for each false accountant's letter, as well as the fee that consumers paid Flores for each letter.

In addition to submitting false accountant's letters to qualify consumers for mortgages, VRM agents and employees falsified information on consumers' mortgage loan applications, including income details.

In some cases, VRM would direct consumers to write letters falsely claiming that they earned an inflated income to submit as part of their loan applications.

Roman and Roman Realty collected substantial real estate commissions as a result of the falsified loan documents. VRM and Tony Mojica, VRM's office manager, also collected substantial brokers fees for each loan transaction based on the falsified loan documents. Many consumers who bought homes through Roman faced or now face the prospect of losing their properties to foreclosure.