U.S. Consumer Financial Agency Hits Lawyer in First Suit

The year-old U.S. Consumer Financial Protection Bureau brought its first lawsuit this month, accusing a California lawyer of operating an illegal mortgage relief scheme.

The lawsuit, filed in federal court in Los Angeles, alleges that Chance Gordon used his law firm and affiliated companies to falsely promise loan modifications in exchange for advance fees, ranging from $2,500 to $4,000, according to a complaint unsealed on July 23.

“Rather than helping homeowners modify their mortgage loans or avoid foreclosure, defendants dupe distressed homeowners into paying thousands of dollars based on false promises and misrepresentations,” Kent Markus, the bureau’s enforcement director, said in the filing.

The lawsuit alleges that since early 2010 Gordon, who is based in Los Angeles, would entice potential clients with advertisements and phone calls that claimed an affiliation with government entities or programs.

After securing payments, he did “little or nothing” to assist his clients and advised them to avoid interaction with their lenders and to stop making mortgage payments, causing them to enter foreclosure or lose their property, according to the complaint.

U.S. District Judge Ronald Lew granted the agency’s request that the assets of Gordon and other defendants remain temporarily frozen.

On July 30, Gordon asked the judge to allow him access to $25,000 to pay a lawyer to defend him in the case and another $10,000 a month for living expenses. Lew hasn’t ruled on that request.

Gary Kurtz, a lawyer for Gordon, didn’t immediately respond to a telephone message seeking comment on the allegations.

The case is Consumer Financial Protection Bureau v. Gordon, 12-cv-06147, U.S. District Court, Central District of California (Los Angeles).

Before it's here, it's on the Bloomberg Terminal. LEARN MORE