Consumer bureau sues foreclosure relief firm, its CEO and auditor over deceptive and abusive acts, practices

Suit seeks redress and fines from firm and its CEO; bulk of penalty against auditor would be suspended under proposed order

A foreclosure relief services company headquartered in Houston, Texas, as well as its chief executive and its auditor are being sued by the federal consumer financial protection agency for engaging in deceptive and abusive acts and practices and for charging fees before services were rendered, the agency said Friday.

The Consumer Financial Protection Bureau (CFPB), in a release, said it filed a complaint in federal court Friday in the Central District of California against Certified Forensic Loan Auditors, LLC (CFLA); Andrew Lehman, its president and chief executive officer (CEO); and the firm’s sole auditor, Michael Carrigan, who the CFPB’s complaint says provided “substantial assistance” to CFLA and Lehman in their activities.

According to the complaint, CFLA offered or sold financial-advisory or mortgage-assistance-relief services to consumers nationwide, including within California (where it is incorporated). CFLA is currently not in good standing and has been suspended by the California Franchise Tax Board for failing to meet its state tax obligations, the complaint states.

The bureau’s complaint holds that:

  • CFLA and Lehman violated the Consumer Financial Protection Act of 2010 (CFPA) and Regulation O by making deceptive and unsubstantiated representations about the company’s mortgage assistance relief services and its ability to help consumers avoid foreclosures or negotiate loan modifications. The bureau alleges that CFLA has made deceptive and unsubstantiated claims about the efficacy and content of its services, as well as misleading or false claims about the experience and qualifications of the persons providing the services. [Among the false claims cited are that attorneys are involved in the preparation of audits and litigation documents; that CFLA is attorney-owned and operated; that CFLA has multiple experts on staff; and that Carrigan manages a team of 25 auditors, when he is the company’s sole auditor.]
  • CFLA’s representations and services constituted abusive acts and practices in violation of the CFPA.
  • CFLA and Lehman have charged consumers for the company’s fees before services were actually rendered, in violation of Regulation O.
  • Carrigan violated the CFPA as well as Regulation O in assisting CFLA and Lehman in their activities. For example, the complaint states, Carrigan “knew or recklessly avoided knowing that CFLA and Lehman were engaged in making deceptive representations to consumers regarding the effectiveness, content, and expertise of the individuals engaged in the preparation of the Audits.”

The complaint states that CFLA and Lehman charge a fee of $1,495 and collect it from consumers before producing and delivering an audit and litigation documents, and before they obtain any mortgage-assistance-relief for consumers. Since 2014, they have sold more than 2,000 audits to consumers, either directly or through intermediaries, the complaint says. Presuming a fee was collected for each audit, that works out to nearly $3 million in fees to CFLA.

The complaint seeks, among other things, restitution (jointly and severally) of all unlawfully collected fees; “disgorgement of ill-gotten revenues” or compensation for just enrichment; civil money penalties (not specified); payment of damages or the monetary relief; limits on the activities or functions of defendants; and “additional relief as the Court may determine to be just and proper.”

The CFPB and Carrigan also filed a proposed stipulated final judgment and order to resolve the “substantial assistance” claims against Carrigan. Under that proposal, Carrigan would be barred from providing mortgage assistance relief services, or consumer financial products and services, and assessed a $493,000 civil money penalty, all but $5,000 of it suspended due to Carrigan’s limited ability to pay.

Consumer Financial Protection Bureau Files Suit against Certified Forensic Loan Auditors, Andrew Lehman, and Michael Carrigan, and Proposed Settlement with Carrigan