Minnesota Attorney General Lori Swanson Prevails in Lawsuit Trageting Foreclosure and Real Estate Fraud

Attorney General Lori Swanson scored a sweeping victory today in a lawsuit against real estate fraudsters who were scamming Minnesota homeowners in foreclosure. Following a ten-day trial of the case involving 16 witnesses and 480 trial exhibits in January, 2008, Minnesota District Court Judge Lloyd Zimmerman issued a decision today in favor of the Attorney General in the case of State of Minnesota v. Thomas von Behren, et al., Hennepin County Court File No. 04-12164. Judge Zimmerman required Defendants to pay nearly $1.7 million and issued a permanent injunction barring them, among other things, from participating in any transaction related to real estate, mortgages, or real estate financing.

The January trial was handled by Deputy Attorney General Karen Olson and Assistant Attorney General Nate Brennaman of the Complex Litigation Division, with assistance from investigator Giulia Palumbo.

“Given the terrible problems in the housing market, the last thing we need is companies like these preying on Minnesota homeowners who are already facing financial difficulties,” Swanson said.

The case, which was filed in 2004, alleged that Thomas von Behren, Bruce Livingood, Abdul Baten, and their various business entities, had engaged in a variety of illicit and deceptive schemes to defraud homeowners facing foreclosure and investors out of savings or the equity in their homes. Von Behren and the other Defendants preyed on homeowners who were either in foreclosure or who were delinquent on their mortgages and therefore about to go into foreclosure.

In one of the deceptive schemes perpetrated by Defendants, Defendants made representations to homeowners that Defendants would help the homeowners and “save” their homes. Defendants would instead obtain title to the homes to profit themselves at the expense of the homeowners, who were forced from their homes without receiving the equity they had built in their homes.

Judge Zimmerman noted on page 29 of his Order that: “This was a heart-wrenching case, with repeated stories of misery of persons forced out of their home in their most desperate hour, and most tragically, after they relied on the defendants’ offer to rescue them from pending disaster.” Judge Zimmerman went on to say: “In summary, the 13 witnesses called by the State established a sad and convincing truth that the defendants engaged in a pattern and practice of deceptive, misleading, and fraudulent behavior in violation of Minnesota’s consumer protection laws.”

Judge Zimmerman found that each Defendant committed multiple separate violations of the Minnesota Consumer Fraud Act and the Minnesota Deceptive Trade Practices Act.

In late 2004, then Solicitor General Swanson personally argued for, and received, temporary injunctions against the Defendants. Attorney General Swanson said she was pleased that the Court had made the injunctions permanent.

Attorney General Swanson cautioned homeowners to be wary of smooth-talking companies that promise to “save” or “rescue” a home from foreclosure: “There are unscrupulous people out there who will not hesitate to exploit desperate homeowners for their own financial gain. Before agreeing to work with a foreclosure consultant, be sure to confirm that the person has an established reputation for helping people, not exploiting them,” Swanson said. Swanson encouraged homeowners facing foreclosure to take action immediately to work with their lender to remedy the situation. The Attorney General’s Office issued an alert entitled Facing Mortgage Foreclosure, which provides tips on how to locate reputable assistance and what steps to take.

Attorney General Swanson commended Deputy Attorney General Olson, Assistant Attorney General Brennaman, and Investigator Palumbo for their work on the trial. Swanson hopes that the case will serve as a deterrent to other wrongdoers in the residential real estate business. “As demonstrated by this case, my Office will not be shy about going to trial to protect and vindicate the rights of desperate homeowners,” Swanson said.

Consumers with questions about foreclosure, or who would like to file a consumer complaint may do so by contacting the Attorney General’s Office at (651) 296-3353 or 1-800-657-3787. Consumers may also download a consumer complaint form from the Attorney General’s website by clicking here and mail the completed form to the Attorney General’s Office at: 1400 Bremer Tower, 445 Minnesota Street, Saint Paul, MN 55101-2131.