WASHINGTON (AP) — As it announced its first big enforcement action against Capital One Financial this summer, the Consumer Financial Protection Bureau was preparing to raid a California company that had offered to help lower at-risk homeowners' monthly payments.
In court papers, the government accused Chance Gordon and Abraham Michael Pessar of misleading homeowners about their chances of negotiating reduced payments. It said the two charged illegal, upfront fees and did little to help clients who signed up.
Homeowners who paid the steep fees often ended up in foreclosure, while Gordon and Pessar used their money to "to fund a lavish lifestyle, including expensive cars, dinners and nightclubs," the government said. Among the company's assets is a 2004 Lamborghini Gallardo with an original cost of $88,321.
A federal district court in central California allowed the consumer bureau to raid the men's offices, freeze their assets and investigate claims that homeowners in at least 25 states were misled about the company's services.
On his Facebook page, Gordon described officials storming into his offices on the morning of July 19 and disconnecting the phones. The bureau had used details from Gordon's bank statements and earlier investigations by the California State Bar to make its case, he said in the Facebook account, which is part of the court record.
Agents were aggressive, obtaining a restraining order in secret, raiding the offices without warning and freezing defendants' assets even before confirming that they had done anything wrong. Now officials are in settlement talks with Pessar, he said last week. He has agreed not to dispute many of the allegations, court papers show.
Gordon maintains his innocence. His lawyer, Gary Kurtz, said the upfront fees actually were for "pre-litigation services," a claim the government disputes. Kurtz said Pessar was responsible for the communications with homeowners that the government criticized.