Hundreds of victims of a mortgage-rescue scheme rooted in Palm Beach County will receive full recompense for their losses in a landmark reward of $11.7 million.
The money, which will be paid to homeowners who contracted with the North Palm Beach-based Hoffman Law Group, is a combination of auction proceeds from the sale of jewelry and firearms belonging to the company’s operators and funds from the federal Civil Penalty Fund.
The Hoffman Law Group was shut down in July 2014 by the Florida Attorney General’s office and the Consumer Financial Protection Bureau following Palm Beach Post stories that uncovered dozens of complaints against the firm.
According to court documents and two former employees, the company used boiler room-style sales tactics to rope struggling homeowners nationwide into pricey “mass litigation” lawsuits against their banks.
Consumer protection groups have warned for years that the lawsuits, which can include dozens of homeowners in a single case, are ineffective or outright scams.
“I want to cry I’m so happy,” said Orlando resident Regino Becerra, when he was told Tuesday about the pending refund.
Becerra, 72, said he paid about $10,000 to the Hoffman Law Group and lost his home to foreclosure.
“It’s been very hard,” he said. “We lost the home. We lost everything. It’s hard trusting anyone.”
An estimated 1,200 struggling homeowners from the Pacific Northwest to South Florida were clients of the Hoffman Law Group. Many paid upfront fees of $6,000 and monthly payments of $495 to join the lawsuits.
Mark Bernet an attorney with Akerman LLP was appointed receiver in the Hoffman case. He was able to recover more than $1 million, including by auctioning luxury jewelry owned by Hoffman operators. Items auctioned included watches by Breitling, Cartier and Rolex. Diamond and gold pendants, earrings and bracelets, as well as a Glock 45 semi-automatic pistol and a Ruger .380 were also sold at auction.
“The most challenging part of the case was realizing that so many people relied upon the misrepresentations of the Hoffman enterprise by sending in almost $12 million,” Bernet said. “I had dozens of conversations with struggling homeowners who could have used the money they sent to Hoffman to work with their home lenders.”
More than $11 million in refunds are coming from the Consumer Financial Protection Bureau’s Civil Penalty Fund, which was established by the Dodd-Frank Wall Street Reform Act of 2010.
Since 2013, more than $225 million has been allocated nationwide to victims in civil cases against firms such as Payday Loan Debt Solution, American Debt Settlement Solutions, Culver Capital and Student Financial Aid Services.
The federal case against the Hoffman operators, Consumer Financial Protection Bureau and State of Florida Office of Attorney General vs. Michael Harper, et al., was settled in May 2015 when final judgments were issued.
While Florida attorney Marc Hoffman lent his name to the company, court records say Michael Harper of North Palm Beach and Benn Willcox of Palm Beach Gardens were truly running the organization.
Hoffman, who was struggling financially, embroiled in a divorce, and “eating cheap meals from value menus at fast-food restaurants,” got involved after answering an advertisement posted on Craigslist in 2011.
“Hoffman Law was owned by Marc Hoffman although, as will be discussed below, the firm was not controlled by Hoffman,” Bernet wrote in court filings. “He had only a vague notion of the nature of the lawsuits that the firm filed. He was not invited to attend weekly meetings to discuss the business.”
Last year, the Florida Supreme Court revoked Hoffman’s license for at least five years. His legal settlement also bars him from working in the loan modification industry.
Harper and Willcox are similarly banned from selling, advertising or otherwise participating in the sale or advertising of consumer financial products or services. Money judgments against Harper and Willcox were suspended so long as they surrendered personal property for liquidation.
For more information about the suit against the Hoffman Law Group and settlement go to www.bernet-receiver.com/appointments/hoffman.
WHAT THE POST FOUND
The Palm Beach Post reported in 2014 that homeowners were complaining that they paid thousands to the Hoffman Law Group but felt duped by its pitch that they could get a lower mortgage and better credit rating through mass litigation lawsuits.