Professional Documents
Culture Documents
TO
AMENDED COMPLAINT
I. INTRODUCTION
General, Martha Coakley, brings this enforcement action in the public interest under G.
L. c. 93A, '' 2 and 4 of the Massachusetts Consumer Protection Act concerning unfair
and deceptive business conduct in connection with the foreclosure rescue scheme
defendants Timeless Funding, Andrew Palmer, and others, from 2004 through 2006,
could help them avoid foreclosure through refinancing, and then deceived the
homeowners into transferring to him, or to his wife Jennifer Sohmer, or to his brother
Bradley Sohmer, ownership of their homes, and the equity built up in their homes.
executing documents purporting to give them the ability to repurchase their homes at a
later date by paying Arent@ in the meantime. But the Arepurchase@ terms were both
themselves tenants in their own homes paying Arent@ to Sohmer, then evicted by him
when they were late on even one monthly payment, and then facing the prospect of the
sale of their homes from Sohmer to third parties. Throughout this process, Sohmer and
the defendants extracted the equity built up by the homeowners in their property, and
further extracted additional fees, commissions and other payments directly from the
homeowners.
deceptive acts and practices under the Massachusetts Consumer Protection Act, as
well as violations of specific state and federal laws and regulations designed to protect
3
families burdened with: (i) significantly higher mortgage principal balances than they
previously had; (ii) high monthly mortgage payments, and in some instances second or
even third mortgages and very high interest rates; (iii) the prospect of no escrow funds
which Sohmer had promised to save for them; (iv) a total loss of home equity; and, (v)
inflated debt at a time when market values for the homes in many instances have
7. Other defendants aided Sohmer in his scheme, and were integral to its
continuation, as follows:
(iii) The primary mortgage broker, Edward de la Flor, and his employer
Carteret Mortgage Corporation (mortgage broker/originator),
originated and brokered many of the loans involved in the Sohmer
transactions. Both Carteret and de la Flor profited from the transactions
by collecting closing points, commissions, yield spread premiums, sales
bonuses and other fees.
Without them, Sohmer’s scheme never would have occurred. Each of these defendants
profited from their participation by siphoning off the homeowners’ equity, enriching
everyone but the homeowners, who lost their homes or, at best, were saddled with an
4
9. The Commonwealth is seeking through this Adversary Proceeding: (i)
restitution for those homeowners harmed by defendants= practices; (ii) civil penalties;
(iii) permanent injunctive relief; (iv) payment of the Commonwealth=s costs and
attorney=s fees incurred in investigating and litigating this case; (iv) objection to
II. JURISDICTION
bring its state court action in the Superior Court for Suffolk County, Massachusetts,
against Sohmer and other defendants, pursuant to G. L. c.93A '' 2 and 4, G.L. c. 12, '
10, and G. L. c. 223A, ' 3(a) and (b). The Commonwealth filed its Complaint on August
30, 2006, which was designated as Civil Action No. 06-3664-A (the “state court case”).
November 20, 2006. The Court assigned In re Sohmer Bankruptcy Case No. 06-
14073JNF.
12 The Attorney General removed its state court case to this Court, by filing a
Notice of Removal on December 12, 2006, pursuant to 28 U.S.C. ' 1441(b) and
Bankruptcy Rule 9027. The state court case is related to In re Sohmer, pursuant to 28
U.S.C. ' 1334(b), and therefore the district court for the Eastern District of
Massachusetts has original, but not exclusive, jurisdiction over the removed state court
5
action. This Court designated the Commonwealth’s removed case Adversary
13. This Court has subject matter jurisdiction over all defendants in this
Amended Complaint in Adversary Proceeding No. 06-1433 for at least the following
reasons. First, this Amended Complaint includes allegations and actions which
and Timeless Funding, pursuant to 28 U.S.C. § 157(b)(1), due, inter alia, to the issue of
the validity of liens on properties nominally and/or legally owned by Sohmer. Thus, this
Court has subject matter jurisdiction over those claims, pursuant to 28 U.S.C.
§ 1334(b). Second, this Amended Complaint contains claims against all defendants,
including Andrew Palmer, Shaun Ellis, Carteret Mortgage, and Edward de la Flor, that
are “related to” Sohmer’s bankruptcy proceeding. Thus, this Court has subject matter
' 1367, because the same operative facts are involved in the Commonwealth’s
allegations against Sohmer, and the other defendants, which involve: 1) the same set of
unfair and deceptive practices carried out by all defendants collectively; 2) the same
foreclosure rescue transactions orchestrated by Sohmer and the other defendants; and,
pursuant to 11 U.S.C. § 727(a), and seeks to except from discharge certain debts owed
6
These claims are core proceedings under 28 U.S.C. § 157(b).
III VENUE
223, ' 5 and G. L. c. 93A, ' 4 when the Commonwealth filed its state court case on
August 30, 2006. Venue is proper in this court pursuant to 28 U.S.C. '§ 1409(a) and
1452.
IV. PARTIES
Attorney General, Martha Coakley, brings this action in the public interest.
law in the Commonwealth of Massachusetts. His home address is: 23 Roxanne Road,
Pembroke, Massachusetts 02359. His business address is, or was during the acts and
practices relevant to this case, located at: 71 Legion Parkway, Suite 23, Brockton,
Massachusetts; and also at the offices of Andrew P. Palmer and Associates, 200
individually, and as Trustee to 26 separately formed Nominee Trusts, which are named:
7
46 BOURNE NECK ROAD NOMINEE TRUST (the ACoelho Property@)
27 GENERAL PATTON DRIVE NOMINEE TRUST (the ASawyer Property@)
7 BUTTERFIELD LANE NOMINEE TRUST (the AForero Property@)
420 HIGH STREET NOMINEE TRUST (the ABertelli Property@)
5 JOE JAY LANE NOMINEE TRUST (the ALansing Property@)
159 GREEN STREET NOMINEE TRUST (the AAustin Property@)
23 PRIMROSE LANE NOMINEE TRUST (the ACataldo Property@)
72 PURCHASE STREET NOMINEE TRUST (the ADand Property@)
158 ASA MEIGS ROAD NOMINEE TRUST (the AWells-Hamblin Property@)
10 SAMOSET ROAD NOMINEE TRUST (the ABaum Property@)
37 HAYES ROAD NOMINEE TRUST (the APhillips Property@)
36 RESTFUL LANE NOMINEE TRUST (the ATrarback Property@)
9 MIDWAY STREET NOMINEE TRUST (the AMartin Property@)
15 BEECHWOOD DRIVE NOMINEE TRUST (the ALopes Property@)
73 ADAMS AVENUE NOMINEE TRUST (the AMarsh Property@)
49 COURTLAND STREET NOMINEE TRUST (the AImbrogna Property@)
28 VINEYARD AVENUE NOMINEE TRUST (the AGiuffre Property@)
121 WALNUT STREET NOMINEE TRUST (the AHarrison Property@)
3 LADY ALLISON WAY NOMINEE TRUST (the AMonroe Property@)
667 BRIDGE STREET NOMINEE TRUST (the AHinchey Property@)
41 WESTON STREET NOMINEE TRUST (the ACarrigan Property@)
19. Defendant Jennifer Sohmer is the wife of defendant Alec Sohmer, and the
Secretary of defendant Timeless Funding. Her home address is: 23 Roxanne Road,
and as co-Trustee, along with Sohmer, to 6 separately formed Nominee Trusts, which
are named:
licensed under the laws of the State of Nevada, listed as being located at 1802 N.
8
Carson Street, Suite 212, Carson City, Nevada. Its Secretary is listed as Jennifer Di
Domenico, which is the maiden name of the Defendant Jennifer Sohmer, with an
address of P.O. Box 368, Brockton, Massachusetts 02303. Sohmer is listed as the
Massachusetts.
under the firm name: Andrew P. Palmer and Associates. Palmer was formerly a
partner with Sohmer in the law firm: Palmer Sohmer, LLP. On information and belief,
Palmer was, or planned to become, a partner, officer, and/or principal affiliate with
Palmer and Associates, and/or as a member of Palmer Sohmer LLP, served as the
closing attorney on behalf of each lender in each of the Sohmer transactions at issue in
this case. Palmer maintains a home address located at: 360 Prospect Street, Norwell,
Massachusetts. Palmer=s business address is located at: 200 Cordwainer Drive, Suite
301, Norwell, Massachusetts. The business address of Palmer Sohmer LLP is and/or
was located at: 200 Cordwainer Drive, Suite 301, Norwell, Massachusetts.
the Commonwealth of Massachusetts. Ellis currently practices law under the sole
practitioner firm name Law Offices of Shaun Ellis, LLC. Ellis on several occasions
referred his clients to Sohmer for foreclosure rescue assistance, and some of those
clients became victims of Sohmer’s scheme. On at least two occasions, Ellis received a
9
referral fee from Sohmer. Ellis maintains a home address located at: 11 Burgess
licensed under the laws of the State of Virginia, whose corporate office is located at:
6211 Centreville Road, Suite 800, Centreville, Virginia 20121. Carteret maintains two
offices in Massachusetts, one located at: 236 Huntington Avenue, Suite 418, Boston,
Massachusetts 02115; the other located at: 117 High Street, Charlestown,
24. Edward de la Flor (Ade la Flor@), at all times relevant to this case,
10
former employee of First Horizon Home Loans, a lender for several of the Sohmer
transactions. His home address is: 116A Rockingham Road, Londonderry, New
Hampshire 03053. De la Flor acted as mortgage broker for eleven Sohmer transaction,
V. FACTS
1. The Transactions
Timeless Funding, Inc. (“Timeless Funding”). He listed himself as sole Director. Under the
Timeless Funding name, Sohmer began offering foreclosure rescue “services” to financially
homeowners who faced foreclosure, and who often were in Chapter 13 bankruptcy.
11
$ explained that, ATimeless Funding is able to reduce your monthly mortgage
payment by securing an interest only loan at the lowest available mortgage
rates. We will also access a small portion of your equity to subsidize your
payments over the first two (2) years.@
The Timeless Funding letter thus purported to offer replacement financing with a lower
his foreclosure rescue transactions, he held out the deal as offering replacement financing
from Timeless Funding, which would allow homeowners to avoid foreclosure and keep their
home.
27. Sohmer used his uncapitalized, shell company ATimeless Funding@ to solicit
clients for his transactions. Sohmer held out Timeless Funding as a corporation that would
provide a Arefinance,@ and Areduce your monthly mortgage payment by securing an interest
only loan . . . .@ Sohmer generated phony mortgage commitment letters that he shared with
the homeowner victims. The letters were signed by Charles Taylor, the purported ACEO@ of
28. In fact however, the transaction ultimately arranged by Sohmer was not
replacement financing, but instead required: (i) the homeowners to convey their homes to
Sohmer, and then (ii) pay Sohmer=s new mortgage loan on a monthly basis, with (iii) the
29. Still worse, contrary to the solicitation letter, Sohmer failed to deliver the lower
12
payments promised, and often increased monthly payments beyond those that had led to
foreclosure.
provide the monthly payments promised in his solicitation letter. Most monthly payments
increased hundreds of dollars (average increase $358 net payments), and some more than
$1,000. The monthly payments of eleven of Sohmer=s clients increased more than 25%
(from promised to actual), and seven more had payments increase between 10% and 25%.
Because these higher monthly payments were not disclosed until the Aclosing,@ when
foreclosure was imminent, homeowners typically believed they had no choice but to go
31. After soliciting homeowners to use his services through the misleading letter
and his verbal presentation, Sohmer eventually proposed a program purportedly provided by
Interim Ownership Agreement, and Disclosure Document, which he, and defendant Palmer,
when foreclosure was imminent, and represented that his proposal was the only way
homeowners could stay in their home and preserve home equity. The Interim Ownership
32. First, the IOA and Disclosure Document@ prominently featured Timeless
13
Funding as the entity that would obtain an interest only loan and arrange the promised
letters@ generated by Sohmer, did not provide or arrange funding in any manner; it played no
role in the transactions. Instead, only Sohmer, personally, obtained financing and acquired
title to property in his own name or that of his wife or brother. Sohmer never disclosed to
33. Second, Timeless Funding is a fiction and its Amortgage commitment@ letters
were patently false. Timeless Funding is not a licensed mortgage lender or broker in
Massachusetts (or anywhere else). It does not provide or arrange financing in any
manner, and it played no role in the eventual transactions. Timeless Funding is a sham
invented by Sohmer to mislead consumers into believing that Sohmer had arranged
financing for them from a mortgage lender. Charles Taylor, ACEO@ of Timeless Funding,
Nevada. In fact, Sohmer obtained financing and acquired title to property in his own name
(or that of his wife or brother). Only at the Aclosing,@ when foreclosure was imminent, did
homeowners learn that they were dealing not with Timeless Funding, but Sohmer
personally, who was acquiring their home and obtaining a mortgage in his name, although
34. Third, the IOA stated that the difference between the purchase price and
Sohmer=s mortgage loan, Arepresent(ed) a one time buy down of the new mortgage,@ and
Sohmer explained to homeowners that he would access their home equity to reduce their
14
monthly payments. In fact, the Astated purchase price@ was fictitious; Sohmer never paid
that amount to the homeowners. The loan proceeds obtained by Sohmer were used only
to pay off the consumer=s previous encumbrances, including the mortgage loan which was
being foreclosed upon. That difference between the nominal purchase price and Sohmer=s
mortgage loan -- which represented the homeowner=s home equity -- was not used
exclusively to reduce monthly payments. The difference between Sohmer=s mortgage and
the homeowner=s existing pay-offs was used to pay Sohmer=s $15,000 fee, closing costs
ranging from $7,500 to $36,000, and finally, in some cases, an escrow to subsidize monthly
payments.
35. Thus, Sohmer misled homeowners that his transaction would cost only the
$15,000 fee to Timeless Funding. In fact, in order to obtain the replacement financing that
Sohmer promised would allow them to keep their home, each homeowner paid: (i) the
$15,000 fee, sometimes coupled with additional fees to referring attorneys; (ii) closing costs
(including Sohmer’s) which averaged $14,426 per transaction; and (iii) another round of
closing costs and expenses in the event that the homeowner was able to obtain financing to
homeowners have paid fees and costs of $28,906 for the transaction arranged by Sohmer.
All of these costs were effectively paid from the home equity that homeowners accumulated
prior to dealing with Sohmer. At no time did Sohmer accurately disclose the costs of his
transaction or how these costs sapped the home equity that Sohmer promised to preserve.
36. Fourth, central to Sohmer=s solicitation of clients was his claim that his
transaction would allow homeowners to preserve the equity they had accumulated in their
15
home. The IOA and Sohmer claim that Aall equity will remain with the property.@ But the
home equity was immediately conveyed to Sohmer, and used in part to fund Timeless
Funding=s $15,000 fee, and all closing costs for the transaction (with closing costs to be
homeowners transferred all of the equity in their homes when they deeded their property to
Sohmer. Thus, Sohmer’s claims of preserving equity were misleading and he failed to
mortgage payments was misleading, and often did not materialize for homeowners. A
central aspect of Sohmer=s proposal to avoid foreclosure was that Sohmer would Aaccess@
the homeowner=s home equity and use it to Abuy down@ the new mortgage, and that
monthly payments would be decreased by the Aequity buy down@ escrow to be maintained
by Sohmer.
Sohmer, failed to establish the Aequity buy down@ escrow he promised. Fourteen Sohmer
clients either had no escrow, or their escrow account, after paying costs and fees, did not
contain the money necessary to fund the 24 month “subsidy” that Sohmer promised.
39. Sixth, Sohmer also failed to disclose that Timeless Funding is not a licensed
broker or anything other than a shell of Sohmer himself, and that Timeless Funding would
not be providing or applying for the replacement loans. Instead, Sohmer himself, or his
wife or brother, was the applicant for each of the loans at issue in this case.
16
Transfer Deeds and Nominee Trusts.
40. Once a homeowner signed the IOA and Disclosure Document, Sohmer then
arranged financing for his acquisition of the home. When Sohmer arranged financing for
himself, eventually a Aclosing@ occurred at the office of defendant Palmer. At the closing,
the homeowner was presented, for the first time, with several papers that effected the
transfer of their home to Sohmer, including: (i) a quitclaim deed to Sohmer, and (ii) a
sometimes his wife or brother, signed a Note and Mortgage to his new lender, but did not
41. For most of the transactions, on or about the same day as the Aclosing@ of
including: i) a Declaration of Trust, named for the property at issue; ii) a deed of the subject
property from Sohmer to the new Trust; iii) a Trustee Certificate concerning authority to
purchase the property; and, iv) a Schedule of Beneficiaries, listing the homeowner as 85%
receipt of the schedule of beneficiaries. Each of these trust documents was signed by
42. The form trust prepared by Sohmer provided that Sohmer was trustee, to hold
property Afor the sole benefit of@ the listed beneficiaries. Among other terms, Sohmer=s
form trust provides that Adecisions made and actions taken under this trust . . . shall be
made or taken solely by the minority beneficiary [Timeless Funding].@ As a result, the Trust
prepared by Sohmer: (i) gave broad authority to Sohmer, as trustee, to control the trust
17
property; and, then (ii) allowed him to exercise that authority as instructed by Timeless
43. Between December 2004 and June 2006, Sohmer arranged at least 26
name:
Closing Homeowner’s
Date Name Address_______________________
10/28/2005 Beth Austin 159 Green Street, Weymouth, MA 02191
4/24/2006 Harry and Melinda Baum 10 Samoset Road, Mashpee, MA 02649
5/6/2005 John and Kathleen Bertelli 420 High Street, Bridgewater, MA 02324
3/29/2006 John and Barbara Bryson 1 Diamond Street, Plymouth, MA 02360
2/25/2005 Shirelle Carrigan 41 Weston Street, Brockton, MA 02301
11/17/2005 Paul and Cindy Cataldo 23 Primrose Lane, Middleboro, MA 02346
1/20/2006 Regina Coelho 46 Bourne Neck Road, Bourney, MA 02352
3/10/2006 Nancy Dand 72 Purchase Street, Brockton, MA 02301
10/17/2005 Julian and Leticia Forero 7 Butterfield Lane, Medfield, MA 02052
3/24/2006 Guy Giuffre 28 Vineyard Avenue, Oak Bluffs, MA 02557
11/23/2005 Ray and Wendy Goff 57 Stage Coach Road, Centerville, MA 02631
1/20/2006 Oleg and Maryana Grigoryan 2 Belgian Road, Danvers, MA 01923
1/05/2005 Linda Harrison 121 Walnut Street, Brockton, MA 02301
10/31/2005 Gail Hinchey 667 Bridge Street, East Bridgewater, MA 02333
4/19/2005 Jeff Imbrogna 49 Courtland Street, Middleboro, MA 02346
11/23/2005 Robert and Karen Lansing 5 Joe Joy Lane, Sandwich, MA 02644
4/3/2006 Brad and Cynthia Lopes 15 Beechwood Drive, Mashpee, MA 02649
2/22/2005 William Marsh 73 Adams Avenue, Pembroke, MA 02359
10/11/2005 James and Mary Lou Martin 9 Midway Street, Wareham, MA 02558
9/2/2005 Ron and Carol McCallum 9 Shangri-La Boulevard, Wareham, MA 02558
9/14/2005 Paul and Wendy Munroe 3 Lady Allison Way, Bourne, MA 02532
3/28/2005 Lori Phillips 37 Hayes Road, East Bridgewater, MA 02333
11/23/2005 Thomas and Deodata Sawyer 27 General Patton Drive, Hyannis, MA
02601
3/28/2006 Sigrid Trarbach 36 Restful Lane, Wareham, MA 02539
9/30/2005 Sara Wells-Hamblin 158 Asa Meigs Road, Marston Mills, MA 02648
6/6/2006 Charles and Carlene Wood 389 Center Street, Hanover, MA 02339
18
44. The properties were valued, based on their sales prices in the transactions,
45. Sohmer=s HUD-1 Settlement Statements and the loan closing files show how
the money flowed in each transaction. In each deal, Sohmer obtained a mortgage loan that
significantly exceeded the homeowners= existing mortgage loan and other pay-offs (back
taxes and liens). This Aoverage@ ranged from $11,946 to $107,093 and averaged $43,973
per transaction, which on each occasion represented the homeowners= home equity
46. Sohmer, in turn, used the money from his loan proceeds to: (i) pay a $15,000
fee to himself (nominally Timeless Funding), and sometimes a $2,000 or $3,000 fee to a
referring attorney; (ii) pay the settlement costs of both Sohmer and the seller-homeowner,
which ranged from $7,525 to $36,404, and averaged $14,426; and, (iii) fund a so-called
payments or for other various payments to the homeowners during the so-called interim
period. These escrow accounts, at their commencement, ranged from zero to $108,000.
47. In total across 25 deals, Sohmer obtained $738,656 in his clients= home
equity (total loans less total prior mortgage payoffs; less tax liens or other mandatory
payments; less all closing costs; less any miscellaneous payments to homeowners). Of
that amount, $362,000, or 49%, was immediately paid as fees to Sohmer ($353,000) or a
referring attorney ($9,000). Sohmer claimed to maintain Aescrow@ accounts for 25 clients in
one IOLTA account, which contained approximately $180,000 as of September 30, 2006.
19
48. At least one of the deals involved Sohmer purchasing his own client=s home at
the time Sohmer represented the client in a Chapter 13 bankruptcy proceeding (Carrigan).
Sohmer bought the home, and then a few months later flipped it to a third party, keeping
49. In another deal (Imbrogna), Sohmer closed the transaction on April 19, 2005,
then he transferred the deed to a Nominee Trust, and listed himself as the 100%
beneficiary. Then Sohmer refinanced the April 2005 loan/mortgage only three months after
the closing, on July 19, 2005, for approximately $15,000 more. The additional proceeds on
the loan was apparently used to pay Sohmer, and settlement costs.
name of his wife, Jennifer (six transactions), who is a defendant in this case, and also his
brother, Bradley (five transactions). Although trusts established by Sohmer own these
properties, Alec, Jennifer and Bradley Sohmer collectively are responsible for
approximately $6.6 million in outstanding mortgage loans to ten different lenders, and
further his scheme, including: (i) he used his status as the homeowners’ attorney to gain
their= trust, and then misrepresented to homeowners that he would help them save their
homes from foreclosure by refinancing their mortgage to reduce their monthly payments; (ii)
20
homeowners had built up in their homes; (iv) he structured each closing to include false
information on the HUD-1 Settlement Statement and on other important legal documents;
v) he deceived homeowners into paying to him and to other defendants Arent@ to remain in
their homes with false promises that these payments were actually mortgage payments that
would allow them to repurchase their homes at a later date; and, (vi) he evicted or
threatened to evict homeowners from their homes, reconveying the homes to others, and
scheme, and then self-servingly changing the terms, resulting in exorbitant profits for
54. Sohmer was legal counsel for many of the homeowners. For example, on his
legal letterhead, Sohmer routinely wrote to third parties stating: APlease be advised that this
21
office represents [homeowners] relative to [the client=s pending foreclosure].@ Even more
direct, Sohmer was chapter 13 bankruptcy counsel for at least four other homeowners.
56. Sohmer failed to discharge his duties to his clients consistent with his
fiduciary duty. Sohmer misrepresented and concealed material facts, and failed to ensure
that his clients were fully informed of the nature and effect of Sohmer’s proposed purchase
and of Sohmer’s own rights and interest in the client’s home. Sohmer plainly failed to
provide advice with respect to the transactions, in each of which he had a major financial
stake.
arranged. To induce them to convey their homes, Sohmer assured homeowners that their
homes would be placed in trust for their benefit. At or soon after each Aclosing,@ Sohmer
prepared and executed a Declaration of Trust and, in turn, transferred the subject property
into the Trust. For each trust, Sohmer was designated as trustee (sometimes with his
brother or wife), and the List of Beneficiaries identified Sohmer=s client as 85% beneficiary,
Sohmer had absolute control over the trust property. Sohmer captioned each of his trust
documents as a ANominee Trust.@ But Sohmer drafted his Anominee@ trust so that he, as
22
trustee, took his directions not from all the beneficiaries, but from Athe Minority beneficiary,@
3.2. Decisions made and actions taken under this Trust, including without
limitation, amendment and termination of this Trust, appointment and removal
of Trustees, directions and notices to Trustees, and execution of documents,
shall be made or taken, as the case may be, solely by the minority
Beneficiary.
(Declaration of Trust), ' 3.2, at p. 3 (emphasis added). As a result, the Trust offered no
his directions concerning the trust and trust property only from himself.
59. The very structure of Sohmer=s trusts assured that he could not comply with
his fiduciary duty of loyalty as trustee, because Sohmer=s individual interests conflicted with
those of the beneficiary. The interest of the homeowner beneficiaries was to stay in their
home and preserve their home equity. But because Sohmer himself (or his wife or brother)
was responsible for the mortgage loan on the property, Sohmer had a personal interest in
making sure the mortgage loan was paid. Sohmer=s individual interest was manifested by
immediately threatening to evict beneficiaries if their payment was even a few days late,
carrying out evictions so that Sohmer could market the trust property, and seeking to sell the
trust property to persons other than his clients-beneficiaries. Each of these actions directly
conflicted with the interests of the trust beneficiaries. Sohmer=s interest as legal owner of
the property (from the mortgage lender=s perspective) cannot and could not coexist with his
purported role as trustee for the exclusive benefit of the beneficiaries. The transactions
Sohmer structured guaranteed that Sohmer would breach his duty of loyalty, and that is
what happened.
23
60. Sohmer also breached his duty of loyalty to beneficiaries by draining the trust
property of equity, first through his $15,000 fee and undisclosed transaction costs, and then
by unilaterally taking additional monies from the trust property to pay for late fees and other
61. Sohmer=s fiduciary duties as trustee also included providing his beneficiaries
with accurate material information; segregating trust property; and maintaining accurate trust
accounts. Sohmer violated each of these duties because he: a) failed to segregate trust
funds, namely the Aescrows@ maintained for each property which reflect home equity
IOLTA account; and b) failed to provide any accounting to the trust beneficiaries of their trust
62. The HUD-1 Statements in each of the transactions arranged by Sohmer were
$ The HUD-1 Statements each state that net proceeds of the sale
(Line 603, Acash to seller@) were paid to the home sellers (Sohmer=s
Clients/homeowners), in amounts ranging from $78,996 (Goff) to
$239,904 (Baum) that never occurred.
$ The Statements show an inflated purchase price that was never paid.
24
$ The Statements purport to reflect settlement costs paid by both seller
and borrower (Sohmer) when, in fact, all those fees were paid by the
homeowner.
63. Because every HUD-1 Statement contains this false or misleading information,
Alec, Jennifer and Bradley Sohmer made false statements each time they certified that the
HUD-1 accurately described the Areceipts and disbursements@ made in the transaction.
Moreover, Sohmer required the homeowners, who were the nominal sellers on the HUD-1
documents, to sign false documents in order to obtain the foreclosure rescue financing
promised by Sohmer.
64. Sohmer’s promise that his trust arrangement would protect homeowners was
false and misleading for another reason: the trust arrangement violated the financing terms
of every loan that Sohmer had obtained as part of his foreclosure rescue scheme.
65. On or soon after the day that Sohmer obtained mortgage loan to finance his
acquisition of his client=s home, Sohmer conveyed the home into a trust. He claimed that
doing so would protect his clients= interest in the property and preserve home equity.
However, every Note and every Mortgage executed by Alec, Jennifer or Bradley Sohmer in
Jennifer or Bradley Sohmer) transfer of legal or equitable title to the property that secures
the loan.
25
f. Sohmer Had No Reason to Believe Homeowners Could Make
Payments or Re-Acquire Their Home.
Sohmer=s replacement financing was designed to last for no more than three years, the
homeowner=s costs and fees were astronomical compared to the value of the replacement
loan over three years. Sohmers= clients paid an average of $28,906 in fees to, in effect,
obtain a three year loan (totaling about $30,000 on average) followed by a massive balloon
payment. Thus, on average, the clients paid nearly as much in fees as their three-year
loan amount. Further, by sapping home equity in order to pay his fees and other costs,
Sohmer made it much more difficult for his clients to obtain the financing necessary to re-
acquire their home, because the mortgage to be paid off was inflated with those fees and
costs.
67. In addition, Sohmer knew or should have known that many of these
transactions would fail and that the homeowner=s re-acquisition rights were illusory.
Although his client homeowners all had faced foreclosure on their prior mortgage, Sohmer
baited them with the promise of lower monthly payments but then failed to actually provide
those payments. Sohmer thus knew or should have known that his clients would default.
Likewise, Sohmer knew or should have known that the homeowners would have difficulty
obtaining the financing necessary to re-purchase their home. After they failed to pay their
prior mortgage, Sohmer saddled them with a new mortgage that was significantly
increased, rendering the re-acquisition illusory for most homeowners, absent a dramatic
26
g. Under the Equitable Mortgage Doctrine, the Sohmer
Transactions Were De Facto Mortgages Vis-à-Vis the
Homeowners, Triggering a Variety of Legal
Obligations Sohmer Failed to Meet.
because homeowners were led to believe that the transactions comprised replacement
Sohmer and the documents he prepared convinced homeowners that the Sohmer
transactions would preserve home ownership and avoid foreclosure by virtue of the Interim
Ownership Agreement, the Trust, and the homeowner=s status as beneficiary. Sohmer=s
clients kept all the responsibilities of owning the home, including paying taxes, insurance,
utilities, maintenance and repairs. Sohmer=s nominal ownership was to be temporary. The
deed was to secure the homeowner=s promise to pay Sohmer=s new mortgage, and the
myriad of state and federal laws that regulate mortgage lending, as discussed at ¶ 106,
infra.
27
Sohmer transactions at issue in this case.
72. At some point prior to these transactions, Palmer was a partner in the practice
of law with defendant Alec Sohmer. Together, they had formed a partnership: Palmer,
73. Palmer played several different roles and relationships with Sohmer. In
addition to being a law partner of Sohmer, Palmer served as an attorney for Timeless
Funding, Inc., Sohmer=s shell company. Palmer is also listed in Timeless Funding=s draft
Business Plan as a future officer or attorney for Timeless Funding. Further, Palmer
represented and served as an attorney and agent for each lender in each of the
74. Palmer had knowledge of most, if not all, aspects of Sohmer’s scheme. He
knew how Sohmer solicited clients, particularly through Chapter 13 bankruptcy court
proceedings.
75. In connection with the closings he oversaw, Palmer drafted and/or assisted in
the drafting of numerous documents to effectuate each transaction. For example, Palmer
drafted some or all of the Nominee Trust Agreements, Deeds, Discharges of Mortgage, the
HUD-1 Settlement Statements, and other documents necessary to close each deal.
76. Palmer represented and served as an attorney and agent for each lender in
each of the transactions. The lenders paid Palmer for his legal services and representation
28
77. Palmer had knowledge of Sohmer’s scheme, including what was actually
occurring before, during and after the closings. Palmer had knowledge that the legal
documents he prepared did not accurately represent what Sohmer had told the
homeowner. In summary, Palmer had knowledge of, and/or effectuated at closing, the
1) the HUD-1 settlement statement for each closing, which Palmer prepared,
falsely stated that the buyer, nominally Sohmer (or his wife Jennifer or
brother Bradley), paid a certain amount of cash at closing when in fact
Sohmer (or his wife or brother) never paid any money at closing;
2) the HUD-1 settlement statement for each closing, which Palmer prepared,
falsely stated that the seller, nominally the homeowner, received a certain
amount of cash at closing as proceeds when in fact the homeowners never
received the amount stated on the HUD-1 at closing (and usually never
received any sale proceeds);
3) the homeowners paid Sohmer a flat $15,000 fee, from the equity extracted at
closing, for Sohmer=s Aservices@, yet Palmer, who prepared the HUD-1
settlement statement, never included this information on the HUD-1s;
4) each of the homes at or soon after closing was transferred into a nominee
Trust, for which Sohmer served as a Trustee;
5) Sohmer collected Arent@ from the homeowners, who continued to live in the
homes, in the amount of or exceeding the actual monthly mortgage owed to
each lender, promised in the Interim Ownership Agreement, which
Palmer apparently never disclosed to the lenders;
78. Upon information and belief, neither Palmer, nor anyone in his office,
other documents to any of the homeowners prior to, during or after the closings. Although
29
the homeowners were nominally listed as the sellers, they believed -- and Palmer knew that
they believed -- that they were effectively refinancing their prior mortgages.
79. The homeowners became, and Palmer knew that they became, obligated to
pay Sohmer for the new mortgages, pursuant to the Interim Ownership Agreement. The
homeowners however were entitled, based on their status as the equitable and de facto
borrowers, to full disclosure of the terms of each loan, an accurate estimate of closing and
settlement costs, and other statutory and regulatory disclosures, none of which they
or should have known that the transactions contravened state and federal statutes and
regulations, and were unfair and deceptive, and Palmer was thus obligated to stop, and not
81. Palmer profited from his role as the closing attorney for each of the 26
transactions in several ways. First, the lenders paid Palmer attorney fees, designated on
the HUD-1 Settlement Statement, which were extracted directly from what would have been
the homeowners’ proceeds on the transactions. Palmer typically charged more money to
close purchase and sale transactions, compared to refinancings. Even though the
homeowner thought they were refinancing their mortgages, Palmer nevertheless charged
his higher purchase and sale fees. These fees totaled approximately $35,000 across the
26 transactions.
82. Second, Palmer also served as the agent of Chicago Title Insurance
30
Company (“Chicago Title”). Palmer placed title insurance coverage for all of the
transactions with Chicago Title. Palmer profited from generous commissions he received
from Chicago Title’s premiums, for lender and owner title and closing insurance coverage
for each of the closings. Thus, in selling both lender and owner title insurance, Palmer
transaction, Palmer would place only lender insurance. Here, even though the
homeowners believed they were refinancing, Palmer placed and charged the homeowners
for both lender and owner title insurance premiums, collecting a total of approximately
83. Third, upon information and belief, Palmer profited by charging homeowners
more for registry and related fees than they actually cost. For example, Palmer typically
charged a higher amount to file a mortgage than the county charged for such service. All
total, Palmer siphoned off approximately $12,000 in over-charges to the homeowners for
homeowners to Sohmer as potential clients for Sohmer. Ellis referred clients to Sohmer on
a regular basis, all of whom were homeowners, and all of whom were up until that time
transaction and then paid Ellis a referral fee for referring his clients to Sohmer. At the time
he referred his clients to Sohmer, Ellis knew, or with minimal diligence should have known,
31
the true nature of Sohmer’s transactions and that they would cause homeowners to lose
85. Ellis received other benefits from his relationship with Sohmer. For example,
some homeowners who were clients referred by Ellis to Sohmer, who then ended up
victimized by Sohmer’s scheme, ended up paying Ellis for old debts, such as accumulated
attorneys fees, from the proceeds of the transaction arranged by Sohmer. Ellis thus
collected fees that were otherwise presumably uncollectible by referring clients to Sohmer’s
fraudulent scheme.
86. Ellis either knew or with a minimum level of vigilance should have known that
Sohmer’s foreclosure rescue scheme was unfair and deceptive. Nonetheless, Ellis was a
willing participant in providing Sohmer with a long list of unwitting homeowners, mostly in or
unfairly and deceptively referring clients to Sohmer, Ellis also failed to fulfill his obligations
to his clients because he failed to provide meaningful advice concerning their options with
respect to bankruptcy, lender workouts, and otherwise, instead sending them to Sohmer.
87. Ellis’ conduct in referring clients to Sohmer, and then either receiving a
referral fee, or other benefit from Sohmer for the referral, was unfair and deceptive and in
violation of G. L. c. 93A.
32
brokerage services and originates loans nationwide. Carteret, through its employee
Edward de la Flor, who was based in New Hampshire, was involved in originating or
brokering loans for 11 of the Sohmer transactions. For seven of the transactions, Carteret
brokered both first and second mortgages. Carteret and/or de la Flor assisted in
completing Sohmer=s loan applications, for interest only loans used to facilitate the
89. Upon information and belief, Carteret, through its employee de la Flor, knew
or with minimal diligence should have known all aspects of the Sohmer transactions,
including each of the six essential features of the transactions set forth at ¶ 77, supra.
90. Carteret, and separately de la Flor, failed to discharge its duties pursuant to
applicable statutes and regulations governing the conduct of mortgage brokers and their
employees, see ¶ 106, infra. Carteret and de la Flor each engaged in mortgage brokering
Hampshire office for properties located in Massachusetts. de la Flor was not licensed to
broker mortgage loans for Massachusetts properties, nor working under a Massachusetts
licensed broker at the time that he brokered loans for the Sohmer transactions.
91 Carteret, and separately de la Flor, each profited from the points, yield spread
premiums, commissions, accelerators, and fees paid to them by the homeowner in these
transactions.
92. Had Carteret exercised even minimal diligence in connection with the Sohmer
loans, it would have quickly learned that the loans were part of Sohmer’s fraudulent
scheme to take homeowner’s property and equity, that the loans relied on a false HUD-1
33
and fraudulent closing, and that the Sohmer transaction violated the applicable Note and
mortgage. Carteret and de la Flor could have, and should have, stopped the transactions.
Instead, Carteret and de la Flor arranged and facilitated the fraudulent transactions, to
93. The actions of Carteret and de la Flor in serving as the mortgage broker
and/or originator of 11 of the loans at issue in this case, which resulted in the funding of
money for each of the loans in these transactions, were unfair and deceptive, and
constituted violations of state and federal statutes and regulations, including c. 93A.
94. Upon information and belief, within a one year period preceding the filing of
the bankruptcy proceeding, Sohmer and Jennifer Sohmer each owned numerous properties
95. Upon information and belief, within one year period preceding the filing of the
bankruptcy proceeding, Sohmer maintained bank accounts at Citizens Bank, including one
96. During the period when Sohmer orchestrated and closed the foreclosure
rescue transactions at issue in this case, Sohmer transferred, deposited, withdrew, and
concealed transfers of monies, some of which were obtained or accessed through the
foreclosure rescue transactions. In making the transfers and in concealing them, Sohmer
did so with the intent of or with the effect of, hindering, delaying or defrauding creditors
34
97. Upon information and belief, Sohmer has concealed, destroyed, mutilated,
records, and papers, from which the Sohmer’s financial condition or business transactions
segregate and account for trust funds, namely the “escrows” maintained for each property
which reflect home equity “accessed” by Sohmer, instead commingling at least 25 separate
trust accounts in one IOLTA account. As a further example, Sohmer failed to keep a
reasonable accounting of his clients’ assets in his IOLTA account, whether involving
98. Upon information and belief, Sohmer has knowingly and fraudulently, in
connection with his foreclosure rescue scheme at issue in this case, made a false oath or
account; and/or, presented or used a false claim. By way of example, during a hearing
before this Court on August 17, 2006, Sohmer, purportedly representing Timeless Funding,
made a false oath or statement, knowingly and fraudulently. Sohmer appeared before the
Adversary no. 06-01335JNF, and misrepresented to the Court his role in the foreclosure
rescue transactions and his relationship to defendant Timeless Funding. At the hearing on
Austin’s motion for preliminary injunction against Timeless Funding, Sohmer stated:
35
Court: Who are they?
Sohmer: I’m sorry, I don’t’ know that off the top of my head.
In re Austin, Adv. No. 06-01335, Aug. 17, 2006 Tr. At p. 16 (emphasis added) (excerpts of
Trustee). As discussed at ¶ 33, supra, Timeless Funding is a ruse; it is nothing more than
Sohmer. There are no “principals” other than Sohmer. Charles Taylor is simply a resident
agent. Although Sohmer occasionally used his wife or brother as straw purchasers, he
controlled all aspects of the Timeless Funding business, such as it was. Sohmer thus lied
to this Court, in a hearing closely related to his bankruptcy case, regarding one of the unfair
and deceptive transactions (Austin) at issue both in his bankruptcy case and in the
99. At this time, Sohmer has failed to explain satisfactorily, before determination
liabilities. For example, Sohmer has failed to explain satisfactorily the whereabouts of all
“fees” to Timeless Funding, and even more money that was “escrowed” into the IOLTA
accounts he controlled.
credit by means of: 1) false pretenses, false representations, and/or actual fraud; and/or 2)
36
use of a statement in writing that is materially false, relates to the Sohmer’s financial
condition, was relied upon by a creditor to whom the Sohmer is liable, and/or was made by
101. Through his foreclosure rescue scheme, in the manner described above,
and/or larceny.
102. Sohmer committed willful and malicious injury to another entity or to the
property of another entity by encumbering the properties subject to the foreclosure rescue
restitution, penalties and costs, entered as a result of this Adversary Proceeding against
Sohmer should be deemed a debt that is excepted from discharge under 11 U.S.C.
104. Further, any civil penalty recovered by the Commonwealth in its Adversary
Sohmer owes the Commonwealth the sum of $10,000, in compliance with the Final
Sohmer entered by the Superior Court for Suffolk County, Massachusetts, on March 28,
37
Against: All Defendants
and/or carrying out the foreclosure rescue transactions alleged above, defendants
Sohmer, Jennifer Sohmer, Timeless Funding, Palmer, Ellis, Carteret, and de la Flor
have collectively engaged in unfair and deceptive acts and practices, in violation of G.L.
c. 93A, 2(a) and regulations promulgated there under pursuant to G.L. c. 93A, 2(c),
38
f. Referring homeowners to Sohmer for the purpose of Sohmer arranging
a foreclosure rescue transaction;
m. Breaching their duty of good faith and fair dealing in their contracts and
arrangements with homeowners;
39
transactions in a manner designed to avoid, and soliciting transactions
that fail to conform to, state and federal law designed to protect would-be
borrowers in loan transactions, including failing to conform to i) G.L. c.
140D; ii) 209 C.M.R. '' 32.32 & 32.34; iii) G.L. c. 93, ' 101; iv) G.L. c.
271, ' 49 (usury law); v) G.L. c. 184, ' 17D(c)(1); vi) federal Truth-In-
Lending statutes, 15 U.S.C. '' 1635, 1638, 1639; and vii) RESPA, 12
U.S.C. '' 2601 et seq.;
should have known that their conduct was unfair or deceptive in violation of G.L. c. 93A,
' 2.
COUNT II:
Violation of c. 93A Through Violations of the Massachusetts Consumer
Credit Cost Disclosure Act, G.L. c. 140D, and Federal Truth-In-Lending Laws
15 U.S.C. '' 1635, 1638
Against: All Defendants
40
109. Pursuant to 940 C.M.R. ' 3.16(3) & (4), respectively, an act or practice
violates G.L. c. 93A, ' 2, if it (a) fails to comply with existing Massachusetts statutes,
rules, regulations or laws meant for the protection of the public=s health, safety or
Federal Trade Commission Act, the Federal Consumer credit Protection Act or other
110. Because Sohmer, together with the other defendants, held out his
111. Sohmer and all defendants have violated G.L. c. 140D by:
Truth-in-Lending laws, 15 U.S.C. §§ 1635, 1638. Sohmer and all defendants violated
41
b. failing to provide, and failing to clearly and conspicuously disclose, the
three day right of rescission applicable to the transactions arranged by
Sohmer, as required by 15 U.S.C. ' 1635.
comprise unfair or deceptive acts in violation of G.L. c. 93A, ' 2, pursuant to 940 C.M.R.
114. All defendants worked in concert with Sohmer and collectively with him
COUNT III:
Violation of c. 93A Through Violations of Massachusetts and Federal Law
Applicable to High Cost Mortgage Loans, G.L. c. 183, ' 28C, G.L. c. 183C,
209 C.M.R. '' 32.32 & 32.34, and 15 U.S.C. ' 1639
Against: All Defendants
restrictions on certain high cost mortgage loans, pursuant to G.L. c. 183C and G.L. c.
183, ' 28C. Further, the Division of Banks has promulgated regulations, at 209 C.M.R.
'' 32.32 & 32.34, that require certain protections for borrowers in high cost mortgage
essentially comprise replacement mortgage financing, and defendants held them out as
Sohmer=s foreclosure rescue transactions call for monthly payments for between 24 and
42
36 months followed by a very large balloon payment to Sohmer in order to reacquire the
home. The effective costs of the loan, in light of the 24-36 month duration, is
exceedingly high.
loan transactions subject to chapter 183C and the Division of Banks regulations, 209
C.M.R. '' 32.32 & 32.34, as the effective interest rates exceeded the yield on Treasury
securities having comparable periods of maturity by more than eight percentage points.
transactions alleged above violated chapter 183C and applicable Division of Banks
a. making a high cost home loan that Sohmer, and all defendants, at the
time of the loan, could not reasonably have believed the homeowner
would be able to pay, in violation of c. 183C, ' 4 and 209 C.M.R.
' 32.34(1)(c);
f. making a loan to refinance an existing debt within sixty months of the prior
financing, where the refinancing loan is not in the borrower=s interest, in
43
violation of c. 183, ' 28C(a).
borrowers in connection with high cost mortgage loans, 15 U.S.C. ' 1639. Sohmer=s
foreclosure rescue transactions are subject to 15 U.S.C. ' 1639. Defendants have
a. making a high cost home loan without regard for the borrower=s ability to
pay, in violation of Section 1639(h);
federal statutes applicable to high cost mortgage loans comprise unfair or deceptive
acts in violation of G.L. c. 93A, ' 2, pursuant to 940 C.M.R. '' 3.16(3) & (4).
122. All other defendants in this action worked in concert with Sohmer and
collectively with him violated the laws and regulations delineated above.
COUNT IV:
Usury
Against: All Defendants
124. The Massachusetts usury statute, G.L. c. 271, ' 49(a) prohibits creditors
from charging interest or expenses exceeding 20% per annum, unless the creditor is
44
registered with the Attorney General.
125. Sohmer is not registered with the Attorney General under G.L. c. 271, '
49(c).
comprise replacement mortgage loans, with a large balloon payment, and result in an
effective interest rate exceeding 20%. Defendants, working in concert with Sohmer,
COUNT V:
Fraud
Against Sohmer and Palmer
127. The allegations contained in paragraphs 1 - 126 of the Complaint are re-
transactions by making statements that were false or misleading before, during and
after the closing, and by failing to disclose material information concerning the
transactions he closed. Sohmer and Palmer knew that their statements to homeowners
homeowners transferred money and/or property to sohmer and Palmer. Had the
45
transactions Sohmer arranged and Palmer closed, they would not have participated in
these transactions and would not have transferred money or property to Sohmer and
Palmer.
COUNT VI
Objection to Discharge Pursuant to 11 U.S.C. § 727
Against: Alec Sohmer
preserve recorded information, including books, documents, records, and papers, from
Sohmer has also, with intent to hinder, delay, or defraud a creditor, transferred,
removed, destroyed, mutilated, or concealed his property within one year of his filing
bankruptcy.
foreclosure rescue scheme at issue in this case, made a false oath or account; and/or,
of discharge, any loss of assets or deficiency of assets to meet the Sohmer’s liabilities.
COUNT VII
Exception to Discharge Pursuant to 11 U.S.C. § 523
46
Against: Alec Sohmer
137. Sohmer’s mortgage foreclosure rescue scheme was unfair and deceptive,
in violation of G. L. c. 93A, and violated numerous other state and federal statutes and
arising out of his foreclosure rescue transactions should be excepted from any
actual fraud, and/or materially false written statement(s) respecting financial condition
arising out of his foreclosure rescue transactions should be excepted from any discharge as
a debt arising out of Sohmer’s fraud, defalcation while acting in a fiduciary capacity,
140. Sohmer committed willful and malicious injury to another entity or to the
141. Any judgment, including restitution, penalties and costs, entered as a result of
this Adversary Proceeding against Sohmer should be excepted from any discharge
47
PRAYER FOR RELIEF
defendants= unfair or deceptive acts or practices, civil penalties of $5,000 for each
violation of chapter 93A, attorneys fees, costs and other remedial relief under chapter
rescue transactions in the future such as those designed and orchestrated by Sohmer.
U.S.C. § 727(a), extend the time in which creditors, including the Commonwealth, must
file claims to except their specific debts from discharge until sixty (60) days after entry of
11 U.S.C. § 727(a), enter an Order that the Commonwealth’s claim for civil penalties,
restitution, attorneys’ fees and costs against Sohmer, and any claims by Sohmer’s
homeowner victims, arising out of the foreclosure rescue transactions described herein,
are excepted from discharge pursuant to 11 U.S.C. §523(a)(2), (4), (6) and (7).
48
COMMONWEALTH OF MASSACHUSETTS
MARTHA COAKLEY
ATTORNEY GENERAL
By:______________________________
49