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Minn. Businessmen to Pay $1.7M for Running Foreclosure Scam

Minnesota's attorney general has won $1.7 million in a civil suit against three men who defrauded homeowners facing foreclosure by falsely representing that their homes could be saved.

Judge Lloyd Zimmerman of the Hennepin County District Court ordered defendants Thomas von Behren, Bruce Livingood and Abdul Baten to pay damages to the state.

He also permanently barred them from participating in any transactions involving real estate, mortgages and home purchase financing.

Attorney General Lori Swanson sued von Behren and his companies Real Equity Investments Inc., Zachspence Inc., Land Data Inc. and World Wide Data Inc. in August 2004. The suit also named business associates Livingood and Baten as defendants.

The defendants allegedly violated Minnesota law by operating a fraud scheme that victimized homeowners who were facing foreclosure.

Although the suit did not specifically say subprime lending was involved, the foreclosure-fraud issues are relevant to the current mortgage banking crisis.

Swanson said the men told homeowners who were delinquent on their mortgage payments or in foreclosure that their homes could be saved. They charged various fees for "foreclosure rescue" services that never were provided, she said.

Some homeowners paid as much as $28,000, Swanson said. However, instead of saving their residences, von Behren allegedly retained the titles to the properties by telling homeowners that their homes could be taken out of foreclosure if they were signed over to him.

Mortgage debtors deeded their homes to von Behren on the promise that he would lease them back with an option to repurchase in the future, the suit said.

The defendants never leased the homes back to the homeowners, who were evicted, Swanson said.

"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 in a statement.

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