Case Digests: Predatory Lending Class-Action Suit

Center for Social Justice Files Class-Action Suit against Predatory Lenders 
 
Professor Linda Fisher (left) and former Visiting Professor Jenny-Brooke Condon in the Center for Social Justice filed a class-action lawsuit alleging a widespread practice of illegal property-flipping and real estate fraud by various individuals and entities in the greater Newark area. Taking advantage of the real-estate boom and relaxed lending standards of earlier in this decade, Defendants Maurice Bethea and his companies Blu Financial, Born Asiatic and Greenfield Asset Holdings lured over a hundred and fifty people into a real estate investment scheme that led to great profit for Bethea but foreclosure and ruined credit for the individual purchasers.

The scheme involved deceiving financially-unsophisticated low and moderate-income individuals into buying homes in Newark, Irvington, East Orange and Orange as investment properties. Using the purchasers’ good credit scores as bait, Blu worked with dishonest mortgage brokers and appraisers to obtain mortgage funding in excess of the homes’ value. Blu purchased the buildings at a low price, partially renovated them and resold them to the unsuspecting purchasers at prices far greater than their actual worth. Falsely promising that they would find tenants for the properties and that the rental income would easily allow the purchasers to make their mortgage payments, Blu representatives manipulated class members into buying the properties, but they invariably failed to carry through on their promises and the purchasers fell into default and foreclosure.

The named plaintiff Melvin Gibson is a truck driver for relief operations throughout North America. He was forced to file for bankruptcy after losing his life savings as a result of Blu’s deceptive practices.

This lawsuit is not the first case that the Center for Social Justice has filed against Blu Financial. In April of 2007, Professors Fisher and Michael Barbosa filed the first of approximately a dozen third-party complaints against Blu in foreclosure actions, alleging that Blu’s fraudulent and deceptive practices caused the Center’s clients to fall into default and foreclosure on their mortgages. (See April 17, 2007 press release and complaint, posted on this website.) Scores of Blu victims have contacted the Center since that time, each of them repeating similar stories about Blu’s deceptive practices.

Dozens of Seton Hall law students assisted with research and drafting of the complaint. Recent graduates Carolyn Dellatore, Nicole Figliolina, Jason Hawrylak, and Ben Zilbergeld prepared the class action complaint under the supervision of Professors Fisher and Condon. 1L’s Derek Pahigiannis and Taylor Ward assisted with final edits and filing. Marshall Kolba, Esq. worked with Center faculty as a volunteer attorney, providing valuable advice and assistance.

Inquiries should be directed to the Center for Social Justice at (973) 642-8700.

Read the Complaint.