Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 1 of 47 PageID #: 1Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 1 of 47 PageID #: 1
EOB|CEu.s. liilsgiiiEgTKgouar E.D.N.Y.UNITED STATES DISTRICT COURT
EASTERNDISTRICTOFNEWYORK * JAN 2 5 2019 *
BROOKLYN OFFlCECARLA BARKER,
Plaintiff, V _ 5 1 4 t!
COMPLAINT ANDJURY DEMAND
-against‑
1 e r ROKOSZ,JANELLE DEFREITAS,STEVEN G. LEGUM,FRANK RICHARD 7HURLEY, GREGGTELSEY, ROBERT MFISHBEIN,BETTY J.HINGLE,ROYCE LLC, ATSUMOTO' J‑JACKIE MARKETINGLLC, LOCKDECOA/K/A LODECO,“JOHN DOE #1” through“JOHN DOB #100,” said names bein fictitiousg GOLD, M 3 ,and unknown, the parties intendedbeingpersonsor corporations, if any, havingparticipated in theenterprise described in the complaint,
Defendants.
PlaintiffCarla éarker, fer her complaint, alleges uponpersonalknowledge asto herself
and information andbeliefasto other matters asfollows:
PRELIMINARY STATEMENT
1. Carla Barker, a 51-year-Oid Afro-Caribbean cancer survivor, is at risk of losing
her home of over 35 years because of afraudulent equity-shipping scheme. Defendants Izia
Rokosz,Janelle Defreitas, Steven G. Legum, Frank RichardHurley, GreggTelsey, Robert
Fishbein, and Betty J. Hingle conspired to induce Ms. Barker to enter into illegal and
unconscionablehigh-cost mortgage loantransactions with the intent to evade consumer
protection laws and rob Ms. Barkerof her family home.
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 2 of 47 PageID #: 2Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 2 of 47 PageID #: 2
2. Defendants enticedMs.Barker to transfer herhometo ashell corporation and
enter into two mortgage loantransactions that created asingle lienof $450,000 on the house (the
transactions are coilectively referredto asthe “Subject Loan”). The Subject Loan,which
required interest-onlypayments for one year ata i2 percent interest rate,was paddedwith
excessive andhidden fees paiddirectly or indirectly to the Defendants,was priced iliegally and
madewithout regardto Ms.Barker’s ability to repay it, and strippedtheproperty of significant
equity. Ms. Barker is now in imminentjeopardy of losingherhome.
3. The Subject Loan is ahigh-costmortgage that violates: the Truth in LendingAct
(“TILA”), 15U.S.C. § 160}, et seq.; the HomeOwnership EquityProtectionAct (“HOEPA”),
15U.S.C. § 1639;NewYork BankingLaw §6-1; NewYork’s prohibitionagainst usury; and
NewYork’s deceptivepractices act, General Business Law, § 349. In furtherance of their
scheme, the Defendants acted asanenterprise engaged in the collection of unlawful debts, in
violation of the Racketeer Influencedand Corrupt Organizations Act (“RICO”), 18U.S.C.
§ 1691,et seq.
JURISDICTIONAND VENUE
4. This Court has jurisdiction over Plaintiff’s federal claims pursuant to 28U.S.C.
§ 1331, 15U.S.C. § i640(e), and 18U.S.C. § 1964. This Court has supplementaljurisdiction
11over Plaintiff‘s state law claims pursuant to 28U.S.C. § 1367because they are sorelated to the
ciaims within the Court’s originaljurisdiction that they form part of the same case or controversy
underArticle 3 of the US.Constitution.
5. This Court hasjurisdiction to render the declaratory judgment Plaintiffseeks
pursuant to 28 U.S.C. §2201.
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 3 of 47 PageID #: 3Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 3 of 47 PageID #: 3
6. Venue lies in the EasternDistrict of NewYork pursuant to 28U.S.C. § 1391(b)
because the property that is the subject of the action is situated in Brooklyn,NewYork.
PARTIES
7. PlaintiffCarla Barker is anatural personwho resides at611East 48th Street,
Brooklyn,NewYork 11203 (the “Subject Property”), located in the East Flatbushneighborhood
of Brooklyn. 5
8. Defendant IziaRokosz is anaturalpersonWho, upon informationand belief,
maintains aprincipal residenceat 335 Broadway,Lawrence,NewYork 11559. Defendant
Rokoszregularlyoriginates residentialmortgage loans withhigh-cost terms. Since 2014,
DefendantRokoszhas originated at least 14mortgage loans for one-to~four family homes in
NewYork City, eachwith similar high-cost terms requiringinterest-onlypayments for one to
three years at a 12percent interest rate. DefendantRokosz is the lenderwho originated the
Subject Loan,which is comprisedof the First Loan, dated February6, 2017, and the Second
Loan,datedFebruary 16,2017.
9. DefendantJanelle Defreitas is anatural personwho is currently incarcerated,but,
upon information andbelief,maintains aprincipalplaceof business at 609 East 40th Street,
Brooklyn,NewYork 11203. In 2017, theNewYork Attorney General andKings County
DistrictAttorney’s Office indictedDefendantDefreitas oncharges related to acomplex
mortgage fraud andmoney-launderingscheme. According to the NewYork StateDepartment of
Correction andCommunity Supervision Inmate InformationDatabase,DefendantDefreitas is
incarcerated for certain charges from that indictment, includinggrand larceny, residential
mortgage fraud, conspiracy and scheme to defraud. DefendantDefreitasbrokered the home loan
transactions at issue.
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 4 of 47 PageID #: 4Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 4 of 47 PageID #: 4
10. DefendantStevenG.Legumis anatural personwho, upon informationandbelief,
resides in or aroundMineola,NewYork. Defendant Legumis anattorney admitted to practice
in the State of NewYork,with aprincipal placeof business locatedat 170Old CountryRoad,
Mineola,NewYork 11501. Defendant LegumservedasDefendantRokosz’s agent and attorney
for the home loantransactions at issue.
11. DefendantFrankRichardHurley (also known asF. RichardHurleyor Richard
Hurley) is anaturalpersonwho, uponinformationandbelief, resides in or aroundBrooklyn,
NewYork. DefendantHurley is anattorney admitted to practice in the State of NewYork,with
aprincipalplaceof business locatedat30Vesey Street, 15thFloor,NewYork,NewYork 10007.
DefendantDefreitas arranged for DefendantHurley to act asMs.Barker’s attorney for the
closings.
12. DefendantGreggTelsey is anatural personwho, upon informationandbelief,
resides in the State of NewYork. Uponinformation andbelief,DefendantTelsey is amanaging
partner atRoyceLLCandmaintains aprincipalplaceof business at 364 Central Avenue,
Brooklyn,NewYork 11221. Upon informationandbelief,DefendantTelsey is anassociate of
one ormoreDefendants and receivedproceeds from the Subject Loan in furtherance of the
scheme.
13. DefendantRobert Fishbeinis anaturalpersonwho, upon informationandbelief,
resides in the State of NewYork andmaintains aprincipalplaceof business at 110-20Jamaica
Avenue, Suite 2D, RichmondHill,NewYork 11418. Upon informationandbelief,Defendant
Fishbein is anassociate of one or moreDefendants and receivedproceeds from the Subject Loan
in furtherance of the scheme.
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 5 of 47 PageID #: 5Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 5 of 47 PageID #: 5
14. DefendantBettyJ.Hingle is anatural person, who upon information andbelief,
resides in or around Sayville,New York. DefendantHingle is anattorney admitted to practice in
the State of New York,with aprincipalplaceof business locatedat 53RooseveltAvenue,
Sayville,New York 11782. Uponinformationand belief,DefendantHingle is anassociate of
one or moreDefendants and receivedproceeds from the Subject Loan in furtherance of the
scheme.
15. DefendantRoyceLLC (“Royce”) is adomestic limited liability company
registeredwith the NewYork State Department of Stateunder ID No. 2673038 with aprincipal
place of business located at97294th Avenue, Brooklyn,New York 11209. Roycereceived
proceeds from the Subject Loan in fiartherance of the scheme.
16. DefendantJackie Marketing, LLC (“Jackie Marketing”) is a domestic limited
liability company registeredwith the New York State Department of State under ID No.
4073191 with aprincipalplace of business located at35-15 84th Street, 211, Jackson Heights,
New York 11372. Jackie Marketingreceivedproceeds from the Subject Loan in furtherance of
the scheme.
17. DefendantLockdeco, also knownasLodeco, is anentity doing business in the
State of New York, but is not registeredwith the New York State Department of State. Upon
informationand belief, Lockdeco’s principalplace of business is located at 115-53 Mexico
Street, Saint Albans, NewYork 11412. Lockdeco receivedproceeds from the Subject Loanin
furtherance of the scheme.
FACTUAL ALLEGATION S
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 6 of 47 PageID #: 6Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 6 of 47 PageID #: 6
18. PlaintiffCarlaBarker is a51-year-oldAfro-Caribbean cancer survivor andmother
of two. She is ahighschool graduate. Ms. Barkerhas lived in the Subject Property,which is her
primary residence, for more than 35years. It is atwo-family home.
19. The Kings County DistrictAttorney’s office referredMs.Barker toMobilization
for Justice, Inc. (“MFJ”) asapossiblevictim of mortgage fraud in needof free civil legal
services.
20. In 1983,Ms.Barker’smother,Claudine Langevine,purchased the Subject
Property to be ahome for herself,Ms. Barker, and Ms.Barker’s stepfather and stepbrother. Ms.
Langevinepurchasedthe Subject PartyWith a$64,600mortgage,which was refinanced into a
$75,000mortgage in 1993.
21. Ms. Barker has lived in the Subject Property since 1983 and raisedher daughter
and son there. Her 18-year-oldson still liveswithher. Ms.Barkerwas proud that her family, an
immigrant family from Guyana,had achieved the Americandreamof homeownership.
22. In 2004,Ms. Langevinepassedaway from cervical cancer. In herwill, Ms.
Langevinedevised the Subject Property to Ms.Barker andMs. Barker’s half-sister, Sandra
Vaughan.
23. In or aroundNovember2004,Ms. Langevine’swill was probated and the Subject
Propertywas deeded to Ms. Barker andMs. Vaughan. Ms. Barker remained in the Subject
Property,makingall mortgage payments andmaintainingher family home. Ms.Vaughan did
not reside in the homenor did she assist withmortgagepayments andproperty charges.
24. By 2006,Ms. Barkerwas able to pay offhermother’s smallmortgage.
25. In 2008,Ms.Vaughanbrought apartitionaction against Ms. Barker.Ms. Barker
was unableto defend this actionbecause shewas undergoingchemotherapy, and was no longer
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 7 of 47 PageID #: 7Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 7 of 47 PageID #: 7
able to work atherjob asahomehealthaide. As aresult,Ms. Vaughan obtained adefault
judgment in this actionagainstMs.Barker.
26. Formany years thereafter,Ms.VaughanpressuredMs.Barker to payher for her
portionof the Subject Property. Shewould frequently callMs. Barker to pressure her to take out
aloan to buyherportionof the Subject Property. On several occasions, Ms.Vaughan, or her
attorney or other agents, also came to Ms.Barker’shomeunannounced to show the Subject
Property to potentialbuyers.
27. By this time,Ms.Barkerhadalso fallenbehindonherproperty taxes due to her
battlewith cancer. In addition to pressure fromMs.Vaughan,Ms. Barker also became
concerned about property tax liensplaced against her home.
28. Ms.Barkerattempted to obtain amortgage loanfrom traditional mortgage
lenders,but shewas denied because she was not working at the time. Feelingdesperate andout
of options,Ms.Barkerwould often talk to fiiends andneighbors in EastFlatbushabout her
situation andher fear of losingher family home. She asked them for advice about how she could
saveher home fromMs.Vaughan’s threats or aninevitable tax lien foreclosure.
29. In 2016,Ms.Barker confided in JuneWhyte, the daughter of her latemother’s
best friend,who, likeMs. Barker, is also fromGuyana and lives in the neighborhood. Ms. Barker
consideredMs.Whyte andMs.Whyte’s mother family.
30. Ms.Barker told Ms.Whyte about her sister’s repeated threats to buyher out and
the risk of losingher home, even thoughMs.Barkerhadpaidoff themortgageandher sister had
not lived there for over adecade. Ms.Whyte referredMs.Barker to Defendant JanelleDefreitas,
amember of the local community, for help.
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 8 of 47 PageID #: 8Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 8 of 47 PageID #: 8
31. DefendantDefreitas toldMs.Barker that she could help her obtain amortgage to.
pay offMs. Vaughan. Uponinformationandbelief,DefendantDefreitasknew that Ms.Barker,
still recuperating from cancer, had little or no incomebecause she only sporadically worked odd
jobs due to herpoorhealth.Ms. Barker toldDefendantDefreitas about the threats fromher sister
and her desire to saveher home.
32. DefendantDefreitas further advisedMs. Barker that she coulduse the proceeds
fiom amortgage to repair the secondunit of herhome, so that she could rent it out andhave a
steady source of income. She also toldMs.Barker that she could findher acontractor for this
purpose.
33. In late2016 or early 2017,DefendantDefreitas informedMs.Barker that shehad
foundher amortgage lender. As aconditionof obtaining the loan,DefendantDefreitas informed
Ms.Barker that because she planned to rent out the second floor apartment, shewas required to
transfer the Subject Property to acorporation, J&MProperty Holdings, Inc. (“J&M Holdings”).
DefendantDefreitasexplained that the personwho receives aloan cannot both live in the
property andbe the owner of the property. She reassuredMs. Barker that Ms.Barkerwould
retaincontrol of the corporation, and thus remain the owner of her house.
34. In or around late2016 or early 2017,DefendantDefreitas droveMs.Barker to
Queens to meet with Jaipaul Persaud. DefendantDefreitas informedMs.Barker that Mr.
Persaudwould drawup thepaperwork to set upJ&M Holdings. However,when they arrived at
Mr.Persaud’s office,DefendantDefreitas instructedMs.Barker to wait in the car while she went
into the office. DefendantDefreitaswent inside for a longtime.Ms. Barkernever received any
incorporationdocuments, either to sign, review, or keep for her records.
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 9 of 47 PageID #: 9Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 9 of 47 PageID #: 9
35. According to adocument filedwith theNewYork StateDepartmentof State,
DefendantDefreitas signeda“Certificate of Incorporation” for J&M Holdingsasthe
“Incorporator.” Mr. Persaudfiled the document onJanuary 13,2017. I
36. Also in or around late2016 or early 2017,DefendantDefreitas introducedMs.
Barker to Defendant FrankRichardHurley, and informedMs.Barker that DefendantHurley
would beher lawyer at themortgage closing. DefendantDefreitas took Ms.Barker to meet
DefendantHurleyat a local restaurant insteadof an office. This was a shortmeetingduring
whichDefendantDefreitas didmost of the talking for Ms.Barker,anddiscussedwithDefendant
HurleyrepresentingMs. Barker in arefinance. DefendantHurleyagreed to representMs.
Barker,but Ms.Barker never signed aretainer. Ms. Barkerdid not see or communicate with
DefendantHurley againbefore the closing.
37. Uponinformation andbelief,DefendantHurley’s specialized area of law is
criminal law,not real estate.
38. Also in or around late2016 or early 2017,DefendantDefreitas droveMs.Barker
to Queens to meetwith DefendantRobertFishbein,describingDefendant Fishbeinasthe person
they had “to go through first” for the loan. This time, Ms. Barker entered the officewith
Defendant Defreitas,who instructedMs. Barkernot to speak and to letDefendantDefreitas do
all the talking. Duringthemeeting,DefendantFishbein andDefendantDefreitas spoke asif they
were familiar with each other. Ultimately,Defendant Fishbein informedthem that hecould
arrange financing for Ms.Barker to buyout her sister. Healso said that hewould eventually be
able to helpMs. Barkerobtain aFederalHousingAdministration (“FHA”)mortgage
administeredby the UnitedStates Department of HousingandUrbanDevelopment. Upon
informationandbelief,Defendant Fishbein thereafter reachedout to Defendants Legumand
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 10 of 47 PageID #: 10Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 10 of 47 PageID #: 10
Rokosz and arrangedthe closing. NeitherDefendantFishbeinnorDefendantDefreitas explained
the terms of the financing to Ms.Barker at this meeting.
39. In or around early 2017, DefendantDefreitas advisedMs.Barker of adate, time,
and location for the closing. DefendantDefreitas did not informMs.Barker of the nameof the
lender or who elsewould beat the closing.
40. Before the closing, in or around early 2017, DefendantGreggTelsey came to Ms.
Barker’s house. DefendantTelseywas accompaniedby anotherman. Ms. Barkerbelieved that
Defendant Telsey was anappraiser soshe allowedhiminside to inspect herhouse. At that time
or thereafler, DefendantTelsey gaveMs.Barker abusiness card fromRoyceLLC.
First LoanClosing
41. On February 6, 2017,Ms.Barker attended the loanclosing at the office of
Defendant Steven Legumat 170Old Country Road in Mineola,NewYork.
42. At the closing, Ms. Barker first learnedthe identity of the lender: Defendant Izia
Rokosz.DefendantRokoszwas not at the closing. His attorney,Defendant Legum,was present
onhisbehalf.
43. DefendantDefreitaswas at the closing.
44. DefendantHurleywas also at the closing.
45. DefendantHinglewas also at the closing.
46. DefendantTelsey was also at the closing.
47. Ms.Barker’s half-sister and co~owner of the property,Ms. Vaughan, was also at
the closing, alongwith her lawyer andher son.
10
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 11 of 47 PageID #: 11Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 11 of 47 PageID #: 11
48. Either immediatelyprior or during the closing, DefendantHurleytoldMs.Barker
to sign aletter, dated February6, 2017. The letter stated that the loanshe was receivingwas a
“hardmoney loan,” that most borrowers cannot afford such loans, and that she would release
DefendantHurleyof any liability if there was afuture lawsuit.
49. After havingMs. Barker sign this document,DefendantHurleyproceeded to
represent her at the closing.
50. DefendantTelsey was also at the closing.
51. At the ciosing, Defendant Legumdistributed various documents to Defendant
Hurley to pass to Ms. Barker to sign. At nopoint during the closing didDefendantHurley
explain to Ms. Barkerany of the documents heinstructedher to sign, or discuss withher the
potential consequences of signing.
p52. DefendantLegum thenprovidedDefendantHurleywith the deed transferring the
Subject Property to J&M Holdings. DefendantHurley instructedMs.Barker to sign the deed,
which she signed onbehalfof J&M.
53. Thereafter, Ms. Vaughan signed the deed transferringher share of the title to Ms.
Barker.
54. Defendant Legumalso providedDefendantHurleywith theFirst Loandocuments
that Ms.Barker signed asthe president of J&M Holdings.
55. At one point, DefendantHurley asked to speak privatelywith Ms.Barker and
escortedher into aseparate room. When the two were alone,DefendantHurley toldMs. Barker
that he “didn’t like the figures” that were provided. Ms.Barker did not understandwhat he
meant and waited for himto clarify, butbeforehecould continue,DefendantDefreitas entered
the roomand interrupted them. DefendantDefreitas toldDefendantHurley not to tell MS.
11
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 12 of 47 PageID #: 12Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 12 of 47 PageID #: 12
Barker anythingand that his job was to haveher sign the documents. That forcedDefendant
Hurley andMs. Barker’s private conversation to end and the two went back to the conference
roomWhere DefendantHurley instructedMs.Barker to sign the remainingdocuments.
56. DefendantDefreitas reassuredMs.Barker that she did not have to worry about
monthlypayments because shewouldmake the paymentsuntil Ms. Barker refinancedwith an
FHA loan.
57. In addition to theNote andMortgage,DefendantLegurn also providedDefendant
Hurleywith the following documents at the closing for the First Loan: aPromissoryNote, an
EscrowAgreement, anAssignment and Security Agreement, aGuarantee, andaCorporate
Resolution.DefendantHurley,without explainingany of the terms of these documents,
instructedMs.Barker to sign them. Ms.Barkerwas notprovidedanopportunity to readthe
documents, they were not explained to her, and shedid not fully understandwhat they were or
their legalramifications.
58. Relyingon the reassurances of DefendantHurley,her lawyer, andDefendant
Defreitas,whom she trusted, Ms. Barkerultimately signed eachFirst Loandocument presented
to her.
59. Ms. Barker also signed aPromissoryNote for $10,000 that was payable to
DefendantsTeisey andFishbein. The PromissoryNotedeclared that the funds advancedwere
for the purposeof closing the contemporaneously issuedFirst Loan. The PromissoryNotealso
provided that any default under its terms would bedeemed adefault of the First Loan. Ms.
Barkerwas instructed to Sign thePromissoryNote in her individual capacity asthe obligor.
60. The EscrowAgreement requiredasum of $45,792.68 to beposted to Defendant
Legumasthe authorized EscrowAgent. The EscrowAgreement provided that, in the event of
12
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 13 of 47 PageID #: 13Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 13 of 47 PageID #: 13
default, Defendant Legumcould,upondirection of DefendantRokosz,andwithout notice to Ms.
Barker,make requiredpayments out of the escrowedbfunds. Ms. Barker was instructedto sign
the EscrowAgreement asthe president of J&M Holdings.
61. TheAssignment and Security Agreement required that Ms.Barker, aspresident
and secretary of J&MHoldings, to assignall interest and stock in J&MHoldings to Defendant
Rokosz,the assignee. Per the agreement, the assignment was to be held in escrow by Defendant
Legum, to bereleased to DefendantRokosz if Ms.Barker defaulted on the loan.
62. The Guaranteeprovided that Ms. Barker agreed to be boundto the loanterms asa
personal obligor. Again without any explanation,Ms.Barker was instructed to sign the
Guarantee in herpersonalcapacity.
63. The Corporate Resolutionprovided that all shareholders, officers, anddirectors of
1&MHoldingsunanimously agreed to borrow $330,000 fromDefendantRokosz and to provide
asecurity interest to him in the Subject Property. Ms. Barkerwas instructed to sign the
Corporate Resolutionboth asPresident and Secretary of J&M Holdings.
64. At the conclusion of the First Loanclosing, Ms. Barkerdid not receive any copies
of anyof the documents signed at the closing.
65. The First Loan agreement that Ms.Barker signed on February 6, 2017 was in the
amount of $330,000. Ms.Barkerwas never informedof the terms of the First Loan, nor
providedwith any documentation reflecting the terms of the First Loan. The First Loanwas
issuedwithout any regard to Ms. Barker’s ability to repay.
66. The First Loanprovided for a 12percent annual interest rate, aone-year term, and
interest-Onlypayments for the term of the loan,with noprepayment allowedbefore six months.
13
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 14 of 47 PageID #: 14Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 14 of 47 PageID #: 14
67. Of the $330,000 initialprincipal amount, $221,276.85 was applied to Ms.
Barker’s debts: $150,000 to buy out her sister’s interest in the property, $71,126.85 to pay off
property tax liens, and $150 to adebt owed to NewYork State. Ms. Barker didnot directly
receive any of the proceeds.
68. The remainingproceeds were distributedto the following entities, asfollows:
EastCor LandServices (title company) $36,573.80Royce LLC $2,980.00Jackie Marketing LLC $3,460.00Lodeco (constructioncompany) $14,416.67StevenLegum $3,000.00RichardHurley $1,500.00BettyHingle $1,000.00Retainedin Escrow $45,792.68Total of RemainingProceeds $108,723.15
69. At the closing, Ms. Barker didnot knowwhat RoyceLLCor JackieMarketing
LLCwere, although she recalls receivingabusiness card fromDefendantTelsey that identified
RoyceLLCashis company. She is not awareof any services performedby these companies to
her benefit. Upon informationandbelief,bothcompanies are associatedwithDefendantTeisey.
70. At closing, Ms. Barkerdid not knowwhat EastCor LandServices was nor did she
retainEastCor LandServices to assist her in the closing.
71. Similarly,Ms. Barker did not retainthe services of Defendant Lodeco,upon
informationandbelief, aiso knownasLockdeco, the purported contractor that Defendant
Defi‘eitas arranged to conduct repair work onMs. Barker’s property. Prior to the closing, Ms.
Barker never communicatedwithDefendant Lodeco. Ms. Barkernever receivedaninvoice for
any work performed. DefendantDefreitaspromisedMs.Barker that Defendant Lodecowould
perform significant repairwork, including, for example, insulation, and roof,electrical, and
plumbingrepairs. Instead,Lodeco employees installed some sheetrock andbegancertain
14
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 15 of 47 PageID #: 15Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 15 of 47 PageID #: 15
preparationwork,which created holes and left exposed electrical wiring in certain areas. No
significant repair work was ever completedby Defendant Lodeco.
72. Upon informationandbelief,neither Lodeconor Lockdeco are licensedby the
NewYork CityDepartment of ConsumerAffairs ashome improvement contractors.
73. Uponinformationandbelief, DefendantDefreitas sued Lockdeco in Kings
County Supreme Court in August 2017 (IndexNo. 515459/2017) for breachof contract and
unjust enrichment, seeking $42,106.01. According to the complaint filed in that case, Defendant
Deficitashired Lockdeco onor about February6, 2017 for ahouse repair project andpaid
Lockdeco aninitial sum of$14,416.67 and anadditional sum of $78,140.70 ten days later, for a
total of $92,557.37. Also accordingto the complaint, Lockdeco reimbursedDefendantDefreitas
$50,451.36 of those fimds.
74. Upon informationandbeliefDefendantDefreitas is seekingadefault judgment
against Lockdecoand its two principals.
75. Upon informationandbelief,Ms.Barker spokewith one of theprincipals of
LockdecoWhile Lockdecoemployees were ather homeone day. The Lockdecoprincipal
advisedMs.Barker that DefendantDefreitas had givenLockdeco checks, and they hadgiven
cashback to Defendant Defreitas.
76. At no time before, during, or after this first closing onFebruary6, 2017, was Ms.
Barker advised about meetingwith nor didMs.Barkermeet with acertified loancounselor
concerning the First Loanor any other loan. If she hadmetwith ahousingcounselor and that
counselor had explained the terms of the loanto her,Ms.Barkerwould not have gone through
with the closing.
15
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 16 of 47 PageID #: 16Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 16 of 47 PageID #: 16
77. At no timebefore, during, or after this first closing onFebruary 6, 2017, did Ms.
Barker receiveany noticeabout her right to rescind themortgage.
16
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 17 of 47 PageID #: 17Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 17 of 47 PageID #: 17
SecondLoanClosing
78. At somepoint,DefendantDefreitas informedMs.Barker that she wouldhaveto
returnto Defendant Legum’s office to Signmore documents.
79. OnFebruary 16,2017, 10days afler the first closing,Ms. Barker returnedto
Defendant Legum’s office to signadditionalmortgagedocuments. DefendantDefreitas,
DefendantHurley,andDefendantLegumwere once againpresent. DefendantFishbein,theman
who, upon informationandbelief,arranged the closing andwas apayee of the $10,000
PromissoryNote dated February 6,2017, was also present. DefendantTelseywas not present at
this closing.
80. Ms.Barkerwas under the impressionthat shewas signing additional documents
for the First Loan. However,unbeknownst to Ms. Barker, she was ledto execute documents
taking out aSecondLoanof $120,000,whichwas then consolidatedwith the First Loan to create
the Subject Loanof $450,000. No one advisedMs.Barker that she was entering into an
additional loanagreement:
81. Defendant Legumagainprovideddocuments to Defendant Huricy for Ms.Barker
to sign.
82. DefendantHurley instructedMs. Barker to sign updatedcopies of the Escrow
Agreement, Assignment and Security Agreement, Guarantee, and CorporateResolution,all dated
February 16,2017. Eachagreement provided for the same general terms aseach respective
original agreement, but recognizedthe additional $120,000 obligation and total consolidated
obligation of $450,000. Again, noone, includingDefendantHurley, explained any of the
documents to Ms. Barker at this second closing. Beingfinancially unsophisticatedand
inexperiencedwithmortgages,Ms.Barker did not understand any of the terms of these
l7
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 18 of 47 PageID #: 18Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 18 of 47 PageID #: 18
documents. Ms. Barker signed them anyway, given thepresence andparticipationof Defendant
Defreitas andDefendantHurley,people she trusted andbelievedwere acting in herbest interest.
83. I TheEscrowAgreement dated February 16,2017a1so provided for anadditional
$14,400 to be retained in escrow, in addition to the $45,792.68 aiready retained in escrow.
Again, the EscrowAgreement provided that, in the event of default,Defendant Legumas
EscrowAgent could, upondirection of DefendantRokoszandwithout notice to Ms. Barker,
makerequiredpayments out of the escrowed funds.
84. The SecondLoanwas again issuedby DefendantRokosz,with the same loan
terms: aone-year term, with interest-onlypayments at a 12percent interest rate,with no
prepayment allowedbefore six months. Once again, the loanwas issuedwithout any regard for
Ms. Barker’s ability to repay.
85. Ms. Barker did not receive any of the proceeds. The proceeds of the Second Loan
were distributed to the following entities:
IziaRokosz (interest accrued2/6 to 2/16) $1,193.42EastCor LandServices, Inc. $3,715.88Royce, LLC $5,733.33Jackie MarketingLLC $11,466.67Lodeco $78,140.70Steven Legum $3,500.00RichardHurley $1,500.00Ronald Ifraimov $350.00Retained in Escrow ' $14,400.00Total: $120,000.00
86. At the closing, Ms. Barker did not receive copies of any of the documents she
signed.
87. At no timebefore, during, or after this closingon February 16,2017,was Ms.
Barker advised aboutmeetingwith or didMs. Barkermeetwith acertified loancounselor
concerning the Second Loanor any loan. If she hadmetwith ahousing counsetor and that
18
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 19 of 47 PageID #: 19Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 19 of 47 PageID #: 19
counselor hadexplained the terms of the loanto her,Ms. Barkerwould not have gone through
with the closing.
88. At no timebefore, during, or alter this closing onFebruary 16,2017, didMs.
Barker receiveany noticeabout her right to rescind themortgage.
PostClosings
89. Between the First Loanand SecondLoan, comprising the Subject Loan, atotal
debt of $450,000 was borrowedagainst the SubjectProperty.
90. Beingafirst-timemortgageborrower and financially unsophisticated,Ms. Barker
was not familiar with nor did sheunderstandany of the loanterms underlyingthe Subject Loan.
91. Ms.Barker never directly receivedany proceeds from the Subject Loan.Of the
$450,000, Ms. Barker only benefited from $221,276.85 to buy out Ms. Vaughan and to pay o f f
the tax liens and a small $150 debt to NewYork State.
92. Uponinformationandbelief, DefendantDefieitas claimed to bethe owner of the
Subject Property in communications with the purported contractor, Lodeco. As aresult Lodeco
never had any direct contact withMs. Barker about the constructionwork, nor did Ms.Barker
ever receive any invoices for any constructionworkon the SubjectProperty.Ms.Barkerwas led
to believe that moneywould be set aside from themortgageproceeds to pay for the repairs.
93. DefendantDefreitas toldMs. Barker that shewouldmake themonthlymortgage
payments while sheheipedMs. Barker apply for anFHA loanthat would clear the Subject Loan.
94. At neither closing didMs.Barker receivecopies of any of the documents she
executedon February 6, 2017 or February 16,2017.
95. After the closings, Ms. Barker repeatedly called DefendantHurley to request
copies of her loandocuments. WhenMs. Barkerwas finally able to reachDefendantHurley,he
19
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 20 of 47 PageID #: 20Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 20 of 47 PageID #: 20
agreed to meetwith her at acafe and toldher that hehadjust returned from acruise. At that
meeting,Ms. Barkerwas finally able to obtain some of the documents from the loanclosings.
96. The itemizationof disbursement proceeds that DefendantHurleyprovided to Ms.
Barker after the closing includedanumberof loanproceedswhichwere never receivedby Ms.
Barker,were notpaidentirely to satisfy Ms.Barker’sprior debts, andwere notpaidto third
parties for purposes that were definedor communicated to Ms.Barker. Noneof the documents
referenceMs.Barker’s right to rescission.
97. In or aroundApril 2017, DefendantTelsey again visitedMs.Barker ather home.
Hewas againaccompaniedby the samemanwho camewith himto herhousebefore the first
closing. Duringthis visit, DefendantTelsey informedMs.Barker that she was behindonher
mortgage. DefendantTelsey insisted that Ms.Barkerhad to signover all the paperwork for the
house to DefendantRokosz,who was now goingto own the house.
98. This was the first time that Ms.Barker learnedthat DefendantDefreitashadnot
made the payments onhermortgage asshehadrepeatedly stated shewould. Ms. Barkerhadnot
receivedanymortgage invoices fromDefendant Legumor anyone else notifyingher that she was
behindonmortgagepayments.Ms. Barkerhadreasonablybelieved that DefendantDefreitaswas
makingthose mortgagepayments andwas shocked to learnotherwise.
99. Desperate for answers, Ms. Barker calledDefendant Legumto requestmortgage
statements. Defendant Leguminformedheron the phone that hermortgagepaymentwas $5,000
amonth and that she was in default. Ms. Barker asked to use the funds in the escrow acCOunt to
helpherwith payments andalso to pay the construction company to finish the work. it started on
herhouse, soshe couldbeginrenting it out and receive income. Defendant Legumtold her this
would notbepossible.
20
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 21 of 47 PageID #: 21Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 21 of 47 PageID #: 21
100. Subsequent to that phonecall, Ms. Barkerdid not receiveanymortgage
statements.
101. By letter datedMay9, 2017,Defendant LeguminformedMs.Barker for the first
time in writing that she was in default of themortgage, and that, asaresult,hewas transferring
the shares of J&MHoldings to DefendantRokosz.
102. In the summer of 2017, two mencame to Ms.Barker’shome. She was in the
backyardgarden andhad left the front door unlocked. A neighbor saw the two menenter Ms.
Barker’shomeandalertedMs. Barker. Ms.Barker confronted the two men,whom shehadnever
metbefore, insideherhome. To her shock anddismay, they toldher that she did not own the
house and that shewould have to leave in eight days. When themenrefusedto leave,Ms.
Barker left to seek thehelp of her neighbor, acorrections officer. By the time she returned
shortly thereafter, the two menhad left her property.
103. It was then that Ms. Barkerrealized that shemay loseherhomeof 35years and
the house that hermotherhadworked sohard to purchase. Ms.Barkerwas scared and ashamed
that she hadunknowinglyjeopardized something that meant somuchto her andher family.
EvictionProceedingsAgainst Ms.Barker
104. In November2017,J&M Hoidings,in petitions verified by DefendantRokosz,
sued to evict Ms. Barker from the Subject Property in the Kings County HousingPart of New
York City Civii Court. J&M Holdings commenced two evictionproceedings against Ms. Barker,
eachunder the captionJ &MPropertiesHoldings Inc. v. Carla Barker, andbearingKings
County LandlordTenant indexnumbers 95190/2017 and 95191/2017.
105. J&M Holdingswas representedby CohenHurkinEhrenfledPomerantz&
Tenenbaum, LLP in those cases.
21
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 22 of 47 PageID #: 22Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 22 of 47 PageID #: 22
106. Thepetitioner in those cases, J&MHoldings,maintainedthat DefendantRokosz
was the president of J&M Holdings and the sole shareholder.
107. By havingMs.Barker transfer oWnership to J&M Holdings and insistingshe sign
the Assignment and Security Agreement, DefendantRokoszdid nothaveto pursue aresidential
foreclosure action to obtainownership of the property and thus deniedMs.Barker the legal
protections that theNewYork State legislatureenacted to protect homeowners.
108. Ms. Barker,representedby MFJ,movedto dismiss these cases in HousingCourt j
onprocedural and substantive grounds.
109. On July 10,2018, the housingcourt dismissed bothactions. J&MHoldingshas
noticedanappealbut has yet to perfect it.
110. Although the evictionproceedinghasbeendismissed,Ms. Barker still does not
feel safe in her ownhome. Throughout the evictionproceeding,multiple individuals came to her
home claiming they hadpurchasedher property.
111. In or aroundJuly 2018, someoneplaceda “For Sale” sign onher property. Ms.
Barker took it down.
112. In or aroundOctober 2018, amanwith akey to Ms.Barker’shomeunlockedthe
bottom lock and tried to enter, but was unableto becauseof adeadbolt. Through the door, the
man told Ms.Barker that hehadbeen informedthe housewas available for rent.
113. Eachof these incidents has scaredMs.Barker andmadeher feel unsafe.
114. Prior to taking out the Subject Loan,Ms. Barker never experienced this type of
harassment.
115. As aresult of these incidents and the threat of losingher home,Ms. Barker has
had to change her lifestyle. A homehealthaide,Ms. Barkernow onlyworks night shifts soshe
22
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 23 of 47 PageID #: 23Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 23 of 47 PageID #: 23
canbe at home in the day to protect herhome from intruders andothers whomay try to take
away her property.
116. Ms. Barker is ashamed that shewas scammed intopotentially losingher home
and experiencesbouts of depression. Herhome,once asource of family pride, no longerbrings
her happinessbecause it is still in a state of disrepair asaresult of the constructionwork that was
startedbut never finished.
117. OnDecember22, 2018, afire caused damage to the Subject Property. Since the
fire,Ms. Barker andher son havebeenunable to live in the property andhavebeen stayingwith
friends and family temporarily. Becauseof her temporary absence from the property,Ms.
Barker is unable to keep acareful watch on her home.
Defendants’ RelatedPractices
118. "InApril 2017, the KingsCOunty DistrictAttorney’s Office and theNewYork
Attorney General’s Office arrestedand indictedDefendantDefreitas, alongwithPaula
Blackwood-Sambury,DarrenDownes,RickleyGregoire, RoxanneHarmon,LesterWayne
Mackey,RaymondMcKayle, JaipaulPersaud, and JuneWhyte. All were arrested and charged
with mortgage fraud andmoney laundering for incidents from 2012.
119. Upon informationandbelief, since 2014,DefendantRokoszhas issued at least 13
other mortgage loans for one-to-four family homes,eachof which havesimilar terms to the
Subject Loan, including 12percent annual interest rates, interest-onlypayments, and one‐year
terms.
120. Of those 14,Defendant Legum’s name is on six of the transactions.
1 2 ] . In 2014, DefendantRokosz issued at least four mortgages for one-to-four family
homes with similar terms to the Subject Loan.
23
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 24 of 47 PageID #: 24Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 24 of 47 PageID #: 24
122. In 2015, DefendantRokosz issuedat least fivemortgages for one‐to-four family
homeswith similar terms to the Subject Loan.
123. In 2016,DefendantRokosz issuedat least onemortgage for one-to-four family
homeswith similar terms to the Subject Loan.
124. In 2017, in addition to the Subject Loan,DefendantRokosz issuedat least three
othermortgages for one-to-four family homeswith similar terms to the Subject Loan.
125. Ten of the 14predatory loans issuedby DefendantRokoszduring this time period
‐ or 71percent - were issued in predominantiyminority communities.
FIRSTCLAIMFORRELIEF(TILA)
(Against DefendantRokosz)
126. Plaintiffrestates, reaileges,and incorporates by referenceall foregoingparagraphs
asif fully set forthherein.
127. The Truth in LendingAct (“TILA”) requires creditors to provide disclosures
about the cost of credit in covered transactions. The right of rescissionmay apply if acreditor
fails to providesuchdisclosures.
128. TILA’s disclosure requirements apply to creditors in consumer credit transactions.
See 15U.S.C. § 1638.
129. A creditor refers to apersonwho both: (1) regularly extends consumer credit
payableby agreement in more than four installments or for which the‘payment of afinance
charge is ormayberequired; and (2) is theperson to whom the debt arising from the consumer
credit transaction is initiallypayableon the face of the evidence of indebtedness. 15U.S.C. §
1602(g). A creditor also refers to anypersonwho originates two or moremortgages considered
“high-cost mortgages,” asdefinedby TILA, in any l2-monthperiod. 15U.S.C. § 1602(g).
24
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 25 of 47 PageID #: 25Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 25 of 47 PageID #: 25
130. A consumer credit transaction is one in which the party to whomcredit is offered
or extended is anaturalpersonand themoneyor propertywhich are the subject of the
transaction areprimarily for personal, family, or householdpurposes. 15U.S.C. § 1602(i).
131. If TILA applies, the creditor mustprovideaseries of disclosures meant to inform
the borrower of the cost of credit for the transaction, includingthe following terms, among
others: the identityof the creditor, amount financed, finance charge, finance charge expressed as
an annual percentagerate, total of payments, payment schedule, amount of late fees, andother
statements of the borrower’s rights. 15U.S.C. § 1638(a). Suchdisclosures mustbemade before
the credit is extended. 15U.S.C. § 1638(b).
132. UnderTILA, the creditormust also providethe borrower,prior to closing, two
copies of anoticeof her right to rescind the loancontract, which are “clearly and conspicuously
in writing, in a form that the consumer may keep.” 12C.F.R. § 1026.17(a)(l); accord 15U.S.C.
§ I635(a); 12CPR. § 1026.15(b).
133. If,asaresult of the consumer credit transaction, asecurity interest is or will be
retainedor acquired in the principal dwelling of the person to whom credit is extended, the
consumer shallhave the right to rescind the loanfor a certainperiodof time after the creditor
makes the requireddisclosures. 15U.S.C. § 1635(a). In the event the creditor fails to comply
with TILA’S disclosure andnotice requirements, aborrower is entitled to rescinda transaction up
to three years after the date of consummation of the transaction. 15U.S.C. § 16350).
134. At all relevant times, DefendantRokosz, in the ordinary course of hisbusiness:
( I ) regularly extends consumer credit payableby agreement in more than four-installments; and
(2) is the personto whom the debt arising from the consumer credit transaction is initially
payable to. 15U.S.C. § 1602(g). DefendantRokoszhas also originated two or more “high-cost
25
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 26 of 47 PageID #: 26Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 26 of 47 PageID #: 26
mortgages” in any 12-monthperiod. Id. DefendantRokosz is therefore a“creditor” within the
meaningof TILA.
135. At all relevant times, J&M Holdingswas amere shamcorporation that one or .
moreDefendantsdesigned to evade consumer protection statutes. The true borrower and
purportedguarantor for 1&MHoldings isMs.Barker, anatural person. DefendantRokosz’sbad
faith attempt to subvert the protections of TILA shouldberejectedandMs.Barker,anatural
person, shouldbedeemed the true borrower. See 12CPR. § 1026.34(b).Because the extension
of credit was, for all intents andpurposes,extendedto a “natural person,” the loanmust be
considered a“consumer credit transaction” within the meaningof TILA and subject to its
protections. See 15U.S.C. § l602(i).
136. DefendantRokosz did not provideMs. Barkerwith any disclosures before the
credit transactions took place. 15U.S.C. § 1638(b)(1). Ms.Barker did not otherwise waive or
modify the timing requirements for the disclosures. 15U.S.C. § 1638(b)(2)(F).
137. The itemizationof disbursement proceeds laterprovided to Ms. Barker includeda
number of loanproceedswhichwere not directly distributed toMs. Barker,were notpaid
entirely to satisfy Ms.Barker’s prior debts,were not fees or charges properly excluded from the
finance charge pursuant to RegulationZ, 12CPR . § 1026.4(0),andwere notpaid to third
parties for purposes that were defined or communicated to Ms.Barker. DefendantRokosz thus
inaccurately disclosed the amount financed, the APR, and the finance charges related to Ms.
Barker’s mortgage transaction.
138. As aresult of the foregoing, DefendantRokosz failed to provideMs. Barkerwith
any requireddisclosures and notices in themanner and timeprescribedby TILA. 15U.S.C. {5
1638. The contents of the untimely itemizationof disbursement proceeds that DefendantHurley
26
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 27 of 47 PageID #: 27Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 27 of 47 PageID #: 27
eventually provided to Ms.Barker after the closing also substantively violated TILA in various
ways, includingbut not limited to, by:
a. failing to preperly andaccurately disclose the “amount financed,” and thereby
violating 15U.S.C. § 1638(a)(2)and 12C.F.R. § 1026.18(b);
b. failing to properly andaccurately disclose the “finance charge,” and thereby
violating 15U.S.C. § 1638(a)(3)and 12C.F.R. §§ 1026.18(d)and 1026.4; and
c. failing to properly andaccurately disclose the “annual percentage rate,” and
thereby violating 15U.S.C. § 1638(a)(4) and 12C.F.R. § 1026.18(e).
139. DefendantRokoszalso failed to provide two notices to Ms.Barker regardingher
right to rescind the loancontract, in the time andmanner requiredby TILA. 15U.S.C. §
1635(a); 12C.F.R. §§ 1026.15(b)and 1026.17(a)(1).
140. Because the Subject Loancreated asecurity interest in Ms.Barker’sprincipal
dwelling, the Subject Loan is subject to rescissionunderTILA. 15U.S.C. § l635(a).
141. The first closing date of Ms. Barker’s loanwas February 6, 2017. Because
DefendantRokoszhas failed to provide the requirednotices anddisclosures,Ms-Barkermay
exerciseher right to rescind the transactionupuntil and includingat leastFebruary 5,2020. 15
U.S.C. § l635(f); 12C.F.R. § 1026.23(a)(3)(i).
142. As aresult of the foregoing,Ms. Barker has a statutory right to rescindthe
Subject Loanpursuant to 15U.S.C. § 1635 and 12C.F.R. § 1026.23. Ms.Barker therefore
requests that this Court enter judgment in her favor and againstDefendantRokosz,by:
a. ordering the rescissionof Ms.Barker’s Subject Loan;
b. orderingDefendantRokosz to return to Ms.Barker any finance charges and fees
paid in connectionwithMs. Barker’s Subject Loan;
27
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 28 of 47 PageID #: 28Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 28 of 47 PageID #: 28
c. orderingDefendantRokoszto terminate any security interest in the Subject
Property created asaresult of themortgageSubject Loandescribedherein;
d. declaring any security interest in the SubjectProperty created asaresult of the
Subject Loandescribedhereinasnull andvoid; and
e. orderingthat DefendantRokoszpay to Ms.Barker the costs of this action,
together with reasonable attorney’s fees asdeterminedby this Court.
SECONDCLAIMFORRELIEF(HOEPA)
(AgainstDefendantRokosz)
143. Plaintiffrestates,realleges, and incorporatesby referenceall foregoingparagraphs
asif fully set forthherein.
144. The HomeOwnership andEquityProtectionAct (“HOEPA”) is anamendment to
TILA, designed to address abusivepractices in refinances andhomeequity loanswithhigh
interest rates or high fees.
145. When aTILA creditor extends a“high-cost mortgage”within the meaningof
HOEPA, it is subject to additionaldisclosure requirements and loan term restrictions. See 15
U.S.C.§ 1639.
146. A mortgage loanmay be considered a “high-cost mortgage” if it is afirst
mortgage on the consumer’s principal dwellingwith anannual percentage rate (“APR”) that
exceeds, by more than 6.5 percentagepoints, the average prime offer rate (“APOR”). See 15
U.S.C. § 1602(bb)(1)(A)(i)(I); 12CPR . § 1026.32(a)(l)(i).
147. The APOR is the averageprimeoffer rate for acomparable transaction asof the
date onwhich interest for the transaction is set, aspublishedby the FederalFinancial Institutions
28
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 29 of 47 PageID #: 29Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 29 of 47 PageID #: 29
ExaminationCouncil (“FFIEC”)onbehalfof the Consumer FinancialProtectionBureau
(“CFPB”). See 15U.S.C. § i639c(b)(2)(B); 12CPR . § 1026.35(a)(2).
148. TheAPR is the annual percentage ratewhich will yield a sumequal to the amount
of the finance chargewhen it is applied to the unpaidbalances of the amount financed, calculated
accordingto the actuarialmethodof allocatingpaymentsmadeonadebt between the amount
financed and the amount of the finance charge. 15U.S.C. § 1606(a).
149. TheUnitedStates Departmentof the Treasury, through the Office of the
Comptroller of the Currency (Q‘OCC”)publishes anAPR calculator that can simplify the
computationwith the following inputs: the amount financed, the disclosed interest rate, and the
payment schedule of the loan. See Office of the Comptroller of the Currency, Annual Percentage
RateCalculationProgramfor Windows (“APRWIN”),available at
https://www.occ.treas.gov/tools-forms/tools/compliance‐bsa/aprwin‐soitwarehtml; see also 15
U.S.C. § 1606(a)(l)(B) (“the rate determinedby any method prescribedby the Bureauasa
methodwhichmaterially simplifies computation”).
150. A finance charge is the sum of all charges,payabledirectly or indirectlyby the
person towhom the credit is extended, and imposeddirectly or indirectlyby the creditor asan
incident to the extensionof credit. 15U.S.C. § 1605(a).
151. If aloan is considereda “high-costmortgage”within the meaningof HOEPA, it
is subject to additional substantive protections, includingbut not limited to: high~eost mortgage
disclosures,prohibitiononprepaymentpenaities,prohibitiononballoonpayments,underwriting
requirements in consideration of ability to repay,protections in home improvement contracts,
prohibitionagainst financing of points and fees, and loancounseling requirements. 15U.S.C. §
1639.
29
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 30 of 47 PageID #: 30Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 30 of 47 PageID #: 30
152. A creditor that fails to comply with thehigh-costmortgage requirements of
HOEPAmaybeliable for actual damages, statutory damages of up to $4,000, additional
statutory damages amounting to the sum of all finance charges and fees paidby the consumer,
and reasonable costs and attorney’s fees. 15U.S.C. § 1640(e). Violations of HOEPA are subject
to athree-year statute of limitationsbeginningonthe date of the occurrence of the violation. 15
U.S.C. § 1640(e).
153. The Subject Loan is a “high-costmortgage”within themeaningof HOEPA, in
that it is afirst mortgageonMs. Barker’sprincipal dwelling, with anAPR that exceeds the
APORbymore than 6.5 percentagepoints. See 15U.S.C. §1602(bb)(1)(A)(i)(I); 12C.F.R. §
1026.32(a)(1)(i).
154. The “Average PrimeOffer RatesTables” arepublicly available onthe FFIEC’s
website athttps://www.ffiec.gov/ratespread/aportableshtm. TheAPOR for aone-year loan term
on February 6, 2017 was 3.52 percent.
155. The Subject Loanincludedroughiy$85,376.10 in finances charges, consisting of
the following charges paid directly or indirectlyasanincident to the extensionof credit: (a)
$60,192.68 retained in escrow asapremiumor other charge for a guarantee protectingthe
creditor against the obligor’s default; (b) at least $23,990.00 to corporations and/or individuals
unknown to Ms. Barker, for services undeclared to Ms. Barker, that were imposedby the creditor
asanincident to the extensionof credit; and (0) $1,193.42 to the creditor asanupfront interest
charge. See 15U.S.C. § 1605(a); 12C.F.R. § 1026.4(a).
156. After deducting finance charges from the $450,000.00 amount borrowed, the
amount financed is $364,623.90.
30
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 31 of 47 PageID #: 31Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 31 of 47 PageID #: 31
157. With adisclosed annual interest rate of 12percent, and interest-onlymonthly
payments for a lZ-monthterm, the Subject Loan’s payment schedule requiredthe following:
a. Twelve interest-only installments of $4,500.00; and
b. A 13thsinglepayment for the entireprincipalbalanceof $450,000.00.
158. With anamount financed of $364,623.90 and the abovepayment schedule, the
resultingAPR of the Subject Loan is at least 32.19 percent for purposes of TILA.
159. The APR easily exceeds the 3.52 percent APORby more than 6.5 percentage
points. Eventhe nominal stated interest rateof the Subject Loan‐12percent‐exceeds the
APOR by more than 6.5 percentagepoints. The Subject Loan is therefore a “high-cost
mortgage”within themeaningof HOEPAand is subject to its additional protections. See 15
U.S.C. § l602(bb)(1)(A)(i)(I); 12CPR . § 1026.32(a)(l)(i).
160. Upon informationandbelief, the terms of the Subject Loanvioiated HOEPA’s
additional protections in the following ways, includingbut not limited to:
a. failing to providespecific disclosures in conspicuous type size not less than three
business days prior to consummation of the transaction in violation of 15U.S.C.
§§ 1639(a), 1639(b);
b. prohibitingprepayment any timebefore six months from origination in violation
of 15U.S.C. § 1639(c);
c. providing for ascheduled payment that is more than twice aslarge asthe average
of earlier scheduled payments,by requiringthe entire loanbalance to becomedue
after one year of interest-onlypayments in violation of 15U.S.C. § 1639(e);
(1. extending credit to Ms. Barkerwithout regard to her repayment ability in
violation of 15U.S.C. § l639(h);
31
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 32 of 47 PageID #: 32Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 32 of 47 PageID #: 32
e. makingapayment directly to acontractor under ahome improvement contract
from amounts extended in the Subject Loan,with nowritten agreement signedby
the consumer in violation of 15U.S.C. § 1639(i);
f. directly or indirectly financing, in connectionwith the Subject Loan,points and
fees in violation of 15U.S.C. § 1639(rn); and
g. failing to obtain acertificate of loan counseling itemacounselor approvedby the
Secretary of HousingandUrbanDevelopmentpursuant to 15U.S.C. § 1639(u).
161. As aresult of the above-described violations of HOEPAandTILA,Ms. Barker
has a statutory right to rescind the Subject LoanwithDefendantRokoszpursuant to 15U.S.C. §
1635 and 12CPR. § 1026.23.
162. As aresult of the above-describedViolations of HOEPA,DefendantRokosz is
liable for actual damages sustainedby Ms.Barker, statutory damages of up to $4,000, additional
statutory damages for HOEPAviolations amountingto the sumof all finance charges and fees
paidby Ms. Barker, and reasonable costs and attorney’sfees for this action. 15U.S.C. §§
1640(a)(1), (a)(2)(A)(iV), (606)and (a)(4)~
163. Accordingly, Ms. Barker requests that this Court enter judgment in her favor and
against DefendantRokosz,by:
a. ordering the rescissionof Ms. Barker’s loantransactions;
b. orderingDefendantRokosz to returnto Ms.Barker any finance charges and fees
paid in connectionwithMs.Barker’s loan transactions;
0. orderingDefendantRokosz to terminate any security interest in the Subject
Property created asaresult of themortgage loantransactions describedherein;
32
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 33 of 47 PageID #: 33Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 33 of 47 PageID #: 33
d. declaring any security interest in the Subject Property created asaresult of the
mortgage loan transactions describedhereinasnulland void; and
e. ordering that DefendantRokoszpay the following damages to Ms.Barker:
i. actual damages sustainedasaresult of Defendant Rokosz’sviolations of
15U.S.C. §§ 1635 and 1639;
ii. statutory damages asdescribed in 15U.S.C. § 1640(a);
iii. the costs of this action, together with reasonable attorney’s fees as
determined by this Court; and
iv. additional enhanced damages in anamount equal to the sumof all finance
charges and fees paidby Ms. Barker.
THIRD CLA IMFORRELIEF(NewYork BankingLaw §6-1)(Against DefendantRokosz)
164. Plaintiffrestates, realleges, and incorporatesby referenceall foregoingparagraphs
asif fully set forth herein.
165. LikeTILA and HOEPA,theNewYork BankingLaw (“NY BankingLaw”) limits
andprohibits certainpracticeswith regard to “high-cost home loans.” N.Y.BankingLaw § 6-1.
166. NY BankingLawapplies to “home loans,”which are defined asloans in which:
(a) the principal amount does not exceed the conforming loansize limit for comparable
dwellings asestablishedby the FederalNationalMortgageAssociation; (2) the borrower is a
naturalperson; (3) the debt is incurredby theborrower primarily for personal, family, or
householdpurposes; and (4) the loan is secured by amortgageor deed of trust on the borrower’s
one~to~four family principal dwelling in NewYork. N Y .BankingLaw §6-l(1)(e).
33
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 34 of 47 PageID #: 34Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 34 of 47 PageID #: 34
167. A home loan is a “high-cost home loan”within the meaningof theNY Banking
Law if it is ahome loanwith anAPR that exceeds eight percentagepoints over the yield on
treasury securities havingcomparable periods of maturity. N.Y.BankingLaw §§6-l(l)(d), (g).
168. For purposes of determiningAPR,NewYork expressly adopts the federal TILA’s
definition andcalculation guidance. N.Y.BankingLaw §6-l(1)(b).
169. A high-costhome loan is subject to the following substantive limitations: no
balloonpayments; nonegative amortization; no increased interest rate; no limitationon advance
payments; no lendingwithout regard to repayment ability; and no lendingwithout counseling
disclosure. N.Y.Banking Law §6-l(2). I
170. Violations of section 6-lprotectionsmayresult in liability to the borrower for:
actual damages; statutory damages; rescission; reasonableattorney’s fees; injunctive,declaratory
andother equitable relief; andupon afinding of anintentionalviolation, the agreement shall be
deemedvoid and the lender shall havenoright to collect or retain any principal, interest, or other
charges, andtheborrowermay recover any paymentsmade. N.Y. Banking Law §§6-l(7)-(11).
The statute of limitations for actionsunder section6-1is six years fiom origination of the high‑
cost home loan. N.Y.BankingLaw §6-l(6).
171. The Subject Loan is a “high-cost home loan”within the meaningof theNY
BankingLawbecause it is a“home loan”with terms that exceed ahigh-cost threshold. N.Y.
BankingLaw §6~l(1)(d).
172. It is afirst lien“home loan”madeto anaturalperson for personalpurposes,
securedby Ms.Barker’s one-to-four family principal residence in the State of NewYork. N.Y.
BankingLaw §6‐l(l)(e).
34
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 35 of 47 PageID #: 35Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 35 of 47 PagelD #: 35
173. At all relevant times, J&M Holdingswas amere sham corporation that Defendant
Rokoszcreated to evade consumer protectionstatutes. The trueborrower andpurported
guarantor for J&M Holdings is Ms.Barker, anaturalperson. Thus, the loanwas, for all intent
and purposes, extended to a “natural person”within the meaningof the NY BankingLaw. N.Y.
BankingLaw §6‐l(1)(e)(ii). DefendantRokosz’sbad faith attempt to subvert the protections of
NewYork BankingLaw Section 6-l shouldbe rejectedandMs.Barker,anaturalperson, should
bedeemed the trueborrower. SeeN.Y.BankingLaw §6-l(3) (statute applies “to any person
who in bad faith attempts to avoid the applicationof this sectionby any subterfuge”). Because
the loanwas made to anaturalperson, for personalpurposes, and secured by a two-family
principal dwelling in the State of NewYork, it must beconsidereda“home loan”within the
meaningof theNY BankingLaw and subject to its protections. SeeN.Y. BankingLaw §6‑
l(1)(e).
174. Furthermore, the Subject Loanexceeds theAPR high-cost threshold. ‘TheAPR
exceeds the yield onTreasury securities with acomparablematurityby more than eight
percentagepoints. N.Y.BankingLaw §§6-l(l)(d), (g).
175. in themonth includingandpreceding the Subject Loanorigination, the yield ona
one-year Treasury security did not riseabove 0.89 percent. The APR threshold is thus nohigher
than 9 percent.
176. Because the NY BankingLawadopts the federal TILA’S definition and
calculation for APR, theAPR of the Subject Loan is at least 32.19 percent and clearly exceeds
the relevant 9percentAPR threshold for a “high-cost home loan.” Eventhe nominal stated
interest rateof 12percent exceeds the APR threshold.
35
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 36 of 47 PageID #: 36Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 36 of 47 PageID #: 36
177. The terms of the Subject LoanviolatedNY BankingLaw §6-1protectionsonhigh‑
cost home loans in various ways, includingbut not limited to:
a. providingfor ascheduledpayment that is more than twice aslargeasthe average
of earlier scheduled paymentsby requiringthe entire loanbalanceto becomedue
after one year of interest‐onlypayments in violation of N Y.BankingLaw §6‑
l(2)(b);
providingaprovisionthat increases the interest rate after default to “the
maximumrate permittedby law” in violation of N Y .BankingLaw §6~l(2)(d);
extending credit to Ms. Barkerwithout regard to her repayment ability in
violation of N Y .BankingLaw {56-l(2)(k);
failing to provide a list of counselors in violation of N Y.BankingLaw § 6»
l(2)(1)(i);
failing to provide amandatednoticeno fewer than 10days before closing in
violation ofN Y.BankingLaw §6-l(2)(l)(ii);
directly or indirectly financing, in connectionwith the Subject Loan,points and
fees in anamount exceedingthree percent of the principal amount of the loan in
violation ofN.Y. BankingLaw §6-l(2)(m);
makingapayment to acontractor under ahome improvement contract from
proceeds of the Subject Loan,with no written agreement signedby the borrower
in violation of N Y.BankingLaw §6‐l(2)(n);
failing to disclose the approximate amount due for property taxes andhazard
insurance in Violation of N Y.BankingLaw §6-l(2)(u); and
36
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 37 of 47 PageID #: 37Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 37 of 47 PageID #: 37
i. failing to state that the Subject Loan is ahigh-costhome loansubject to NY
BankingLawprotections in violation of N.Y.BankingLaw § 6-l(2-a)(a).
178. DefendantRokosz attempted to evadeNY Banking Law § 6-lby forcingMs.
Barker to take out the Subject Loanthrough ashamcorporation. This conduct evinces
DefendantRokosz’s intentional violation of NY BankingLaw §6-1.
179. Ms.Barker’s claims underNewYork BankingLaw §6‐ l are timely raisedwithin
six years of origination of the Subject Loanin February2017. N.Y.BankingLaw §6-l(6).
180. As aresult of the above-describedviolations of NY BankingLaw §6-1,
DefendantRokosz is liable for actual damages sustainedby Ms. Barker, statutory damages,
reasonable costs and attorney’s fees, and injunctiveand suchother equitable reliefasdeemed
appropriateby this Court. N.Y.BankingLaw §§6-l(7)~(9). Becauseof DefendantRokosz’s
intentional violation of the statute, the Subject Loanmust berenderedvoid andDefendant
Rokoszshall havenoright to collect, receive,or retainanyprincipal, interest or other charges
with respect to the Subject Loan, andmust returnany paymentsMs. Barker hasmadeunder the
loanagreement. N.Y.BankingLaw §6-l(10). The Subject Loan is further subject to rescission.
N.Y. BankingLaw §6»l(11).
181. Accordingly,Ms. Barker requests that this Court enter judgment in her favor and
against DefendantRokosz,by: l
a. ordering the rescissionof Ms.Barker’s Subject Loan;
b. declaring the Subject Loanvoid;
c. declaring that DefendantRokoszhas no right to collect, receive, or retainany
principal, interest,or other charges with respect to the Subject Loan;
37
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 38 of 47 PageID #: 38Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 38 of 47 PageID #: 38
d. orderingDefendantRokoszto return to Ms.Barker anypaymentsmade in
connectionwith the Subject Loan;
e. declaring any security interest in the Subject Property created asaresult of the
mortgage loantransactions describedhereinasnull and void;
f. ordering that DefendantRokoszpay the followingdamages to Ms.Barker:
i. actual damages sustained asaresult of DefendantRokosz’sviolations of
N Y.BankingLaw §6-1;
ii. statutory damages pursuant toN.Y.BankingLaw §6‐l(7)(b);
iii. the costs of this action, together with reasonable attorney’s fees as
determinedby this Court;
g. granting suchother equitable reliefasthis Court deems just and appropriate.
FOURTHCLA IM FORRELIEF(Usury)
(Against DefendantRokosz)
182. Plaintiffrestates, realleges,and incorporates by reference all foregoingparagraphs
asif fully set forth herein.
183. In NewYork, loancontracts exceedinga rate of 16percent aredeemedusurious
andvoid. N.Y.Gen. Oblig. Law §§5-501, 5511; N Y .BankingLaw § 14-a.
184. LikeTILA, the rate of interestpursuant to NewYork law is the annualpercentage
rate yielding asumequal to the amount of “interest,” when applied to the unpaidbalances of the
amount financed, calculated according to the actuarialmethod. 3NYCRR§4.4.
185. “Interest” is defined asorigination fees, points andother discounts, andall other
amounts paidorpayable, directly or indirectly,by any person, to or for the account of the lender
in consideration for makingthe loanor forbearance. 3NYCRR§4.2(a). Thus,NewYork’s
38
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 39 of 47 PageID #: 39Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 39 of 47 PageID #: 39
definition of “interest” also tracks federal TILA’S definition of “finance charge.” See 15U.S.C.
§ 1605(a) (“all charges,payable directly or indirectlyby the person to whom the credit is
extended, and imposeddirectly or indirectlyby the creditor asanincident to the extension of
credit”).
186. NewYork’s usury remediesmaybe limitedwhere a lender is asavings bank,a
savings and loanassociation, or afederal savings and loanassociation. N.Y. Gen. Oblig. Law §
5-511. NewYork’s usury limits also do not apply to loans of $250,000 or more,unless the loan
is secured primarilyby an interest in realproperty improvedby aone or two family residence.
N.Y.Gen. Oblig. §5-501(6)(a).
187. At all relevant times, DefendantRokoszwas not asavingsbank, asavings and
ioanassociation, or a federal savings and loanassociation. N.Y.Gen. Oblig. Law §5‐511.
188. At all relevant times, the Subject Loanwas securedby an interest in realproperty
improvedby atwo‐family residence. N.Y.Gen. Oblig. §5-501(6)(a).
189. Accordingly,NewYork’s prohibitionagainst usurious rates applies to Defendant
Rokoszand the Subject Loan.
190. DefendantRokosz charged an annual percentage rate of at least 32.19 percent,
exceeding the usury threshold of 16percent.
191. Accordingly, Ms. Barker requests that this Court enter judgment in her favor and
against DefendantRokosz,by:
a. declaring the Subject Loanvoid; and
b. declaring that DefendantRokoszhas no rightto collecit, receive, or retain any
principal, interest, or other charges with respect to the Subject Loan.
39
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 40 of 47 PageID #: 40Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 40 of 47 PageID #: 40
FIFTH CLA IMFORRELIEF(NewYork Generai Business Law §349)
(Against Defendants Rokosz,Defreitas,Legum,Hurley,Telsey, Fishbein,andHingie)
192. Plaintiffrestates, realleges, and incorporates by reference all foregoing paragraphs
asif fully set forthherein.
193. NewYork prohibits “deceptive acts, or practices in the conduct of any business,
trade or commerce or in the fumishing of any service in this state. . . .” N.Y.Gen. Bus. Law §
349(a).
194. Any person “injuredby reasonof any violation of this sectionmay bringanaction
in his own nameto enjoin suchunlawful act orpractice, anaction to recover his actual damages I
or fifty dollars,whichever is greater, or bothsuchactions.” N.Y.Gen. Bus. Law §349(h).
195. As enumerated above, DefendantRokosz,DefendantDefreitas,Defendant
Legum,DefendantHurley,DefendantTelsey, DefendantFishbein, and DefendantHingle.
(hereinafter collectively referred to asthe “GBL Defendants”)violated section 349 of the New
York GeneralBusiness Lawby usingdeceptive acts andpractices in the conduct of their
businesses.
196. The GBLDefendants’ conduct has abroad impact onconsumers at large.
197. The GBL Defendants committed the above‐described acts willfully and/or
knowingly.
198. The GBLDefendants’ wrongful and deceptive acts havecaused injury and
damages to Ms.Barker andunless enjoined,will cause further irreparable injury.
199. The GBL Defendants’ violations include,but are not limitedto:
40
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 41 of 47 PageID #: 41Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 41 of 47 PageID #: 41
200.
. inducingMs.Barker to transfer title to asham corporation andmisrepresenting
her ability to remainin complete control of the corporation and retaintitle to her
home;
falsely claimingthat Ms. Barker would receivea federal government sponsored
FHA loan to refinance the Subject Loan;
. inducingMs.Barker to execute additional loandocuments atasecond closing,
while misrepresentingto Ms. Barker that shewas signing additional paperwork
related to the initial closing;
. using fraudulent, deceptive, andmisleadingloandocuments and agreements to
strip Ms. Barker’s home of equity; and
. using fraudulent, deceptive, andmisleadingagreements to obtain title to Ms.
Barker’s property.
As adirect andproximate resultof the GBL Defendants’ violations of section 349
of theNewYork GeneralBusiness Law,Ms. Barkerhas suffered compensable harm, including
emotional distress.
201. Accordingly, Ms.Barker requests that this Court enter judgment in her favor and
against DefendantRokosz,DefendantDefreitas,Defendant Legum,DefendantHurley,
Defendant Telsey, DefendantHingle, andDefendantFishbein,by:
a. orderingpreliminary andpermanent injunctive relief,prohibitingeachGBL
Defendant from continuing to engage in the fraudulent and deceptive acts alleged
herein;
b. ordering eachGBLDefendant to pay the following damages to Ms. Barker:
41
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 42 of 47 PageID #: 42Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 42 of 47 PageID #: 42
i. compensatory and treble damages in anamount to be determinedby this
Court; and
ii. the costs of this action, together with reasonableattorney’s fees as
determinedby this Court.
SIXTHCLA IM FORRELIEF(CivilRICO,28U.S.C. § 1962(c))
(Against All Defendants)
202. Plaintiffrestates, realleges, and incorporatesby reference all foregoing paragraphs
asif fully set forthherein.
203. Under the Racketeer InfluencedandCorrupt Organizations Act (“RICO”), it is
“unlawful for any personemployedby or associatedwith any enterprise engaged in,or the
activities of which affect, interstate or foreign commerce, to conduct or participate, directly or
indirectly, in the conduct of such enterprise’s affairs through apatternof racketeeringactivity or
collectionof unlawfuldebt.” 18U.S.C. § 1962(c).
204. “Person” includes any individual or entity capable of holdingalegal or beneficial
interest in property. 18U.S.C. § 1961(3).
205. “Enterprise” includes any individual,corporation, or other legalentity and any
union or group of individuals associated in fact althoughnot alegal entity. 18U.S.C. § 1961(4).
206. “Unlawful debt” includes adebt which is unenforceableunder State or Federal
law in whole or in part asto principalor interest becauseof the laws relatingtousury, andwhich
was incurred in connectionwith the business of lendingmoney at arateusuriousunder State or
Federal law,Where the usurious rate is at least twice the enforceable rate. 18U.S.C. § 1961(6).
42
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 43 of 47 PageID #: 43Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 43 of 47 PageID #: 43
207. Any person injured in herbusiness or propertyby reason of aviolation of section
1962may recover threefold the damages she sustains and the cost of the suit, including
reasonable attorney’s fees. 18U.S.C. § 1964(c). l
208. Ms.Barker is anaturalperson, andassuch is a“person” within the meaningof 18 i
U.S.C. § 1961(3). v
209. Defendants are natural persons and corporate entities, and assuchare “persons”
within the meaningof 18U.S.C. § 1961(3).
210. Upon informationandbelief,Defendants IziaRokosz,JanelleDefieitas,Steve
Legum,FrankRichardHurley,GreggTelsey, RobertFishbein, BettyJ.Hingie,RoyceLLC,
JackieMarketing, LLC, Lockdeco, and any John and Jane Doedefendants unknownto Plaintiff
(hereinafter collectively referred to asthe “Enterprise”) are separate and distinct persons and
entities who, taken together, form anassociation in fact, althoughnot a legalentity, and therefore
constitute anenterprisewithin themeaningof 18U.S.C. § 1961(4).
2 1 ] . Upon informationandbelief, the individual Defendants engaged in anongoing
informalenterprise, established for the commonpurposeof establishinga fraudulent equity‑
strippingscheme.
212. Thepurpose of the Enterprise is to target distressedhomeowners with equity in
their homes, issuehardmoney loans with such onerous terms and costs that default and
immediate deed transfer are guaranteed, all while completely stripping the homeof equity to the
benefit of themembers of the Enterprise. The Enterprise also convinces the homeowner to
transfer title to asham corporation in anattempt to avoid consumer protection laws.
213. This is accomplishedby DefendantDefreitasutilizingher connections in the
community to connect astrugglinghomeownerwith DefendantRokosz andDefendantFishbein;
43
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 44 of 47 PageID #: 44Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 44 of 47 PageID #: 44
DefendantFishbeinarranges the financing; DefendantRokoszissueshardmoney loansdirectly
to the homeowner or has the homeowner transfer title to asham corporationwhich thenbecomes
the borrower and thehomeowner is promisedhe or shewill he the sole shareholder andremain
“effectiveowner, andmustpersonally guarantee the hardmoney loan;DefendantRokoszemploys
associateDefendant Legurnto serve asthe attorney for the transaction and “escrow agen ” in
furtherance of the scheme; DefendantHurleyprovides legal services to the homeowner aspart of
the scheme; DefendantDefreitas arranges for significant proceeds to bepaid to apurported
construction company, Lockdeco, to performrepairs that are never actually completed, in
furtherance of the scheme; proceeds are also diverted to DefendantBettyJ.Hingle,who
notarizes closingdocuments; and one or more of the Defendants arranges for significant
proceeds to goto associateDefendantTelsey, who appears to accept significant proceeds
through two corporations, Royce LLCandJackie MarketingLLC, in furtherance of the scheme.
214. The Enterpriseengages in or affects interstate commerce. In addition to paying
offMs. Barker’s sister, who lives outside the State of NewYork, at least some of the activities of
the Enterprisewere conducted over electronicmail and telephone.
215. Defendants’ unlawful Enterprise in violation of RICOremains longstanding,
continuous, and open ended.
216. Defendantshaveutilizedtheir roleswithin the Enterpriseasameans to directiy
and indirectly conduct andparticipate in the coliection of unlawful debts by facilitating loans
issuedatusurious rates in the State of NewYork, aspart of afraudulent equity-strippingscheme
benefitingall defendants, by demandingpayment of said loans, andby suingMs. Barker. The
Subject Loan is an“unlawful debt” under 18U.S.C. § 1961(6) in that it is:
44
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 45 of 47 PageID #: 45Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 45 of 47 PageID #: 45
a. unenforceableunderNewYork state lawbecause the rate of interest is deemed
usurious;
b. incurred in connectionwith the business of lendingmoney atausurious rate; and
c. the usurious rateof at least 32.19 percent was at least twice the enforceable rate of
16percent.
217. Accordingly, the Defendantshavedirectly and indirectly conducted and
participated in the conduct of the affairs of the Enterprisethrough the collection of unlawful
debts in violation of 18U.S.C. § 1962(0).
218. As adirect and proximate result of Defendants’ violations of 18U.S.C. § 1962(c),
Ms. Barkerwas injured in her business andpropertyby the loss of all remainingequity that was
left in the SubjectProperty. Such injury to Ms. Barker was reasonably foreseeable or anticipated
asanatural consequence of the Enterprise’s equity‐strippingscheme.
219. Accordingly, Ms. Barker requests that this Court enter judgment in her favor and
against all Defendants,by:
a. prohibitingeachDefendant fi‘om continuing to engage in the same type of
endeavors allegedhereinasrelated to the Enterprise;
b. orderingDefendants to pay the following damages to Ms. Barker:
i. compensatory and treble damages in anamount to be determinedby this
Court;
i i. the costs of this action, together with reasonableattorney’s fees as
determined by this Court; and
c. orderingDefendants to disgorge all ill-gotten gains in order to deter them from
engaging in similar conduct in the future.
45
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 46 of 47 PageID #: 46Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 46 of 47 PageID #: 46
PRAYERFORRELIEF
WHEREFORE, Plaintiffrequests the following reliefjointly and severally asagainst all
Defendants:
a. ajudgment declaring that Defendantshave committed the violations of law alleged in
this action;
b. anorder enjoiningDefendants from continuing to engage in the illegalpractices
described above;
0. anorder,pursuant to TILA and HOEPA, (i) declaring the Subject Loanrescinded; (ii)
voiding any lienand/or security interest obtainedby DefendantRokoszagainst the
Subject Property; and (iii)providingto Plaintiffactual, statutory and enhanced
damages, and attorney’s fees and costs asdeterminedby this Court;
(1. anorder, pursuant to NY BankingLaw §6-1, (1) declaring the Subject Loanrescinded
andvoid; (ii) declaring that DefendantRokoszhas no right to collect, receive,or
retainanyprincipal, interest,or other charges with respect to the Subject Loan; (iii)
declaring any security interest in the SubjectProperty created asaresult of the
Subject Loannull and void; (iv) providingthat DefendantRokosz returnto Ms.
Barker anypaymentsmade in connectionwith the Subject Loan; and (v)providingto
Plaintiffactual damages, statutory damages, and attorney’s fees and costs, to be
determinedby this Court;
e. anorder, pursuant toNewYork’s prohibitionagainst usury, (i) declaring the Subject
Loanvoid; and (ii) declaring that DefendantRokoszhas no right to collect, receive,
or retainanyprincipal, interest,or other charges with respect to the Subject Loan;
46
Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 47 of 47 PageID #: 47Case 1:19-cv-00514-KAM-SMG Document 1 Filed 01/25/19 Page 47 of 47 PageID #: 47
f. anorder, pursuant to NY GBL §349, (i) enjoiningthe GBLDefendants from
continuing to engage in practices that violateNY GBL §349; and (ii) providingto
Plaintiffactual and/or compensatory damages, statutory damages, treble damages,
and attorney’s fees and costs, to bedeterminedby this Court;
g. anorder, pursuant to RICO, (i) enjoiningDefendants from continuing to engage in
the same type of endeavors allegedhereinasrelatedto the Enterprise; (ii)providing
to Plaintiffcompensatory and treble damages and attorney’s fees and costs, to be
determinedby this Court; and (iii)providingthat Defendants disgorge all ill‐gotten
gains;
h. such other reliefand further reliefasmaybejust andproper.
JURY DEMAND
Plaintiffrequests ajury onall claims sotriable.
Dated: January 25, 2019NewYork, NewYork
Respectfully submitted,
MOBILIZATIONFORJUSTICE, INC.
By: /s/ BelindaLuuBelinda LuuCaroline ChenCarolynE. Coffey, of counsel toJeanette Zelhof, Esq.100Wiiliatn Street, 6th FloorNewYork,NY 10038(212)417‐[email protected]
AttorneysforPlaintifir
47