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This is an investigative report I did for a client who will be interviewed by Diana Olick of CNBC which will be aired on January 27, 2009.  This client was taken for nearly $3500 by guy named Chris Campbell of Lionstar Financial who claimed to be an affiliate of Green Credit Solutions in California.   Was he? Well, it depends who you ask and when you ask or if Jupiter is in allignment with Mars or Venus because the story kept changing everytime I talked to someone at Green Credit Solutions.   I would advise homeowners to stay away from Lionstar Financial, Sueno Financial and Green Credit Solutions.

Client, Dr. Daniel Howard retained the services of Stephen Dibert of MFI-Miami (now MFI-Mod Squad) on December 15, 2008 to investigate the status of the loan modification they paid Chris Campbell of Lionstar Financial $3495 to perform on their behalf in August 2008. Client was led to believe that Lionstar Financial of Cypress, California had an agency relationship with Green Credit Solutions, of Lake forest, California. Lionstar is a registered LLC in the state of California (registration #200801910254) and Green Credit Solutions is a registered corporation in the state of California (registration #C2994635).

Chris Campbell of Lionstar Financial gave Clients an application from Green Credit Solution which states they would be represented by attorney Ryan Davies (California Bar #192598) through their agreement with Green Credit Solutions and that the $3495 if accepted would be used for attorney representation.

From Page One of the GSC application:

After the Loss Mitigation Package is returned you can expect the following:

1. Your application will be reviewed to ensure the best solution for you.

2. Your application will then be forwarded to the law firm where it will undergo a thorough pre-qualification process, including ensuring the enclosed attorney authorization form has been signed and returned. Once accepted by the law firm you will be charged $3,495.00, of which $2,495.00 is a non-refundable retainer.

3. Upon acceptance into the loss mitigation program GCS and the law firm will proceed according to the solution(s) initially proposed to you.

This appears to be what is known by legal experts as, “Capping”. Capping is where an attorney uses a non-attorney to solicit business for their firm and it is against California law.

California Business and Professions Code Section 6152(a)1

Any person, in an individual capacity or in a capacity as a public or private employee, or for any firm, corporation, partnership or association to act as a runner or capper for any attorneys or to solicit any business for any attorneys in and about the state prisons, county jails, city jails, city prisons, or other places of detention of persons, city receiving hospitals, city and county receiving hospitals, county hospitals, superior courts, or in any public institution or in any public place or upon any public street or highway or in and about private hospitals, sanitariums or in and about any private institution or upon private property of any character whatsoever.

This appears to also be a violation of the CALIFORNIA RULES OF PROFESSIONAL CONDUCT which governs attorneys.

Rule 1-320. Financial Arrangements with Non-Lawyers*

(A) Neither a member nor a law firm shall directly or indirectly share legal fees with a person who is not a lawyer.

*http://calbar.ca.gov/calbar/pdfs/rules/Rules_Professional-Conduct.pdf

California law says any contracts written in violation of this are null and void.

California Business and Professions Code Section 6154(a)

Any contract for professional services secured by any attorney at law or law firm in this state through the services of a runner or capper is void. In any action against any attorney or law firm under the Unfair Practices Act, Chapter 4 (commencing with Section 17000) of Division 7, or Chapter 5 (commencing with Section 17200) of Division 7, any judgment shall include an order divesting the attorney or law firm of any fees and other compensation received pursuant to any such void contract.

After contemplating their options, Client sent a check to Lionstar Financial on 8/27/2008 to proceed with modifications. According to Dr. Howard, Chris Campbell instructed them to do this per Green Credit Solutions’ orders. After sending a check for the $3495 to Lionstar, Client received a letter from Ryan Davies saying he could not represent them. However it was addressed to a John Balcorta and was dated August 7, 2008. Clients immediately called Chris Campbell who informed them that it was a mistake and to disregard it.

Although this may seem odd but it’s not because up until Labor Day many modification companies who used brokers or third parties as “affiliates” had the modification customer pay the third party as an attempt shield themselves from liability (Dr. Howard is a prime example).

The modification company would be paid as a “processing” company for the modification company as a way to skirt Section 8a of RESPA which reads:

No person shall give and no person shall accept any portion, split,or percentage of any charge made or received for the rendering of a real estate settlement service in connection with a transaction involving a
federally related mortgage loan other than for services actually performed.

The practice of using “affiliates” has since been abandoned by most loan modification companies because many state regulators were having a hard time believing that the modification company was collecting 80% of the fees to process the loan modification. Green Credit Solutions has not abandoned this practice and they actively recruit “resellers” (which is another term for “affiliates”) on their website:

Green Credit Solutions provides an opportunity for any broker or reseller to multiply their number of leads, close a higher percentage of those leads and maximize the revenues from each one.

Green Credit Solutions (“GCS”) is a company that offers a complete suite of much-needed rescue services for consumers with financial problems.

These programs include loan modifications, debt management, credit improvement and protection, insurance and more.

By becoming a GCS affiliate, you can increase your revenues using our products and processes without having to worry about anything except sales.

GCS takes care of all aspects of delivery for you. We provide all the support your clients require freeing you up to do what you really want to do — grow your business.

It’s not unusual for a single GCS package sale to generate over $6,000 in commissions.

And we provide FREE on-going support to you and/or your team… keeping you up to date with our growing product lines, industry trends and sales techniques, including:

second call closing

business marketing consulting

The Broker vs. The Financial Professional And the winner is…

The Green Credit Solutions affiliate program allows you to transition from a broker where 50 leads = 1 loan to a financial services professional where 50 leads = 15 clients for LIFE!   This not only provides you with a sustainable business, but allows you to retain your key employees to ensure stability and future growth.

And each of those clients can generate far greater revenues. For example:   50 leads for a single loan can generate $1500 in commissions. With GCS product offerings, those same leads can generate commissions of up to $13,500.

GCS can make a big difference in your business:

• Turn un-performing leads into long-term revenue.
• Sustain and grow your business regardless of the economy.
• Focus on sales and let us do the rest.
• Make more money…today AND tomorrow.

It pays to partner with Green Credit Solutions.   Help is Here™

http://www.greencreditsolutions.com/gcs/resellers/index.php.

It should also be noted that Green Credit Solutions is registered with the California Department of Corporations (license #603A334) and the California Department of Real Estate (DRE) (license #1850648) as a broker. However, as of 1/13/2009 they have no designated officers with a valid DRE licenses on file. The last known officer is Jeffrey Alan Chiuminatta and his officer status was canceled on 11/10/2008. He is an officer with Pac-West Funding which appears to share the same office space with Green Credit Solutions.

Having at least one licensee is required under DRE guidelines:

A corporation may be licensed as a real estate broker through one or more of its officers who are brokers or have qualified for a broker license by examination within the twelve months preceding receipt of application. All acts of the licensed broker/officer(s) under this license must be performed only on behalf of the corporation.

Green Credit Solutions, Lionstar or Pac-West Funding are also not approved to accept upfront fees by DRE.

The broker must have you sign an agreement that tells you what services will be performed, when they will be performed and how much you must pay. The broker cannot have you sign an agreement until it has been submitted to the Department of Real Estate for review and the broker has received permission to use it and collect the advance fee.* The following individual and corporate real estate brokers have submitted advance fee agreements for loan modification and/or similar services to the Department of Real Estate for review, and have received “no objection” letters regarding their use. You can obtain information on brokers and their locations by clicking on the “License Number” on the listing below or call (916) 227-0770.

*http://www.dre.ca.gov/mlb_adv_fees.html

It should also be noted that Green Credit Solutions is connected with Pac-West Funding. All email correspondence from officers at Green Credit Solutions to MFI-Miami all came from Pac-West Funding email accounts.

These three companies as well as attorney Ryan Davies are not licensed in the state of Florida which regulates loan modification companies. Therefore, Client’s deal should not have even been considered. Ryan Davies does have a disclaimer on his agreement which states that he cannot represent people outside of California.

Florida Statute Sec. 501.1377

(3)  PROHIBITED ACTS.–In the course of offering or providing foreclosure-related rescue services, a foreclosure-rescue consultant may not:

(b)  Solicit, charge, receive, or attempt to collect or secure payment, directly or indirectly, for foreclosure-related rescue services before completing or performing all services contained in the agreement for foreclosure-related rescue services.

5(b) ”Foreclosure-rescue consultant” means a person who directly or indirectly makes a solicitation, representation, or offer to a homeowner to provide or perform, in return for payment of money or other valuable consideration, foreclosure-related rescue services. The term does not apply to:

6.  A licensed mortgage broker, mortgage lender, or correspondent mortgage lender that provides mortgage counseling or advice regarding residential real property in foreclosure, which counseling or advice is within the scope of services set forth in chapter 494 and is provided without payment of money or other consideration other than a mortgage brokerage fee as defined in s. 494.001.

(7)  VIOLATIONS.–A person who violates any provision of this section commits an unfair and deceptive trade practice as defined in part II of this chapter. Violators are subject to the penalties and remedies provided in part II of this chapter, including a monetary penalty not to exceed $15,000 per violation.

After about 60 days, Chris Campbell sent Clients copies of undated letters from both IndyMac Bank and Wells Fargo. After a lengthy email exchange between the Clients and Chris Campbell over a 48 hour time frame, Clients then contacted both IndyMac Bank and Wells Fargo to get a status. It was then revealed that neither Chris Campbell nor Green Credit Solutions had ever contacted IndyMac Bank or Wells Fargo and that the letters from them to Chris Campbell were fraudulent.

After nearly a month and half of trying to reach Chris Campbell, Clients gave up and contacted MFI-Miami to investigate. On December 26, 2008, letters were sent via facsimile and certified mail to Lionstar Financial and Ryan Davies. On January 2, 2009, MFI-Miami received a letter from Ryan Davies’ attorney Allison Rhodes of Hinshaw & Culbertson, LLP in Portland, Oregon. In this letter, Ryan Davies denies any knowledge of or connection with Chris Campbell or Lionstar Financial. A certified letter was also sent to Chris Campbell/Lionstar Financial and the receipt was signed by Debra Sugden on 12/29/2008. There has been no response from Lionstar Financial. It should be noted that in later communication between MFI-Miami and Green Credit Solutions it was revealed the address given to Dr. Howard for Lionstar was Sueno Financial which also had a connection with Chris Campbell. It should also be noted that neither Debra Sugden nor Sueno Financial have a license on file with California DRE. The California Secretary of State’s office also does not have a Sueno financial registered as either a LLC or as corporation. I also made several unsuccessful attempts to contact Debra Sugden.

On January 8, 2009, Client called Green Credit Solutions to try to resolve this matter since it appears Lionstar was an affiliate. Client spoke to a “Blair” at Green Credit Solutions who assured him that they would do everything to get their money back because they did not want a bad reputation because of an “unethical affiliate”. I then called Green Credit Solutions on January 12, 2009 and spoke to Brian LaRuffa. Brian LaRuffa claimed he was aware of the situation with Dr. Howard. He assured me of two things; Dr. Howard would get his money back and Lionstar Financial was indeed an affiliate.

About an hour later, I received a call from Brian LaRuffa claiming that they changed their mind and they will not be refunding Dr. Howard’s money.When I questioned him about their connection with Ryan Davies, he informed me Ryan Davies was no longer affiliated with Green Credit Solutions. I then asked him if Green Credit Solutions was collecting an upfront fee, then why they have not been approved by DRE. His response was, “We’re attorney backed so we don’t have to be.” I then asked him if they were a law firm and he said, “No.” I questioned him about who handles the negotiations with the lenders and he responded, “The lawyer we have under contract.” I then informed him of the multiple California and Florida laws that may have been broken.

On January 16, 2009, I received a call from Curt Melone, COO of Green Credit Solutions, who began the conversation out with, “I run a modification company in California and I’m interested having you handle our forensic mortgage auditing and our fraud investigating. We advertise on ML-Implode and can send a lot of business your way!” He then followed it up with, “I’m Curt Melone, COO of Green Credit Solutions, have you ever heard of us?”

The conversation proceeded to Dr. Howard’s situation. At this point, Curt Melone made the claim that Lionstar was only not an affiliate of Green Credit Solutions but stole an unknown amount of their Client Agreement forms. This totally contradicted the statements that Blair made to Dr. Howard and what Brian LaRuffa told me 4 days prior. Curt Melone offered what sounded like a bribe by saying, “We really want this settled, so we can send business your way.”

On January 19, 2008, Dr. Howard and I had a telephone conference with Curt Melone who after a heated discussion with me about turning this matter over to DRE, reiterated to both of us if he could not get the money from Lionstar, he would have Green Credit Solutions write Dr. Howard a check for the $3495.00 fairly quickly. Curt Melone then called me after the conference and reiterated Doctor Howard would receive his money back and that they would turn over all internal documents about their dealing on this matter if I helped them find Chris Campbell. He then reiterated his comment from our January 16, 2009 conversation, “We really want to get this settled, so we can send business your way.”

I then received an email from Brian LaRuffa on January 22, 2008 saying, “In the event we cannot collect the funds, I cannot go after Lionstar for falsely representing Green…”

The email contained an attachment that consisted of an email exchange between Chris Campbell and Dr. Howard which did not come from Dr. Howard or Ms. Struthers. This is would indicate that there was some type of agency relationship between Chris Campbell and Green Credit Solutions if Green Credit Solutions has access to Chris Campbell’s emails.

Conclusion

Three things are abundantly clear, Dr. Howard was conned out of $3495 by Chris Campbell/Lionstar Financial. There was a connection between Lionstar and Green Credit Solutions either directly or indirectly and all three entities, Green Credit Solutions, Lionstar Financial and Sueno Financial are in violating DRE guidelines for soliciting advanced fees from homeowners without approval of DRE.

Is Green Credit Solutions ultimately responsible for refunding Dr. Howard his money based on the evidence presented? More than likely, they are not. However, the Chief Operating Officer, Curt Melone repeatedly confirmed they would refund Dr. Howard’s money as did Chief Financial Officer, Brian LaRuffa. These comments were made to both Dr. Howard and myself.

The constant contradictory statements by both Brian LaRuffa and Curt Melone would indicate the business model of Green Credit Solutions is based on smoke and mirrors with their third party affiliates assuming all the liability.

Other than being in violation of the above mentioned DRE guidelines, it appears Green Credit Solutions may be in violation of California Business and Professions Code 6152 for accepting retainer fees for Ryan Davies or any other attorneys they are affiliated with. They are also in violation Florida Statute 501.1377 which strictly restricts the charging of advanced fees for foreclosure rescue in Florida.

It is also very clear that Green Credit Solutions does little if no due diligence when signing their affiliates. That is very clear with their affiliation with Sueno Financial. As mentioned on the previous page, the state of California has no record of Sueno being a licensed LLC, corporation or having a DRE license.

It is my opinion that homeowners stay clear of Green Credit Solutions, Lionstar Financial, Sueno Financial or Pac-West Funding. They should also stay away from the following individuals; Curt Melone, Brian LaRuffa, Debra Sugden and Chris Campbell.

MFI-Mod Squad will be sending copies of this report along with all collected evidence to the California DRE and the Florida AG’s office for further investigation.