On August 15, 2011, Justice John M. Galasso of the Nassau County Supreme Court issued a sweeping order shutting down Homesafe America Inc., one of New York’s largest mortgage scam operations pending trial. The order is a major victory in a year-long legal campaign against loan modification scams in New York and nationwide.

The case, Mook v. Homesafe America Inc., began on June 28, 2011, when a group of 15 homeowners sued the companies and nearly two dozen employees for fraud, deceptive practices, false advertising and various other claims. Among their demands, victims are seeking $1.5 million in punitive damages and an order permanently preventing all defendants from working in the mortgage assistance industry. The homeowners are being represented on a pro bono basis by Davis Polk and the Lawyers’ Committee for Civil Rights Under Law.

The court order ceases the operations of Homesafe and its successor corporation, United Solutions Law Firm, which are alleged to have scammed more than 1,000 low- and middle-income homeowners by falsely promising to help customers modify the terms of their mortgages. The order also prevents Homesafe’s two founders, Guy Samuel and Scott Schreiber, from engaging in mortgage-assistance relief services.

Attorneys for the homeowners recently unearthed documents indicating that Samuel and Schreiber operated a string of companies that affected thousands of homeowners. On July 26, 2011, Justice Galasso ordered the defendants to turn over nearly 70,000 pages of customer files, which the Lawyers’ Committee and Davis Polk are currently reviewing to determine the breadth of the operation. These materials supplement documents discovered earlier this summer in which Samuel admitted to running an “illegal” operation that grossed more than $2 million in 2010.

Among other claims, the plaintiffs are alleging that the scam companies violated a New York statute known as the “Deceptive Practices Act,” which empowers injured consumers to operate as “private attorneys general.” Under the Act, an individual victim may seek an injunction against an alleged scammer on behalf of all consumers. Using this forceful, yet rarely used remedy, non-profit organizations like the Lawyers’ Committee, in partnership with the private bar, can step in and shut down scam operations when state and local enforcement agencies lack the resources to do so.

In addition to Mook v. Homesafe, the Lawyers’ Committee and Davis Polk have filed two other major lawsuits in New York, both against a network of companies operating in Nassau County, under the names Express Home Solutions, Save My Home and Home Preserve Law Group. On June 28, 2011, the plaintiffs obtained a temporary restraining order against the companies and various owners and employees, and are currently awaiting trial.

The Davis Polk team is led by Daniel F. Kolb and includes associates Andrew J. Bruck, Vesna Cuk, Jayme A. Feldheim, Joseph T. Gallagher, William W. Ralph, Seth Rosenbloom, Noah Solowiejczyk, Jillian Rennie Stillman and Stratos N. Pahis (not yet admitted), legal assistants Michael J. Brown and Cindy Hom, former legal assistant Matt Marcucci, and former summer associates Patrick Blakemore, Michael Comstock, Michael Posada and Daniel Young.