A Seal Beach man named in one of the largest-ever civil real estate fraud cases, was banned from the industry and ordered to pay $5 million in penalties, the Department of Justice announced Thursday.
Terrill “Terry” Meisinger agreed to the $5 million penalty as part of a settlement agreement to resolve a lawsuit filed by the United States Attorney’s Office, accusing him of massive fraud targeting homeowners, renters and lenders.
“This is one of the largest civil mortgage fraud cases ever brought against an individual,” said United States Attorney André Birotte Jr.
Meisinger tricked distressed homeowners into handing over their homes and used identity theft, fraud and Bankruptcy Courts to hold onto the properties without paying for them while he rented them out, according to the Department of Justice. Authorities believe his actions abused hundreds of people’s credit scores and left some homeless.
During a five- year period, Meisinger caused more than 300 bogus bankruptcy petitions to be filed in the names of numerous individuals who had no knowledge their identity was being used, according to the Department of Justice. When lenders were finally able to secure dismissal of these fraudulent bankruptcy petitions and complete foreclosure, the renters lost their deposits and rent payments and, in some cases, were evicted and left homeless, the lawsuit alleges.
United States District Judge Virginia A. Phillips on Tuesday signed an order concluding the case against Terry Meisinger and prohibiting him from participating in the home finance or real estate industries for a period of 10 years.
In the civil lawsuit, federal authorities accused Meisinger of orchestrating a foreclosure rescue scheme that bilked both homeowners and lenders. The suit claims that the scheme resulted in significant losses to federally insured financial institutions and the U.S. Department of Housing and Urban Development (HUD).
The lawsuit was based on an investigation conducted by special agents and auditors from the HUD Office of the Inspector General (HUD-OIG). The complaint alleged that Meisinger’s scheme involved mail fraud, bank fraud and false statements affecting a financial institution, which violated the federal Financial Institutions Reform, Recovery and Enforcement Act
The complaint alleged that Meisinger contacted individuals who were facing imminent foreclosure and promised that he could help them avoid foreclosure and save their credit. Meisinger allegedly told distressed homeowners that if they deeded their houses to him and immediately moved out, they would receive a small cash payment, typically from $500 to $1,000, with the promise that Meisinger would bring their mortgage payments current and pay them an additional $5,000 to $10,000 when he eventually sold their properties.
According to the lawsuit, instead of taking action to bring the mortgage payments current, Meisinger immediately transferred the properties into the names of unknowing third parties whose identities he had stolen, and then fraudulently filed sequential bankruptcy petitions in these names. The court filings triggered successive automatic stays that prevented lenders from foreclosing. The complaint alleges that these fraudulent tactics in Bankruptcy Court allowed Meisinger to rent the properties for extended periods – up to three years on some properties – by repeating this fraudulent transfer and bankruptcy scheme with scores of stolen identities.
Authorities believe that between 2000 and 2004, Meisinger collected more than $1.5 million in illicit rents from renters in more than 100 properties, most of which were in the Inland Empire, and never made any payments on the mortgages.
“The $5 million judgment and injunction against Meisinger demonstrate our commitment to using civil remedies, such as the FIRREA statute, to protect everyone, including vulnerable victims like those seen in this case,” said Birotte Jr.
“Our objective is to ensure that the public is not taken advantage of when they have fallen on hard financial times. Distressed homeowners are particularly vulnerable to this type of fraud,” said James Todak, the Special Agent in Charge of HUD-OIG. “An important message has been sent today to those who prey on upon homeowners who are seeking financial assistance with their mortgage. This type of fraud not only affects individual families, it also affects the housing market.”
In agreeing to pay the $5 million settlement, Meisinger did not admit to liability or violation of any law. As part of the settlement, Meisinger is also barred from filing any bankruptcy petitions on behalf of himself or any other person or entity without prior court approval.