Inverse Mortgages R.I.P.
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We’ve posted previously about the fact that some people were confusing the terms “[tag]inverse mortgage[/tag]” and “[tag]reverse mortgage[/tag]”. We noted that the company promoting inverse mortgages, [tag]Brixdale[/tag], did not appear to have an active website and that most of the discussion on the web about inverse mortgages revolved around whether it was a legitimate financial product or a [tag]scam[/tag].
We came across a press release from the New York state Attorney General’s Office which provides the definitive answer:
Attorney General Eliot Spitzer today announced a consent judgment against a Long Island-based web site operator and his associates who ran a string of fraudulent internet operations.
Following the filing of a lawsuit by Spitzer’s office in September 2005, Jeffrey Augugliaro of Malverne was ordered to immediately pay over $200,000 to consumers who were victimized by a mortgage payment scam he perpetrated through his business, Brixdale, Inc. The judgement entered in State Supreme Court in Mineola required him to pay additional restitution of over $700,000 to affected Brixdale consumers and to make a payment of $100,000 to a charitable organization designated by the court, with the advice of the Attorney General, that serves the stated objectives of a purported charity through which Agugliaro conducted a separate fraudulent solicitation scam.
The Court has designated that the $100,000 be distributed to the American Cancer Society, whose mission is consistent with the purported purposes of the organizations, namely cancer prevention, treatment and service. In addition, evidence suggested numerous consumers who donated money to the defendants’ fake charity thought they were donating to the American Cancer Socirty.
The judgment also requires Augugliaro to shut down all his businesses and websites, permanently bars him from operating any further internet operations, and unless a $100,000 performance bond is posted, bars him from operating any type of consumer business in New York state.
Using the website, brixdale.com, Augugliaro promised consumers that by allowing him to take control of the electronic transfers of their monthly mortgage payments, consumers could not only pay off an entire 30-year mortgage in full, but could also easily make a quarter of a million dollars, all in a matter of months. Nationwide, about 3,000 consumers signed up.
The lawsuit alleged that the Brixdale scam was an [tag]illegal pyramid scheme[/tag], whereby consumers were encouraged to recruit others to sign up. Those new members, in turn, had to recruit new members to perpetuate the scheme. Consumers were lured into making “extra” mortgage payments, but rather than making the mortgage payments as promised, Augugliaro siphoned off some of the funds himself and to pay commissions to others. As a result, hundreds of thousands of consumers’ dollars were drained from the Brixdale account.
As stressed in the prior post, inverse mortgages have nothing to do with legitimate reverse mortgages and the two should not be confused. With the downfall of Brixdale, perhaps the term “inverse mortgage” should be retired.
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