Jury Awards $8.4M to Loan Fraud Victims in RICO Class Action

After five years of litigation and a nine-day trial, a Denver federal court jury has awarded more than $8 million to victims of a loan fraud scheme carried out by a fictitious mortgage lender based out of Ontario, Canada.

The class action lawsuit filed by U.S. consumers and businesses sought to reimburse nearly 130 victims who fell prey to the alleged Racketeer Influenced and Corrupt Organizations Act (RICO) violations of self-proclaimed “mortgage lender” Sandy Hutchens, his wife Tanya Hutchens, and daughter Jennifer Hutchens.

As part of the advanced loan scam, Mr. Hutchens allegedly took on several aliases to conceal his previous criminal history in order to persuade these U.S. borrowers to pay large up-front fees in order to secure a loan.

According to the class action lawsuit, plaintiff Colorado Golf Club Holding Co. of Denver was in the process of developing an 18-hole golf course when one of its main investors backed out. The golf club was assured by Hutchens, who claimed to be the CEO of First Central Mortgage Funding Inc., that it could secure a $34 million loan as long as the company could take care of certain fees.

CGC ended up paying the defendants $182,500 in administrative fees, legal fees, and inspection fees without ever seeing a dime from the promised $34 million loan, the lawsuit states.

In a similar situation, plaintiff James Medick of Las Vegas thought he secured a $4 million loan to purchase a California home through a fictitious mortgage lender offered by Hutchens. After paying nearly $96,000 in “fees,” Medick was allegedly informed that the terms of his contract were not met and his loan application was subsequently terminated. The $96,000 was never returned to Medick.

These plaintiffs, along with Harlem Algonquin LLP of Chicago who claims to have paid $42,688 in fees to Hutchens’ fake Canadian Funding Corporation, sought to represent a Class of U.S. borrowers who also fell victim to the loan fraud scheme. A nationwide Class was certified in 2013 and appealed in the Tenth Circuit Court, which affirmed the lower court ruling in 2014.

After lengthy discovery, a RICO trial started on May 1, 2017 in Denver federal court in which a jury heard testimony from 24 different witnesses over the course of nine days. According to the Class Counsel, it didn’t take long for the jury to reach a unanimous decision to award the full amount of damages in the amount of $8,421,367.

“The jury deliberated for less than two hours (including eating lunch) before they returned a verdict for plaintiffs and class members,” attorney Kevin Roddy of Wilentz Goldman & Spitzer PA told Top Class Actions. “We put on an overwhelming case.”

The Class Counsel also noted that due to the fact that the jury found that the defendants committed RICO violations, the $8.4 million award will automatically be trebled. In addition, the plaintiffs will ask that all attorneys’ fees be paid with pre- and post-judgment interest.

“It is very rare for civil cases to go to trial in our federal court system. It is unusual for a class action to be tried in a federal court. I think the lesson is that counsel should not be hesitant to take cases to trial,” attorney Roddy states.

The Class is represented by Kevin P. Roddy and Michael F. Fried of Wilentz, Goldman & Spitzer PA, and Scott R. Shepherd and Scott Johnson of Shepherd Finkelman Miller & Shah LLP.

The Mortgage Lender Advance Fee Loan Fraud Class Action Lawsuit is GC Holding Co. LLC, et al. v. Hutchens, et al., Case No. 1:11-cv-01012-RBJ-KLM, in the U.S. District Court for the District of Colorado.

UPDATE: On Sept. 26, 2017, the Court granted in favor of the plaintiffs in the amount of $24,239,101, plus reasonable attorneys’ fees and court costs to be determined at a later time.