Real Estate News

Appeals court rules against Bondi in Broward mortgage-fraud case

Florida Attorney General Pam Bondi leaves the Trump Tower in November.
Florida Attorney General Pam Bondi leaves the Trump Tower in November. AP

In a setback for Florida Attorney General Pam Bondi, an appeals court this week reversed a ruling against a Broward County mortgage company accused of defrauding hundreds of homeowners at the height of the housing crisis.

The Fourth District Court of Appeals in West Palm Beach ruled Wednesday that the state’s case against Outreach Housing must go back to trial. The decision also did away with the $8.3 million judgment that had been imposed against the company.

According to the appeals court, the trial judge erred in quickly ruling in the state’s favor after incorrectly accepting the state’s argument that Outreach’s principal, Blair Wright, had admitted wrongdoing in the case. Wright had been representing himself in court before three defense attorneys stepped in, working on a pro bono basis.

“He literally got railroaded,” said Robyn Sztyndor, one of Wright’s attorneys. “There were disputes on every single issue, and there was evidence on both sides. He did not get his day in court.”

Circuit Court Judge Michael Gates was also wrong to award $880,000 in restitution and $7.45 million in damages, the appeals court ruled.

“We’re very, very encouraged,” said Claudia Pastorius, another of Wright’s attorneys. “We’re encouraged a miscarriage of justice has been corrected.”

A Bondi spokesman said her office is reviewing the opinion.

Bondi’s office spent a year investigating Outreach, which from 2007 to 2009 solicited homeowners with TV commercials and online ads promising to stop their foreclosures and negotiate down their mortgages. Prosecutors found the company and Wright falsely represented to many homeowners that they would obtain mortgage modifications and get attorneys to represent them in their foreclosures. The company and Wright disputed the allegations.

Judge Gates ruled in 2015 that Outreach had violated the Florida Deceptive and Unfair Trade Practices Act. He calculated the damages based on $10,000 for each of the 745 consumers who paid Outreach for help they did not receive. Gates also required Outreach to pay an additional $880,000 in restitution to the 252 customers who had complained to the state about the firm.

But the appeals court said Outreach deserved a full trial to lay out its defense. As to the damages, the court said they should have been limited to the 108 consumers who filed written complaints against Outreach — not to every customer the firm had.