Consumer Watch: Foreclosure Fraud

When money is scarce you will do almost anything to hang onto your home, and one company has been taking advantage of that desperation.

Alicia Bazon's life got a lot more complicated after the birth of her son, Fabian. Fabian was born premature. He's now 3 years old and cannot talk or walk. Bazon quit her job to take care of her baby.

"It is difficult because I am a single mom. To be the mom and the dad is not easy," Bazon said.

Paying the bills is a struggle for Bazon. Last year it all came to a head when her home in DeLand, the home she has owned for 13 years, went into foreclosure. She was desperate.

Then a flyer came in the mail from a company called Discount Paralegal. The flyer said that they stop foreclosures immediately.

Bazon called and a representative from Discount Paralegal came to her house. It was like an answer to a prayer.

Bazon gave Discount Paralegal $400 money up front. Then, as instructed, she started sending all of her mortgage payments directly to Discount Paralegal. At first, it seemed like her foreclosure problems were solved.

But there were indications of problems. Bazon said that she asked the representative how they would work with the bank, but he said "we are not sending any information to the clients."

Discount Paralegal wasn't sending information to clients because they were not sending mortgage payments to Bazon's mortgage company. Discount Paralegal kept the money, and to hide the deception, the company hatched a complicated, but brilliant plan.

Around a month after Bazon signed up with the company, Discount Paralegal filed bankruptcy on Bazon's behalf. But, Bazon had no idea what was happening.

How could Discount Paralegal do it? When Bazon first met with the representative, she signed a lot of papers and one gave them permission to file bankruptcy.

In the legal world of foreclosure, bankruptcy brings everything to a screeching halt. That is why the foreclosure notices stopped and the phone stopped ringing. Alicia had a false sense of security.

However, in reality, the judge in the bankruptcy court was wondering why Bazon didn't show up for hearings. Bazon was actually getting further and further in debt. In fact, when she ran out of money, the people at Discount Paralegal took her car.

The nightmare ended when a very sharp clerk in bankruptcy court noticed one particular man kept filing bankruptcy for a lot of people. When government workers tried to call the people that he filed for, they discovered that the numbers listed on the forms were bogus. So they went online and got their real phone numbers. The clerk got in touch with Bazon and at least 170 other victims.

Margaret Hudson is one of several bankruptcy attorneys working to keep the victims from losing their homes.

"When you meet these people it's hard not to get personally involved because you really want to do something to help the people," Hudson said.

At last count, at least 50 people did lose their homes, but fortunately Bazon was not one of them.

The government said that they hope to indict Discount Paralegal this summer. The case is winding its way through the judicial system.