While the big banks continue with their reluctance to pay back borrowers’ losses, a lesser publicized case making its way through the courts for the last four years may help others recover losses from lenders who dealt in risky mortgages, the New York Times reported.
Peter Dawson, a Long Island-based self-described financial planner, was sentenced in 2007 after stealing around $8 million from his clients who included elderly parishioners from his church in Uniondale, N.Y. Home loans were key to Dawson’s theft. He persuaded people who had paid off all or much of their mortgages to take out new home loans and entrust him with the proceeds, then absconded with their money.
Now, victims of Dawson’s crime are taking issue with the banks involved. Contending that all of these loans were quite obviously full of red flags, Jacob Zamansky, the lawyer for the families, has sued various lenders including Bank of America’s Countrywide Home Loans, as well as PHH Mortgage, Homecomings Financial .
“At every turn, the banks placed their own interests ahead of the interests of their customers,” Zamansky said. “The banks were driven by their insatiable thirst for revenues and were recklessly indifferent to the devastating consequences these loans would have on the borrowers.”
In a ruling issued several weeks ago, a Nassau County justice said banks’ actions needed to be looked at more closely.
“Significantly, the courts have held that banks do owe duties of care to their own customers,” Justice F. Dana Winslow wrote. “Moreover, there is a public interest in ensuring the alleged duties relied upon are ‘performed with reasonable care’ — as evidenced by the recent flurry of consumer-oriented laws and amendments enacted in the wake of the ‘subprime mortgage meltdown.'”
According to court documents, Dawson trusted friend Michael Laucella, at a mortgage brokerage called the Custom Capital, to secure the new mortgages for his clients. Laucella had previously served time in prison for state and federal securities and financial crimes. Dawson also worked with with Alfred Arena, branch manager at the First National Bank of Long Island, according to court filings. [NYT]