Complaint for Monetary Damages and Other Relief National Consumer Law Center PL94Ch07

8/4/2019 Complaint for Monetary Damages and Other Relief National Consumer Law Center PL94Ch07

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Chapter 7 Overreaching Loan Scheme Involving MultipleParties

7.1 Complaint

COMMONWEALTH OF MASSACHUSETTSSUFFOLK, SS. SUPERIOR COURT

Mary Glass, Brenda Old, and Donna SmithPlaintiffs,

[vs.]Fast Talking Mortgage Corp., Fast Talking Funding Co.,Fast Talking Development, XYZ Financial Trust, David Stevens,Henry Michaels, and Aggressive Mortgage Co.

Defendants.

COMPLAINT FOR MONETARY DAMAGES AND OTHER RELIEF

INTRODUCTION

1. This complaint is filed and these proceedings are instituted under Massachusetts'

Consumer Protection Act, G.L. c. 93A; the Consumer Credit Cost Disclosure Act, G.L. c. 140D;

and other provisions of the federal and Massachusetts laws enacted for Plaintiffs' benefit. In

addition, Plaintiffs seek relief under the common law for breach of contract and fraud.

2. Each plaintiff entered into a consumer loan transaction at a very high interest rate

involving one or more of the defendants. Through fraud, misrepresentation, misdisclosure and

breach of fiduciary duties, the defendants induced each plaintiff to enter into a loan contract

involving onerous terms including excessive interest, costs, prepayment penalties and other fees.

Each plaintiff gave a mortgage on her residence in connection with the loan obtained.

3. The defendants then reaped their illegal profits on these loans by arranging to have

each plaintiff refinance their first loan through a second loan with a different lender. In order to

compound their profits, Defendants charged the plaintiffs substantial commissions for arranging

these second loans with the third party lenders.

4. Plaintiff Mary Glass was advanced $12,590.48 by the defendants on March 27, 1990.

She then paid Defendants $19,608.72 through a mortgage arranged by the defendants with a third

party lender only fifteen days later on April 12, 1990.


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5. Plaintiff Brenda Old was advanced no more than $46,726.62 by the defendants on

January 25, 1989. Some or all of those amounts were then paid out by Ms. Old to defendant Fast

Talking Developers for construction work on her home which was ultimately improperly done.

Four months later, on May 24, 1989, Ms. Old repaid $65,814.42 through a mortgage arranged by

Defendants with a third party lender.

6. Plaintiff Donna Smith, now 81 years old, has lost her memory of her interactions with

the defendants due to heart failure and a stroke. However, paperwork in the transaction indicates

that Ms. Smith was advanced no more than $38,985.29 on August 3, 1989. Less than three

months later, on October 26, 1989, Defendants were repaid $52,500.46, through a loan arranged

by them with a third party lender.

7. The schemes and methods by which the defendants illegally obtained monies from the

plaintiffs form the basis of this complaint.

JURISDICTION

8. This court has jurisdiction to grant the relief sought by the plaintiffs pursuant to G.L. c.

214 1, 5, c. 212, 3, 4 c. 231A, 1, and c. 93A, 9. In addition, the court has jurisdiction to

grant the relief sought under RICO as established by the United States Supreme Court in Tafflin

v. Levitt, 493 U.S. 455 (1990).

PARTIES

9. Plaintiff Mary Glass is the owner of her residence at 10 Main Street, Dorchester, MA.

10. Plaintiff Brenda Old is the owner, with her estranged husband Henry Old, of her

residence at 100 Woods Street, Mattapan, MA.

11. Plaintiff Donna Smith is the owner of her residence at 50 Foxboro Street, Dorchester,

MA.

12. Defendant Fast Talking Mortgage Co. is a corporation with a business address of 123

Main Street, Brookline MA. On information and belief, defendant Henry Michaels is the

president and chief operating officer of Fast Talking Mortgage Corporation. 13. Defendant


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Fast Talking Funding, Inc. is a corporation with a business address of 123 Main Street, Brookline

MA. On information and belief, defendants David Stevens and Henry Michaels have a financial

interest in Fast Talking Funding, Inc.

14. Defendant Fast Talking Developers is a corporation or other business entity which is

affiliated with Fast Talking Mortgage Corporation and Fast Talking Funding, Inc. Fast Talking

Developers does business at 123 and/or 125 Main Street, Brookline MA. On information and

belief, defendants Henry Michaels and David Stevens have a financial interest in Fast Talking

Developers.

15. Defendant XYZ Financial Trust Inc. is a corporation with a business address of 125

Main Street, Brookline MA. On information and belief, defendants David Stevens and Henry

Michaels are the principals of XYZ Financial Trust Inc.

16. Defendant David Stevens is an attorney whose office and principal place of business

is at 125 Main Street, Brookline MA. 17. Defendant Henry Michaels is an individual

whose office and principal place of business is at 125 Main Street, Brookline MA.

18. Defendant Aggressive Mortgage Co. is a corporation doing business at 1000

Brookline Street, Wellesley MA.

FACTUAL BACKGROUND

19. Plaintiffs Glass, Old and Smith are homeowners with limited educational background

and experience in financial matters.

20. Ms. Glass is 62 years old and she has lived in the home she owns in Dorchester with

her disabled 32 year old son for the last 25 years.

21. Ms. Old has lived with her two children in the home she owns in Mattapan for the last

18 years. The home has been in the Old family for at least 28 years.

22. Ms. Smith is 81 years old and she has owned her home in Dorchester for the last 35

years. She presently lives in the home with her adult son, James Smith, who cares for her due to

various disabilities related to a stroke.


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Facts as to Plaintiff Mary Glass

23. In March 1990, plaintiff Mary Glass contacted defendant Fast Talking Mortgage Co.

seeking a loan based on a radio advertisement.

24. In the advertisement, Fast Talking Mortgage Co. represented itself, by statement or

implication, as a lender, as if it made loans directly to members of the general public.

25. In the advertisement, Fast Talking Mortgage Co. stated or implied that it would make

loans at or below market rates.

26. When Ms. Glass contacted Fast Talking Mortgage Co., she was told that Fast Talking

would take her application and make a loan to her. Representatives of Fast Talking stated or

implied that the loan would be made at or below market rates.

27. Ms. Glass told Fast Talking that she wanted a loan to refinance her prior mortgage on

the residence.

28. Fast Talking did not inform Ms. Glass at the time she made her application that it

would act as a loan broker, seek to arrange a loan with a third party lender, and that it would

charge Ms. Glass a substantial commission for arranging a loan.

29. Based on these misrepresentations, implications and non-disclosures Ms. Glass

believed that she was applying for a loan directly from Fast Talking Mortgage Co. which would

be made at or below market rates.

30. In actuality, Fast Talking did not take Ms. Glass's application for a loan made directly

by Fast Talking.

31. Instead, defendant Henry Michaels acting for himself and/or defendant Fast Talking

Mortgage Corp. and/or defendant Fast Talking Funding Co. set up a loan for Ms. Glass through a

different company of which he was also a principal, defendant XYZ Financial Trust.

32. On March 27, 1990, Ms. Glass entered into a loan with XYZ, purportedly for $18,000

at a disclosed annual percentage rate of 21.43% (the "XYZ loan"). Ms. Glass gave XYZ a

mortgage on her home in connection with the transaction.


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33. XYZ's loan to Ms. Glass was without risk to itself, because XYZ was at all times fully

secured by a mortgage on Ms. Glass's home. At all times relevant to the transaction, Ms. Glass's

home was worth at least $200,000.

34. At closing of the XYZ loan, various disclosures were made to Ms. Glass pursuant to

the Consumer Credit Cost Disclosure Act, G.L. c. 140D, 1 et seq. copies of which are attached

hereto and labeled Exhibit A.

35. Of the $18,000, only $12,590.48 was advanced to Ms. Glass or for her benefit.

$5,409.52 (30% of the loan proceeds) was retained by XYZ in various fees and closing costs.

36. The $18,000 loan included a charge of $3,000 (16.667% of the loan proceeds) paid to

Fast Talking Mortgage Co. (Henry Michaels's company) as a "loan broker" fee.

37. $850 was paid to David Stevens (4.72% of the loan proceeds) as an "attorney fee" and

"title exam" charge.

38. On information and belief, XYZ Financial Trust is solely owned by David Stevens

and Henry Michaels.

39. Other closing costs in the XYZ loan included:

a. $360.00 representing two points for making the loan;

b. $810 for a payment escrow which was not required by the terms of the contract

and which account was never created. On information and belief, said escrow was

never paid out for Ms. Glass's benefit;

c. $20 for an assignment and reassignment fee even though the loan was never

assigned or reassigned.

d. $27 for recording the mortgage even though the cost of recording the mortgage

was only $20.50.

40. The disclosures made in the XYZ loan inaccurately include the following fees and

costs in the amount financed for the loan, even though they should have been included in the

finance charge pursuant to G.L. c. 140D, 4:

a. the $3,000 broker fee (G.L. c. 140D, 4(a)(3));


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b. $617.52 in points and prepaid interest (G.L. c. 140D, (4)(a)(1));

c. $810 in prepayment escrow (G.L. c. 140D, 4(a)(5));

d. $850 in attorneys fees and title examination charges paid to the loan company

president which were neither bona fide nor reasonable in amount (G.L. c. 140D,

4(e); 209 C.M.R.32.04(c)(7));

e. $20 in assignment and reassignment charges which were not actually

incurred (Id.); and

f. $6.50 in recording fees which were not actually incurred (Id.).

41. By these misdisclosures, XYZ misrepresented the amount financed to be $18,000.00,

when in actuality it was no more than $12,695.98 under the requirements of the law.

42. The annual percentage rate was misrepresented to be 21.43% when in actuality it was

60.5%.

43. The payment schedule for the loan was misrepresented to be 11 payments of $270.00

followed by a balloon payment of $2,970.00, when in actuality the contemplated payment

schedule under the note was 11 payments of $270 followed by a balloon payment of $18,887.52.

44. At the closing of the XYZ loan, Ms. Glass discovered that despite her original request

to Fast Talking, the XYZ loan did not pay off the first mortgage loan on her home.

45. At the closing of the XYZ loan, Ms. Glass sought to rescind the transaction, because

it did not meet her needs by paying off her first mortgage loan.

46. Defendant Stevens told Ms. Glass that she could not obtain a refinancing of the first

mortgage on her home unless she followed through with the XYZ loan and then sought

refinancing of both loans together.

47. At no time did any defendant disclose the relationship between Fast Talking and

XYZ. At no time did any defendant disclose Henry Michaels's relationship to XYZ. At no time

did any defendant disclose David Stevens's relationship to XYZ.

48. To the extent, if any, that Fast Talking and/or Henry Michaels acted as a loan broker

for the XYZ loan, they misrepresented and/or failed to disclose that they would not seek the best


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terms available, in favor of obtaining a loan and a broker's commission from an affiliated

company in which they have a financial interest.

49. To the extent, if any, that David Stevens closed the XYZ loan on behalf of the lender

in the transaction, he misrepresented and/or failed to disclose his conflict of interest insofar as he

has an ongoing significant business interest in the entity, Fast Talking, which, as loan broker, was

purporting to act on behalf of the borrower in the transaction.

50. Each and every misrepresentation, misdisclosure and failure to disclose alleged herein

was material.


was made with knowledge and intent to have Ms. Glass enter into a financial transaction which

was to her great economic disadvantage and to the great economic advantage of defendants Fast

Talking Mortgage, Fast Talking Funding, XYZ, David Stevens, and Henry Michaels.

52. Ms. Glass relied on the defendants' misrepresentations, misdisclosures and failure to

disclose material information in entering into the XYZ loan.

53. Due to her lack of education and sophistication in financial matters, Ms. Glass did not

understand that the transaction was irregular, oppressive and against her financial interests.

54. Within days of entering into the XYZ loan, Fast Talking, through Henry Michaels,

approached Ms. Glass about arranging a refinancing.

55. Within 15 days, Fast Talking had arranged a loan to refinance the XYZ loan and Ms.

Glass's first mortgage through another entity ("the third party loan").

56. The third party loan was made on April 12, 1990. XYZ was repaid $17,358.92 and

Fast Talking was paid an additional $2,250 "broker fee" from the proceeds of the third party loan.

57. On information and belief, Ms. Glass could have gotten the same or a similar loan

initially without incurring the fees, charges and closing costs of XYZ and Fast Talking in the

XYZ transaction.


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58. By bifurcating the loan into two transactions, Fast Talking claimed two brokers fees

totalling $5,250. In addition, XYZ earned substantial profits for advancing Ms. Glass a limited

amount of money for only 15 days.

59. XYZ lent Ms. Glass $12,590.48 on March 27, 1990. The return to the various

defendants 15 days later from the third party loan was $19,608.72. This represents an effective

annualized return of over 1,300%.

60. The third party loan to Ms. Glass was at an annual percentage rate in excess of 15%

and it involved additional substantial closing costs including a $1,750.00 attorney fee to close a

$47,000 mortgage. The payments on that loan were further inflated by interest on the amount

included in that loan to repay XYZ for the first transaction.

61. Ms. Glass has had trouble making the payments on the third party loan and the lender

on that loan is now foreclosing.

62. To the extent, if any, that Fast Talking and Henry Michaels, were acting as a loan

broker on Ms. Glass's behalf in the third party loan, they breached their fiduciary duty in the

second transaction to get the best loan terms available for Ms. Glass.

63. Ms. Glass has suffered damages from both transactions, including but not limited to,

payments made far in excess of what she would have paid if she had never done business with

the defendants, as well as severe physical and emotional distress related to the stress of potential

imminent loss of her home to foreclosure.

64. On or about December 18, 1992, Ms. Glass, by counsel, rescinded her transaction

with XYZ pursuant to her ongoing right of rescission granted by G.L. c. 140D, 10. A copy of

the letter rescinding the transaction is attached hereto and marked Exhibit B.

65. By letter to counsel dated December 29, 1992, XYZ refused to rescind the transaction.

66. On or about February 9, 1993, Ms. Glass by counsel, demanded relief pursuant to

G.L. c. 93A from defendants Fast Talking Mortgage Corporation, XYZ Financial, Henry

Michaels and David Stevens. Copies of those letters are attached hereto as Exhibits C, D, E and

F, respectively [not reprinted infra].


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67. None of the defendants made a timely written tender of settlement which was

reasonable in relation to the injury suffered by Ms. Glass. By letter of March 9, 1993 defendant

XYZ denied liability under G.L. c. 93A, but made a offer to settle the case for $250 which was

rejected by Ms. Glass. The other defendants did not respond.

Facts as to Brenda Old

68. Sometime in January, 1989, Ms. Old's husband, Henry Old, contacted Fast Talking

Mortgage Co. in response to a newspaper advertisement offering 24 hour debt consolidation

loans. (The Olds have since separated).

69. In the advertisement, Fast Talking Mortgage Co. represented itself, by statement or

implication, as a lender, as if it made loans directly to member of the general public.

70. In the advertisement, Fast Talking Mortgage Co. stated or implied that it would make

loans at or below market rates.

71. The Olds applied to Fast Talking for a debt consolidation loan, but when they

mentioned that they might also need home improvements, Fast Talking arranged a home

improvement contract with Fast Talking Developers.

72. The Olds informed Fast Talking Mortgage Co. that they needed new windows and

work done on their porch. Fast Talking Mortgage had them sign a home improvement contract

for the work. An amount to cover the cost of the home improvement contract was added to the

loan request.

73. Neither Fast Talking Mortgage nor Fast Talking Developers informed the Olds at the

time they made their application that it would act as a loan broker and that it would charge the

Olds a substantial commission for arranging a loan.

74. Based on Fast Talking's misrepresentations, implications and non-disclosures, the

Olds believed that they were applying for a loan directly from Fast Talking Mortgage Co. which

would be made at or below market rates.

75. In actuality, Fast Talking did not take the Old's application for a loan made directly by

Fast Talking.


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Mortgage Corp. and/or defendant Fast Talking Funding Co. set up a loan for Ms. Old through a

different company, defendant Aggressive Mortgage Co.

77. On information and belief, defendant Aggressive Mortgage had a regular arrangement

with defendants Fast Talking, Michaels and Stevens under which defendant Aggressive would

make loans to customers generated by Fast Talking, would allow defendant Stevens to arrange

the details of the loan terms and would agree to pay Fast Talking and Stevens a substantial

commission disguised as loan broker fees and attorney fees respectively.

78. Under the arrangement, the customer would never meet with Aggressive or any

employee of Aggressive, but rather Aggressive would utilize defendants Fast Talking, Michaels

and Stevens as its agents.

79. Under the arrangement, defendants Fast Talking, Michaels and Stevens were working

in the interests of Aggressive to arrange and set up the loan on favorable terms for Aggressive,

rather than for the borrower.

80. Despite the arrangement under which Fast Talking, Michaels and Stevens were

working for Aggressive, Fast Talking charged the Olds a $6,000 loan broker fee.

81. On January 25, 1989, the loan closing took place at the office of Fast Talking. At

closing, defendant Stevens represented that he was acting on behalf of Aggressive. Defendant

Michaels or another agent of Fast Talking purportedly represented the Olds.

82. The Olds' loan was purportedly for $55,000.00 at a disclosed annual percentage rate

of 20.23%. The Olds gave Aggressive a mortgage on their home in the transaction (the

"Aggressive loan").

83. At closing, the Olds were asked to sign and date various disclosure forms related to

the transaction including the disclosures required pursuant to the Consumer Credit Cost

Disclosure Act, c. 140D 1 et seq. However, they were not given copies of those documents to

take away with them in violation of that law.


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84. Of the $55,000, only $46,726.62 was advanced to the Olds or for their benefit.

$8,273.38 (15% of the loan proceeds) were paid out in various fees and closing costs.

85. The Aggressive loan was made without risk to Aggressive, because Aggressive was

fully secured by a mortgage on the Olds' home. At all times relevant to the transaction, the Olds

home was worth at least $141,000.

86. Fast Talking Mortgage Co. received a $6,000.00 (10.9%) commission from the

proceeds of the Aggressive loan.

87. David Stevens was paid $1,000.00 from the loan proceeds in attorney fees, for

"document preparation" and for a title examination.

88. Aggressive received $1,100 representing two points in the transaction.

89. The loan made by Aggressive was for one year with monthly payments for 11 months

of $870.83 and a final balloon payment of $55,870.83 due at the end of the loan term.

90. Fast Talking, Michaels, Stevens and Aggressive knew or should have known that the

Olds would not be able to make the balloon payment required at the end of the loan term. That

term was included solely in order to insure that the Olds would have to refinance so that Fast

Talking, Michaels, Stevens and Aggressive could earn additional sums by refinancing.

91. Fast Talking Developers installed new windows in the Olds' home, but did not

complete the porch work according to the contract.

92. The windows were installed improperly so that they are not weathertight. There are

gaps at the top and bottoms of the window frames. In addition the windows will not properly

lock.

93. Since the windows were installed, they have further deteriorated. They have pulled

further away from their frames and some of the locks have come off.

94. The work done by defendant Fast Talking Developers was not performed according to

contract and/or in a proper workerlike fashion.

95. Defendant Fast Talking Developers was paid a substantial sum from the proceeds of

the Aggressive loan.


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96. To the extent, if any, that Fast Talking and Henry Michaels acted as a loan broker for

the Aggressive loan, they misrepresented and/or failed to disclose the true nature of their agency

relationship with Aggressive.


for the Aggressive loan, they misrepresented and/or failed to disclose that they would not seek

the best terms available, in favor of obtaining a loan and a commission from a company with

which they had an agency relationship.

98. To the extent, if any, that David Stevens closed the loan on behalf of the lender in the

transaction, he misrepresented and/or failed to disclose his conflict of interest insofar as he has an

ongoing significant business interest in the entity, Fast Talking which, as loan broker, was



was material.

100. Each and every misrepresentation, misdisclosure and failure to disclose alleged

herein was made with knowledge and intent to have the Olds enter into a financial transaction

which was to their great economic disadvantage and to the great economic advantage of

defendants Fast Talking Mortgage, Fast Talking Funding, Fast Talking Developers, Aggressive,

David Stevens, and Henry Michaels.

101. The Olds relied on the defendants' misrepresentations, misdisclosures and failure to

disclose material information when they entered into the Aggressive loan.

102. Due to their lack of education and sophistication in financial matters, the Olds did

not understand that the Aggressive loan was irregular, oppressive and against their financial

interests.

103. The Aggressive loan included a term which allowed Aggressive to charge a

prepayment penalty in certain circumstances. Under that term, no prepayment penalty was due in

the event of prepayment in the first three months of the loan. A prepayment penalty equal to


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three months interest (approximately $3,000) was due in the event of prepayment in the 3rd

through 9th months of the loan.

104. In early May, 1989, almost immediately after the first three months of the loan had

passed, Fast Talking contacted the Olds and offered to arrange refinancing for them to prepay the

Aggressive loan with another lender at a lower rate of interest.

105. Within several days, Fast Talking had arranged a refinancing through another entity

(the "third party loan").

106. The third party loan was made on May 24, 1989. Aggressive was repaid $59,814.42

including the prepayment penalty and Fast Talking was paid an additional $6,000 "broker fee"

from the proceeds of the third party loan.

107. On information and belief, the Olds could have gotten the same or a similar loan

initially without incurring the fees, charges and closing costs of Aggressive in the first

transaction.

108. By bifurcating the loan into two transactions Fast Talking claimed two brokers fees

totalling $12,000. In addition, Aggressive earned substantial profits for advancing the Olds less

than $55,000 for only 4 months.

109. Aggressive lent the Olds $46,726.38 on January 25, 1989. The return to the various

defendants four months later, including interim payments made by the Olds, was $67,474.42.

This represents an effective annualized return of over 150%.

110. The third party loan was at an annual percentage rate of 18% and involved additional

substantial closing costs including an $800 attorney fee to David Stevens to close the second

loan. The payments on the third party loan were further inflated by interest payments included in

that loan to repay Aggressive for the first transaction.


broker on the Olds' behalf in the third party loan, they breached their fiduciary duty to get the best

loan terms available for the Olds.


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112. Ms. Old has had trouble making the payments on the second loan and the lender on

that loan is now foreclosing.

113. Ms. Old has suffered damages from the transaction including but not limited to




114. On or about April 7, 1993, Ms. Old, by counsel, rescinded her transaction with

Aggressive pursuant to her ongoing right of rescission granted by G.L. c. 140D, 10 and 15

U.S.C. 1635. A copy of the letter rescinding the transaction is attached hereto and marked

Exhibit G [not reprinted infra].

115. By letter to counsel dated April 28, 1993, Aggressive refused to rescind the

transaction.

116. On or about April 7, 1993, Ms. Old, by counsel, demanded relief pursuant to G.L. c.

93A from defendants Fast Talking Mortgage Corporation, Aggressive, Henry Michaels and

David Stevens. Copies of those letters are attached hereto as Exhibits H, I, J and K, respectively

[not reprinted infra].


reasonable in relation to the injury suffered by Ms. Old. Defendant David Stevens has denied

liability (although said denial was not timely), but has offered to settle Ms. Old's claims for $500,

which offer was rejected by Ms. Old. Defendant Aggressive has denied liability under G.L. c.

93A in writing. The other defendants did not respond.

Facts as to Plaintiff Donna Smith

118. On information and belief, Fast Talking Mortgage Co. misrepresented or implied to

Ms. Smith that it would make a mortgage directly to her rather than act as a loan broker to

arrange a mortgage with another lender.

119. On information and belief, Fast Talking Mortgage Co. misrepresented or implied to

Ms. Smith that it would make a loan to her at or below market rates.


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120. On information and belief, Fast Talking did not inform Ms. Smith at the time she

made her loan application that it would act as a loan broker and that it would charge Ms. Smith a

substantial commission for arranging a loan.

121. The defendants' misrepresentations, implications and non-disclosures, were designed

to lead Ms. Smith to believe that she was applying for a loan directly from Fast Talking

Mortgage Co. which would be made at or below market rates.

122. In actuality, Fast Talking did not take Ms. Smith's application for a loan made

directly by Fast Talking.


Mortgage Corp. and/or defendant Fast Talking Funding Co. set up a loan for Ms. Smith through

defendant Aggressive pursuant to an arrangement identical to that discussed in connection with

Ms. Old's transactions in paragraphs 77-79, supra.

124. On August 3, 1989, Ms. Smith entered into a loan, purportedly for $47,000 at a

disclosed annual percentage rate of 19.47% (the "Aggressive loan"). The loan was secured by a

first mortgage to Aggressive on Ms. Smith's property.

125. At closing of the Aggressive loan, various disclosures were made to Ms. Smith

pursuant to the Consumer Credit Cost Disclosure Act, G.L. c. 140D, 1 et seq. copies of which

are attached hereto and labeled Exhibit L [not reprinted infra].

126. Several days after the loan documents were signed by Ms. Smith, but before the

proceeds of the loan were distributed, a different set of disclosures were prepared and backdated.

Among other things, these disclosures reduced the amount of the proceeds of the loan payable to

Ms. Smith by $2,000 and paid that amount over to Fast Talking Mortgage Co. A copy of the

backdated loan disclosures are attached hereto and labeled Exhibit M [not reprinted infra].

127. Of the $47,000, not more than $38,985.29 was advanced to Ms. Smith or for her

benefit. $11,914.71 (17% of the loan proceeds) was retained by Aggressive in various fees and

closing costs.


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128. The $47,000 loan included a charge of $5,000 (10.6% of the loan proceeds) paid to

Fast Talking Mortgage as a "loan broker" fee.

129. $1,050 was paid to David Stevens as an "attorney fee."

130. Other closing costs included:

a. $940.00 representing two points for making the loan;

b. $241.40 for a four month tax escrow even though the loan was refinanced

within three months with a third party lender. On information and belief, that tax

escrow was never paid out;

c. $20 for an assignment and reassignment fee even though the loan was

never assigned or reassigned;

d. $28 for recording the mortgage even though the cost of recording the mortgage

was only $20.50;

e. $20 for releasing attachments even though the attaching creditors released their

own attachments and that money was never paid out;

131. The disclosures made in the Aggressive loan inaccurately include the following fees

and costs in the amount financed for the loan, when they should have been included in the

finance charge pursuant to c.140D, 4:

a. the $5,000 broker fee (G.L. c. 140D, 4(a)(3));

b. $1,502.81 in points and prepaid interest (G.L. c. 140D, (4)(a)(1));

c. $241.40 in tax escrow (G.L. c. 140D, 4(a)(5));

d. $1,050 in attorney fees and title examination charges paid to the loan

company president which were neither bona fide nor reasonable in amount (G.L.

c. 140D, 4(e); 209 C.M.R.32.04(c)(7));

e. $20 in assignment and reassignment charges which were not actually incurred

(Id.); and

f. $7.50 in recording fees which were not actually incurred (Id.).


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132. By these misdisclosures, the defendants misrepresented the amount financed to be

$47,000.00, when in actuality it was no more than $39,178.29 under the requirements of the law.

133. The annual percentage rate was misrepresented to be 19.47% when in actuality it

was 23.48%.

134. To the extent, if any, that Fast Talking and Henry Michaels acted as a loan broker in

the Aggressive loan, they misrepresented and/or failed to disclose the true nature of their agency

relationship with Aggressive.


in the Aggressive loan, they misrepresented and/or failed to disclose that they would not seek the

best terms available, in favor of obtaining a loan and a commission from a company with which

they had an agency relationship.

136. To the extent, if any, that David Stevens closed the loan on behalf of the lender in

the transaction, he misrepresented and/or failed to disclose his conflict of interest insofar as he

has an ongoing significant business interest in the entity, Fast Talking which, as loan broker, was



herein was material.


herein was made with knowledge and intent to have Ms. Smith enter into a financial transaction

which was to her great economic disadvantage and to the great economic advantage of

defendants Fast Talking Mortgage, Fast Talking Funding, Fast Talking Developers, Aggressive,

David Stevens, and Henry Michaels.

139. Ms. Smith relied on the defendants' misrepresentations, misdisclosures and failure to

disclose material information when she entered into the Aggressive loan.

140. Ms. Smith did not understand that the transaction was irregular, oppressive and

against her financial interests.


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141. In connection with the transaction, the defendants gave Ms. Smith a notice of right

to cancel which did not accurately state Ms. Smith's rights. Additionally, they had Ms. Smith

waive her right of rescission.

142. A true and correct copy of the notice of right to cancel given to Ms. Smith in the

Aggressive loan is attached as Exhibit N.

143. The defendants illegally deprived Ms. Smith of her right to rescind the transaction by

failing to accurately disclose the right and by failing to take those steps required by 209 C.M.R.

32.23(e) to obtain a proper waiver of the right to rescind.

144. Any waiver of the right of rescission signed by Ms. Smith is void and without effect.

145. The Aggressive transaction included an ambiguous term which allowed Aggressive

to charge a prepayment penalty in certain circumstances. That term states both that no

prepayment penalty was due in the event of prepayment in the first three months of the loan and

also, without limitation, that a penalty of three months interest could be charged.

146. On information and belief, within weeks of the transaction, Fast Talking approached

Ms. Smith about arranging a refinancing.

147. Within 90 days Fast Talking had arranged a refinancing through another entity (the

"third party loan").

148. The third party loan was made on October 26, 1989. Aggressive was repaid

$48,300.46 and Fast Talking was paid an additional $4,200 "broker fee" from the proceeds of the

third party loan.

149. On information and belief, Ms. Smith could have gotten the same or a similar loan

initially without incurring the fees, charges and closing costs of Aggressive, Fast Talking,

Michaels and Stevens in the Grwoth loan.

150. By bifurcating the loan into two transactions, Fast Talking claimed two brokers fees

totalling $9,200. In addition, Aggressive earned substantial profits for advancing Ms. Smith a

limited amount of money for less than 90 days.


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151. Aggressive charged Ms. Smith an undisclosed and illegal prepayment penalty in the

transaction.

152. Aggressive lent Ms. Smith $38,985.29 on March 27, 1990. The return to the various

defendants less than 90 days later was $52,500.46. This represents an effective annualized return

of over 135%.

153. The third party loan to Ms. Smith was at an annual percentage rate in excess of 15%

and it involved additional substantial closing costs, including a $700.00 attorney fee to David

Stevens who closed the second loan. The payments on the third party loan were further inflated

by interest on the amount included in that loan to repay Aggressive for the first transaction.


broker on Ms. Smith's behalf in the third party loan, they breached their fiduciary duty to get the

best loan terms available for Ms. Smith.

155. Ms. Smith has had trouble making the payments on the second loan and the lender

on that loan is now foreclosing.

156. Ms. Smith has suffered damages from the transactions including, but not limited to,




157. On or about April 6, 1993, Ms. Smith, by counsel, rescinded her transaction with

Aggressive pursuant to her ongoing right of rescission granted by G.L. c. 140D, 10 and 15

U.S.C. 1635. A copy of the letter rescinding the transaction is attached hereto and marked

Exhibit O [not reprinted infra.

158. Aggressive has refused to rescind the transaction.

159. On or about April 8, 1993, Ms. Smith by counsel, demanded relief pursuant to G.L.

c. 93A from defendants Fast Talking Mortgage Corporation, Aggressive and Henry Michaels.

Copies of those letters are attached hereto as Exhibits P, Q, and R, respectively [not reprinted

infra].


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reasonable in relation to the injury suffered by Ms. Smith. Defendant Aggressive has denied

liability under G.L. c. 93A in writing.

CLAIMS

I. CLAIMS PURSUANT TO G.L. c. 93A FORUNFAIR AND DECEPTIVE PRACTICES

A. Claims Against Fast Talking Mortgage Co.and/or Fast Talking Funding

161. The conduct of Fast Talking Mortgage Co. and Fast Talking Funding as aforesaid

violated the Massachusetts Consumer Protection Act, G.L. c. 93A, 2 and applicable regulations

including 940 C.M.R. 3.16, in that it was unfair, deceptive, oppressive, unconscionable, and

contrary to public policy and generally recognized standards applicable to the consumer lending

business.



including 940 C.M.R. 3.16, in that it violated existing statutes, rules, regulations or laws, meant

for the protection of the public's health, safety or welfare, including but not limited to, G.L. c.

140D and 209 C.M.R. 32.01 et seq. as set forth more fully below.



including 940 C.M.R. 3.16, in that it violated the requirement of good faith and fair dealing

applicable to contracts under G.L. c. 106, 1-203.

164. The conduct of Fast Talking Mortgage Co. and Fast Talking Funding was willful or

knowing within the meaning of the Massachusetts Consumer Protection Act, G.L. c. 93A, 9.

165. Each plaintiff suffered damages as aforesaid by virtue of the defendants' violations.

Said damages include, but are not limited to,

a. paying fees to the defendants to which Defendants were not entitled;


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b. paying excessive interest and other charges on loans to the defendants and/or their

agents and/or their confederates; and

c. paying interest on loans to third parties which exceed the amounts which would

have been due if the defendants had acted properly in the transactions.

166. The defendants' refusal to grant relief upon demand was in bad faith with knowledge

or reason to know that the act or practice complained of violated G.L. c. 93A, 2.

B. Claims Against Henry Michaels

167. The conduct of defendant Michaels as aforesaid violated the Massachusetts

Consumer Protection Act, G.L. c. 93A, 2 and applicable regulations including 940 C.M.R.

3.16, in that it was unfair, deceptive, oppressive, unconscionable, and contrary to public policy

and generally recognized standards applicable to the consumer lending business.



3.16, in that it violated existing statutes, rules, regulations or laws, meant for the protection of

the public's health, safety or welfare, including but not limited to, G.L. c. 140D and 209 C.M.R.

32.01 et seq. as set forth more fully below.



3.16, in that it violated the requirement of good faith and fair dealing applicable to contracts

under G.L. c. 106, 1-203.

170. In addition to his own conduct, defendant Michaels, is liable as principal for the

conduct of Fast Talking Mortgage Co., Fast Talking Funding Co., and XYZ.

171. The conduct of defendant Michaels was willful or knowing within the meaning of

the Massachusetts Consumer Protection Act, G.L. c. 93A, 9.

172. Each plaintiff suffered damages as aforesaid by virtue of defendant Michaels's

violations. Said damages include, but are not limited to,



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b. paying excessive interest and other charges on loans to the defendant and/or his

agent and/or his confederates; and

c. paying interest to third parties on loans which exceed the amounts which would

have been due if the defendant had acted properly in the transactions.

173. The defendant's refusal to grant relief upon demand was in bad faith with knowledge


C. Claims Against XYZ Financial Trust

174. The conduct of XYZ Financial Trust as aforesaid violated the Massachusetts












under G.L. c. 106, 1-203.

177. The conduct of XYZ Financial Trust was willful or knowing within the meaning of

the Massachusetts Consumer Protection Act, G.L. c. 93A, 9.

178. Plaintiff Glass suffered damages as aforesaid by virtue of the defendants' violations.

Said damages include, but are not limited to,





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c. paying interest on loans which exceed the amounts which would have been due if the

defendants had acted properly in the transactions.

179. The defendant's refusal to grant relief upon demand was made in bad faith with

knowledge or reason to know that the act or practice complained of violated G.L. c. 93A, 2.

D. Claims Against Aggressive Mortgage Co.

180. The conduct of Aggressive Mortgage Co. as aforesaid violated the Massachusetts












under G.L. c. 106, 1-203.

183. The conduct of Aggressive Mortgage Co. was willful or knowing within the

meaning of the Massachusetts Consumer Protection Act, G.L. c. 93A, 9.

184. Plaintiffs Old and Smith suffered damages as aforesaid by virtue of the defendant's





c. paying interest on loans which exceed the amounts which would have been due if

the defendants had acted properly in the transactions.


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185. The defendant's refusal to grant relief upon demand was made in bad faith with

knowledge or reason to know that the act or practice complained of violated G.L. c. 93A, 2.

E. Claims Against David Stevens

186. The conduct of defendant Stevens as aforesaid violated the Massachusetts Consumer

Protection Act, G.L. c. 93A, 2 and applicable regulations including 940 C.M.R. 3.16, in that it

was unfair, deceptive, oppressive, unconscionable, and contrary to public policy and generally

recognized standards applicable to the consumer lending business.



violated existing statutes, rules, regulations or laws, meant for the protection of the public's

health, safety or welfare, including but not limited to, G.L. c. 140D and 209 C.M.R. 32.01 et

seq. as set forth more fully below.



violated the requirement of good faith and fair dealing applicable to contracts under G.L. c. 106,

1-203.

189. In addition to his own conduct, defendant Stevens, is liable as principal for the

conduct of XYZ.

190. The conduct of defendant Stevens was willful or knowing within the meaning of the

Massachusetts Consumer Protection Act, G.L. c. 93A, 9.

191. Each plaintiff suffered damages as aforesaid by virtue of the defendant Stevens's



b. paying excessive interest and other charges on loans to the defendant and/or his

agent and/or his confederates; and

c. paying interest on loans which exceed the amounts which would have been due if

the defendant had acted properly in the transactions.


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192. The defendant's refusal to grant relief upon demand was in bad faith with knowledge


II. BREACH OF FIDUCIARY DUTY AGAINST FAST TALKING MORTGAGE CO., FASTTALKING FUNDING AND HENRY MICHAELS

193. Fast Talking Mortgage Co., Fast Talking Funding Co. and Henry Michaels maintain

that they acted in each transaction on behalf of the plaintiff as a loan broker.

194. To the extent, if any, that any defendant acted as a loan broker in any transaction,

that defendant breached its fiduciary duty in that transaction, by

a. failing to seek and obtain loans on the best terms available;

b. failing to disclose its financial relationship to the lender(s) from whom it obtained

loans;

c. failing to disclose financial interests adverse to those of each plaintiff; and

d. failing to otherwise act in good faith and in the interest of each plaintiff.

195. Plaintiffs were damaged by the defendants' breach of fiduciary duty.

III. INTENTIONAL MISREPRESENTATION AND FRAUD

196. In the course of the transactions, each defendant made one or more

misrepresentations and/or failed to make accurate representations and/or failed to provide

material information about the transactions as set forth more fully above.

197. Said misrepresentations and failure to make accurate representations were made

knowingly or with reason to know that Plaintiffs would rely thereon.

198. Said misrepresentations and failure to make accurate representations were material

to the transactions.

199. Said misrepresentations and failure to make accurate representations were made with

intent that the plaintiffs rely thereon.

200. Plaintiffs did reasonably rely.

201. Plaintiffs were damaged thereby.


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IV. NEGLIGENCE

202. In the course of the transactions, each defendant made one or more statements about

the nature and terms of the transaction which were inaccurate.

203. Each defendant stood in a relationship to the plaintiffs under which they owed that

plaintiff a duty of care to provide accurate information about the transactions.

204. The defendants failed to exercise reasonable care to provide the plaintiffs with

accurate material information about the transaction which they knew or had reason to know that

the plaintiffs would want.

205. Plaintiffs were injured in each transaction by defendants failure to provide accurate

information.

206. Defendants' negligence was the proximate cause of Plaintiffs' injuries.

V. BREACH OF CONTRACT AND WARRANTY CLAIMS ON BEHALF OF BRENDA OLDAGAINST FAST TALKING DEVELOPERS, FAST TALKING MORTGAGE CO.

AND FAST TALKING FUNDING

207. At all times relevant hereto, Fast Talking Developers acted as agent for Fast Talking

Mortgage Co. and/or Fast Talking Funding.

208. Fast Talking Developers failed to provide goods and services for Ms. Old's home

according to contract.

209. Fast Talking Developers failed to complete the work called for under the contract.

210. Fast Talking Developers knew or had reason to know that Ms. Old was relying on its

skill or judgment to select and furnish suitable goods under the contract.

211. Said goods were not fit for the purposes intended.

212. The goods and services provided to Ms. Old did not meet the standards set for like

goods and services passing in trade.

213. Fast Talking Developers breached written and implied warranties made in

connection with its contract to perform work on Brenda Old's home.

214. Ms. Old suffered damages which were proximately caused by Defendants' breaches.


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VI. CIVIL RICO

215. Defendants Fast Talking Mortgage Co., Fast Talking Funding, Henry Michaels,

David Stevens, XYZ Financial Trust and Aggressive Mortgage Co. are individuals or entities

capable of holding a legal or beneficial interest in property and as such are persons as defined by

18 U.S.C. 1961(3).

216. Fast Talking Mortgage Co. and Fast Talking Funding are enterprises within the

meaning of 18 U.S.C. 1961(4).

217. Fast Talking Mortgage Co. and Fast Talking Funding engage in or conduct activities

which affect interstate commerce, including, but not limited to, arranging loans with out of state

lenders.

218. Fast Talking Mortgage and/or Fast Talking Funding served as an umbrella for the

activities of the various defendants who sought to obtain profits from Plaintiffs and others

through fraud and other illegal conduct.

219. Defendants Michaels, Stevens, XYZ, Aggressive, Fast Talking Mortgage and Fast

Talking Funding participated in the affairs of the enterprise through a pattern of racketeering

activity or collection of unlawful debt in violation of 18 U.S.C. 1962(c), including, but not

limited to:

a. collecting interest at a rate which is more than twice the enforceable rate from

each of the plaintiffs and others;

b. fraudulently misrepresenting their right to collect fees from the plaintiffs,

including, in particular their right to broker fees, attorney fees, points and other

charges from the proceeds of the loan in violation of the Consumer Credit Cost

Disclosure Act, G.L. 140D, 1 et seq.;

c. fraudulently misrepresenting the true cost of credit in connection with each loan

made to the plaintiffs;

d. making fraudulent advertising claims concerning the nature and terms of the loan

transactions;


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e. fraudulently seeking to obtain multiple commissions and payoff of prior loans

from the plaintiffs so that they could realize illegal profits;

f. backdating documents prepared in connection with the transactions;

g. fraudulently misrepresenting to Plaintiffs and others the terms of various loan

transactions for the purpose of concealing the disadvantageous nature of the

transactions.

220. The defendants have acquired funds through the aforesaid racketeering activity

which they have invested in the enterprise in violation of 18 U.S.C. 1962(a).

221. The defendants have conspired to participate in the affairs of the enterprise through a

pattern of racketeering activity and collection of unlawful debt in violation of 18 U.S.C.

1962(d).

222. The defendants regularly use the United States mails in furtherance of said pattern of

racketeering activity and collection of unlawful debt and to otherwise defraud Plaintiffs

including, but not limited to, obtaining credit information, contracts and payments by mail,

mailing collection letters, mailing checks to distribute proceeds of the transactions, and mailing

various credit applications and other documents.

223. The defendants regularly use the interstate telephone system in furtherance of said

pattern of racketeering activity and collection of unlawful debt and to otherwise defraud the

Plaintiffs including, but not limited to, making calls soliciting business and refinancing and

making calls to obtain credit information and to arrange appointments to close loans.

224. Defendants' use of the mail and telephone as set forth above constitutes indictable

mail fraud as defined by 18 U.S.C. 1341 and indictable wire fraud as defined by 18 U.S.C.

1343.

225. The actions of the various defendants constitute a "pattern of racketeering activity"

as defined by 18 U.S.C. 1961(5).

266. The plaintiffs were damaged by said violations of law.


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VII. CLAIMS UNDER THE CONSUMER CREDIT COST DISCLOSURE ACT,G.L. 140D

A. For Mary Glass Against XYZ

227. At all times relevant hereto defendant XYZ was a creditor within the meaning of the

Consumer Credit Cost Disclosure Act ("CCCDA"), M.G.L. c. 140D, 1 et seq.

228. Plaintiff Glass's transaction with XYZ was a consumer credit transaction within the

meaning of the CCCDA.

229. In connection with the transaction, XYZ failed to provide Ms. Glass with a

disclosure statement in conformity with the CCCDA.

230. The disclosure statement provided by XYZ to Ms. Glass fails to accurately set forth

the finance charge, amount financed, annual percentage rate, total of payments and payment

schedule in the transaction.

231. By reason of Defendants' failure to provide a proper disclosure statement, Ms. Glass

retained a right to rescind the transaction for four years from the date of the transaction.

232. Ms. Glass properly exercised her right to rescind the transaction in a timely fashion.

233. Pursuant to G.L. c. 140D 10(b) Ms. Glass is entitled to a refund of all finance

charges paid in connection with the transaction.

234. Ms. Glass is entitled to an award of $2,000.00 statutory damages together with

actual damages, costs and attorney fees for XYZ's failure make proper disclosures and to

effectuate rescission of the transaction in conformity with the CCCDA.

B. For Brenda Old and Donna Smith Against Aggressive

235. At all times relevant hereto defendant Aggressive was a creditor within the meaning

of the Consumer Credit Cost Disclosure Act ("CCCDA"), M.G.L. c. 140D, 1 et seq.

236. Plaintiffs Old and Smith entered into transactions with Aggressive which were

consumer credit transactions within the meaning of the CCCDA.

237. In connection with the transactions, Aggressive failed to provide Ms. Old and Ms.

Smith with a disclosure statement in conformity with the CCCDA.

238. Ms. Old did not receive a completed disclosure statement or notice of right to cancel.


30/77

239. The disclosure statement provided by Aggressive to Ms. Smith fails to accurately

set forth the finance charge, amount financed, annual percentage rate, total of payments and

payment schedule in the transaction.

240. The notice of right to cancel provided by Aggressive to Ms. Smith did not accurately

set forth Ms. Smith's cancellation rights and Aggressive improperly induced Ms. Smith to waive

her rights.

241. By reason of Defendants' failure to provide proper disclosure statements and notices

of right to cancel, Ms. Old and Ms. Smith retained a right to rescind their transactions for four

years from the date of the transaction.

242. Ms. Old and Ms. Smith properly exercised their right to rescind their transactions in

a timely fashion.

243. Pursuant to G.L. c. 140D 10(b) Ms. Old and Ms. Smith are entitled to a refund of

all finance charges paid in connection with their transactions.

244. Ms. Old and Ms. Smith are each entitled to an award of $2,000.00 statutory

damages together with actual damages, costs and attorney fees for Aggressive's failure make

proper disclosures and to effectuate rescission of the transaction in conformity with the CCCDA.

REQUESTS FOR RELIEF

The plaintiffs request that this Court:

a. assume jurisdiction of this proceeding;

b. award damages, multiple damages, costs and attorney fees against defendants Fast

Talking Mortgage, Fast Talking Funding, Michaels, Stevens, XYZ and Aggressive pursuant to

G.L. c. 93A;

c. award damages, multiple damages or other enhanced damages, costs and attorney fees

against defendants Fast Talking Mortgage, Fast Talking Funding and Michaels for breach of

fiduciary duty;


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1 Note that similar discovery requests made to the attorney and to Aggressive are not reprintedinfra.

d. award damages, multiple damages or other enhanced damages, costs and attorney fees

against defendants Fast Talking Mortgage, Fast Talking Funding, Michaels, Stevens, XYZ and

Aggressive for intentional misrepresentation and fraud;

e. award damages, costs and attorney fees against defendants Fast Talking Mortgage, Fast

Talking Funding, Michaels, Stevens, XYZ and Aggressive for negligence;

f. award damages, costs and attorney fees against defendants Fast Talking Developers,

Fast Talking Mortgage and Fast Talking Funding in favor of Brenda Old for breach of contract

and breach of warranty;

g. award damages, multiple damages, costs and attorney fees against defendants Fast

Talking Developers, Fast Talking Mortgage, Fast Talking Funding, Aggressive, XYZ, Michaels

and Stevens pursuant to RICO;

h. declare that each plaintiff validly rescinded her transaction with XYZ or Aggressive;

i. award each plaintiff $2,000.00 in statutory damages together with actual damages, costs

and attorney fees for Defendants' failure to effectuate rescission and for Defendants' disclosure

violations pursuant to the CCCDA;

j. order that XYZ and Aggressive return all finance charges paid to them in connection

with each transaction pursuant to the CCCDA;

k. award such other relief as the Court deems appropriate and just.

Dated:

Counsel for the Plaintiffs

7.2 Request for Production of Documents1

COMMONWEALTH OF MASSACHUSETTS

SUFFOLK, SS.SUPERIOR COURT

C.A. NO.


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Mary Glass, Brenda Old, and Donna Smith

Plaintiffs,

[vs.]

Fast Talking Mortgage Corp., Fast Talking Funding Co.,

Fast Talking Development, XYZ Financial Trust, David Stevens,

Henry Michaels, and Aggressive Mortgage Co.

Defendants.

PLAINTIFFS' FIRST REQUEST FOR PRODUCTION OF DOCUMENTS

TO: James Jones Esquire

100 Boston Street

Newton, MA

Attorney for Defendant XYZ Financial Trust

Plaintiffs request, pursuant to Fed. R. Civ. P. 34 that defendants produce a copy of each

of the following documents to be sent to the office of plaintiffs' attorney: Gary Klein, Esquire,

National Consumer Law Center, 18 Tremont Street, Boston, MA 02108.

DEFINITIONSAs used herein the following terms shall have the following meaning:

A. "Documents" means all writings of any kind, including the originals and all

nonidentical copies, whether different from the originals by reason of any notation made on such


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copies or otherwise, including but not limited to correspondence, memoranda, notes, diaries,

desk or other calendars, statistics,

charts, summaries, pamphlets, books, interoffice and intraoffice communications, notations of

any sort of conversations, written agreements, bulletins, printed matter, computer printouts,

teletypes, telefax, invoices, worksheets, all drafts, alterations, modifications, changes and

amendments of any of the foregoing, graphic or oral records or representations of any kind

(including, without limitation, tapes, cassettes, discs, recordings and computer memories).

B. The term "transaction" shall include all activities by and between any plaintiff and

any defendant related to a loan which is referenced in the amended complaint filed in this matter.

C. The term "subject property" shall refer to any plaintiff's residence.

D. The term "you" or "your" shall refer to the defendant to whom these requests are

directed. All requests shall be deemed to include any documents made by, held by or maintained

in the files of any predecessor, successor, employee, agent or assignee of any defendant.

INSTRUCTIONS

E. If your response to any request herein is that the documents are not in your

possession or custody, describe in detail the unsuccessful efforts you made to locate the records.

F. If your response to any request herein is that the documents are not in your

control, identify who has control and location of the records.

G. If a request herein for production seeks a specific document or an itemized

category which is not in your possession, control or custody, provide any documents you have

that contain all or part of the information contained in the requested document or category.

H. Identify the source of each of the documents you produce.

REQUESTS FOR PRODUCTION

l. All contracts between any plaintiff and any defendant including notes, judgment

notes, security agreements, mortgages, and insurance agreements related to any transaction.


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2. All disclosure statements or other notices given to any plaintiff related to any

transaction.

3. All documents provided to any plaintiff describing the terms of any transaction.

4. All notices of right to cancel given to any plaintiff in connection with any transaction.

5. The loan application, loan worksheet, application worksheet or other document

used in considering the application of any plaintiff for a loan.

6. The settlement statement, commitment letter and any worksheet or other

document used to prepare the federal disclosure statement in any transaction.

7. All letters, notices and forms relating to defendants' intention to foreclose on any

subject property.

8. All ledger cards, ledger sheets or other documents reflecting payments made, and

charges and costs incurred in any transaction.

9. All written communications either by or to any plaintiff.

10. All telephone log sheets, internal memoranda, notes or other documents

concerning any transaction prepared or reflecting activity on any plaintiff's account.

11. All documents recording, reflecting or otherwise relating to visits which any

plaintiff or anyone acting on their behalf made to your office in connection with any transaction.

12. All documents you rely on for assessing attorneys fees and costs on the plaintiffs

in this matter, including but not limited to fee agreements, contracts, bills, timesheets, attorney

work records, canceled checks and other documents supporting fees assessed for an attorney in

connection with closing any transaction.

13. All documents defendants rely on for payment of document preparation fees in any

transaction.

14. All documents defendants rely on for payments made to any entity, including any

plaintiff, in connection with any transaction including, but not limited to, contracts, bills,

canceled checks and other back-up documentation for such payment.


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15. All documents relating to any fees, commissions or other payment to any third party

in connection with any transaction whether or not such payment was charged to any plaintiff.

16. All documents relating to any fees, commissions or payments received by any

defendant in connection with any transaction from anyone other than a plaintiff.

17. All contracts, agreements, correspondence, records of communication or other

documents reflecting interaction with any loan broker who was paid in any transaction.

18. All documents your employees or agents had received from you or any third party at

the time of any transaction concerning the requirements of the federal Truth-in-Lending Act or

the state Consumer Credit Cost Disclosure Act.

19. All documents relating to any internal inspection procedures you used at the time of

any transaction to insure that your employees or agents were complying with the Truth-in-

Lending Act and the state Consumer Credit Cost Disclosure Act.

20. A copy of the outside and inside front and back of the file folder on any of plaintiff's

loan accounts.

21. Copies of both sides of each and every check issued or received in connection with

any transaction.

22. All documents reflecting commissions and/or bonuses paid to any individual

including, but not limited to, payments to your employees, agents and any loan broker in

connection with any transaction.

23. All contracts, agreements, correspondence, records of telephone conversations,

memoranda or other documents reflecting communication between you and any other defendant

involved in this matter related to any transaction, subject property or plaintiff in this case.

24. All contracts, agreements, correspondence, records of telephone conversations,

memoranda and other documents reflecting communication between you and any person or entity

who loaned money to any plaintiff whether or not such person or entity is a defendant in this

case.


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25. All documents related in any way to any criteria or system used to determine any

plaintiff's credit worthiness.

26. All documents used in choosing, determining, setting, changing or adjusting the

interest rate in any transaction, including any documents related to how the amount of the interest

rate relates to any plaintiff's individual circumstances.

27. All documents related in any way to any terms required as a condition for entering

into a loan agreement with any plaintiff.

28. All of the above enumerated documents with respect to any previous or subsequent

transaction with any plaintiff.

29. All documents from whatever source relating in any way to the fair market value

of any subject property.

30. All advertisements sent to any plaintiff by mail and the transcript of any telephone

advertisements or other solicitation made directly to any plaintiff at any time.

31. The text of any published advertisement you used in any print or electronic media

between January 1, 1988 and December 31, 1992.

32. The results of all title and lien searches of any subject property.

33. All documents related to establishment, maintenance, collection or disbursement of

an escrow in any transaction.

34. All mortgages, security agreements or other documents reflecting security interests

held by third parties such as your creditors in any mortgage and/or note executed by any plaintiff

in any transaction.

35. All corporate records maintained by you which reflect:

a. the identity of your corporate officers, executives or shareholders for any period of

time since the corporation was formed;

b. any financial relationship between your corporation and any other corporation,

individual or other entity; and


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c. any agreements, financial relationship or any other connection between your

corporation and any other defendant in this lawsuit.

36. All contracts, agreements, memoranda of understanding or any other document

reflecting an agreement between you and any other defendant whether or not such agreement

relates to this case.

37. All bank records of any accounts held by you at any time since January 1, 1989.

38. Any and all documents which you intend to use or introduce at trial.

Dated:

7.3 Motion for Remand

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS


Plaintiffs,

[vs.]




Defendants.

C.A. No. 93-XXXXXX

PLAINTIFFS' MOTION FOR REMAND

Now come the plaintiffs in the above matter, pursuant to 28 U.S.C. 1441(c), or

alternatively, 28 U.S.C. 1367(c), and hereby request that the Court remand this matter to the

Superior Court of the Commonwealth of Massachusetts. In support of their motion plaintiffs

state the following:


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1. Plaintiffs commenced this litigation on or about May 21, 1993 by filing of a complaint

in the Suffolk County, Massachusetts Superior Court. The complaint was amended in that court

as of right on or about July 14, 1993.

2. Plaintiffs' amended complaint states seven causes of action, six of which are entirely

state law claims.

3. Plaintiffs' state law claims are based on defendants' violations of the Massachusetts

consumer protection statute, M.G.L. ch. 93A; state common law claims of breach of fiduciary

obligation, misrepresentation, fraud and negligence; state law claims of breach of warranty and

contract; and defendants' violations of the Massachusetts consumer credit cost disclosure act,

M.G.L. 140D.

4. Plaintiffs' one federal claim derives from the civil remedies provisions of the

Racketeering Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1964.

5. On August 18, 1993, defendant Aggressive Mortgage Co. (Aggressive) removed the

litigation to this Court, pursuant to 28 U.S.C. 1441 and 1446.

6. Plaintiffs' RICO claim is a cause of action related to, but separate and independent

from plaintiffs' state law claims. Plaintiffs' state law claims predominate in this action.

7. Alternatively, plaintiffs' RICO claim derives from the same acts and omissions by the

defendants which form the basis of plaintiffs' state law claims and the state law claims

predominate in this action.

8. Plaintiffs' state law claims involve complex and unique questions of Massachusetts

law.

9. Reasons of comity, fairness and judicial economy require that all of plaintiffs' claims,

including their one federal claim, be tried and resolved in the Massachusetts courts.

10. In further support of this motion, plaintiffs hereby submit their Memorandum in

support thereof.

11. The undersigned counsel hereby certify that they conferred with all other counsel in

this matter and have attempted in good faith, but failed, to resolve or narrow the issues herein.


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REQUEST FOR ORAL ARGUMENT

12. If any party files opposition to this motion, the plaintiffs request oral argument on the

matter before the Court.

WHEREFORE, plaintiffs request that this Court exercise its discretion pursuant to 28

U.S.C. 1367(c) and/or 1441(c) and remand all matters in this action to the Massachusetts

Superior Court. Alternatively, they request a remand of all state law matters to the state court.

Dated:

Counsel for the Plaintiffs

7.4 Memorandum for Remand

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS


Plaintiffs,

[vs.]




Defendants.

C.A. No. 93-XXXXXX

PLAINTIFFS' MEMORANDUM IN SUPPORT OF

THEIR MOTION FOR A REMAND TO STATE COURT

I. INTRODUCTION

This memorandum is submitted in support of the plaintiffs' Motion for a Remand. The

motion asks the Court to exercise the discretionary remand authority granted pursuant to 28

U.S.C. 1441(c) and 1367(c) (hereinafter "1441" and 1367") and return this litigation to the

state court from which defendant Aggressive Mortgage Company (hereinafter "Aggressive")


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removed it. Under either statute, the fact that state law questions predominate in the case, as well

as reasons of comity, fairness and judicial economy, all compel a remand. The plaintiffs ask the

Court to remand the entire matter to the state court. Alternatively, they ask that they be permitted

to try the state law questions in that forum.

II. PROCEDURAL AND FACTUAL BACKGROUND

The plaintiffs began this litigation on or about May 21, 1993 by filing their complaint in

the Suffolk County, Massachusetts Superior Court. The complaint was amended as of right in

that court on July 14, 1993. In their complaint, they allege a complex home mortgage loan

scheme in which the defendants conspired to defraud them. The complaint asserts that defendant

Fast Talking Mortgage Corporation (hereinafter "Fast Talking Mortgage") misrepresented itself

as a home mortgage lender when it in fact was acting as a mortgage broker on behalf of

Aggressive and defendant XYZ Financial Trust. In the case of plaintiff Mary Glass, the actual

mortgage lender was defendant XYZ Financial Trust (hereinafter "XYZ"). In the case of

plaintiffs Brenda Old and Donna Smith, the actual mortgage lender was Aggressive.

Each plaintiff complains that Fast Talking Mortgage arranged loans with Aggressive and

XYZ on terms that were unconscionable, terms that included exorbitant interest rates, negative

amortization, and so-called "balloon payments" requiring immediate refinancing. In each case,

the plaintiffs assert that Fast Talking Mortgage negligently and fraudulently misrepresented the

amounts financed in the loans, to the benefit of Aggressive and XYZ. In each case, the plaintiffs

were charged excessive fees for the closing of the loans, including "brokers fees" paid to Fast

Talking Mortgage and excessive attorneys fees. In each case, Fast Talking Mortgage arranged

for immediate refinancing of the loans with third party lenders, causing the plaintiffs to incur

prepayment penalties and substantial, duplicate and excessive costs associated with prepayment

of the Aggressive and XYZ loans. By obtaining financing from third parties (in each case within

four months of their original loans) the defendants obtained profits ranging from 150% to


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1,300% annualized return on the amount they invested. In each case, the plaintiffs now face

imminent sale of their homes by foreclosure of the third party loans arranged by the defendants.

One example of the defendants' modus operandi from a myriad alleged in the complaint is

as follows: at the closing of the loan in favor of plaintiff Donna Smith, the defendant Aggressive

Mortgage Co. gave Ms. Smith loan disclosures indicating that a $3,00.001 [sic] broker fee would

be paid from the proceeds of the loan to the defendant Fast Talking Mortgage Co. At that

closing, the defendant Fast Talking Mortgage Co. was purportedly acting as Ms. Smith's agent in

its capacity as "loan broker." The defendant David Stevens was purportedly acting as

Aggressive's agent as "closing attorney."

A subsequent list of disbursements provided by Mr. Stevens to Fast Talking indicated that

a $5,000 broker fee was actually paid by Aggressive to Fast Talking from the proceeds of the

loan. Perhaps this is less surprising in view of the fact that Mr. Stevens, Aggressive's attorney,

was then also a principal of Fast Talking. Ms. Smith was not only responsible to repay the $5,000

she supposedly borrowed to pay Fast Talking as her loan broker, but also she was on the hook to

repay it with over 20% interest to Aggressive.

The plaintiffs' amended complaint states seven causes of action, six of which are entirely

state law claims. The state law claims are based on Defendants' violations of the Massachusetts

consumer protection statute, M.G.L. ch. 93A; state common law claims of breach of fiduciary

obligation, misrepresentation, fraud and negligence; state law claims of breach of warranty and

contract; and Defendants' violations of the Massachusetts Consumer Credit Cost Disclosure Act,

M.G.L. ch. 140D. [See Am. Complaint, Counts I through V, and Count VI.] Plaintiffs' one

federal claim derives from the civil remedies provisions of the Racketeering Influenced and

Corrupt Organizations Act (RICO), 18 U.S.C. 1964. [See Am. Complaint at Count VI.] The

plaintiffs allege inter alia that the defendants, including Aggressive, have participated in the

affairs of an enterprise (Fast Talking Mortgage Co. or Fast Talking Funding) through a pattern of

racketeering activity or collection of unlawful debt in violation of 18 U.S.C. 1962(c). Plaintiffs

further allege that Defendants have conspired in violation of 18 U.S.C. 1962(d) and have


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invested income from their activities in violation of 18 U.S.C. 1962(a). The pattern of

racketeering activities and the collection of unlawful debt which form the basis of the RICO

count of the complaint are based on the same conduct which is alleged in the other counts of the

complaint as the basis for the state law causes of action. Thus, the plaintiffs' state law and RICO

claims are intimately related and inseparably linked.

III. ARGUMENT

Aggressive's petition for removal, with its citation to 28 U.S.C. 1441, makes only the

most general reference to the statutory basis for removing this case to federal court. The petition

does cite the Court's federal question jurisdiction over the RICO claim as grounds for the

removal. [See Petition for Removal at page 1.] See also 28 U.S.C. 1331. The petition does

not, however, recite any basis for this Court's jurisdiction over the plaintiff's state law claims, and

the plaintiffs can only assume that Aggressive views the state law issues as nonremovable.

Aggressive's removal petition can therefore fairly be characterized as predicated on 1441(c),

which states:

Whenever a separate and independent claim or cause of action within the

jurisdiction conferred by section 1331 of [Title 28] is joined with one or moreotherwise nonremovable claims or causes of action, the entire case may beremoved and the district court may determine all issues therein, or, in itsdiscretion, may remand all matters in which State law predominates.

The plaintiffs readily admit that the Court's federal question jurisdiction extends to the

RICO claim. They do not concede the jurisdiction that Aggressive's petition fails to assert, that

is, jurisdiction over the state law issues as supplemental or "pendant" claims under 28 U.S.C.

1367(a). For purposes of argument, however, the plaintiffs ask the Court to exercise its

discretion to remand this case on alternative theories. On the one hand, they contend that a

remand is appropriate and necessary under the provisions of 1441(c) which grants the Court

discretionary authority to "remand all matters in which state law predominates." Alternatively,

assuming, arguendo, the supplemental jurisdiction of the Court over th