Bogus Non-Profit Advertising

Attorney General Andrew M. Cuomo announced his office has stopped a Syracuse-area reverse mortgage lender from preying on seniors statewide through false advertising and portraying itself to be a local non-profit organization.

Under a settlement reached by the Attorney General’s Office, Upstate Capital, Inc. of Basile Rowe in East Syracuse, must reform its marketing practices and indicate that it is a registered mortgage/reverse mortgage broker. The company must also pay $20,000 in costs and penalties to the state.

This settlement is one of several initiatives the Attorney General has undertaken to help stem the tide of abuse and fraud in the mortgage and housing industries.
                                                                
“Consumers must remain vigilant in the midst of the national mortgage crisis,” said Attorney General Cuomo. “There are unscrupulous individuals seeking to take advantage of homeowners who have worked hard their whole lives to secure equity in their properties. This settlement serves as both a victory for New York’s homeowners and a warning to all companies that they must clearly state their intentions when seeking business from unsuspecting consumers.”

In an attempt to solicit business from senior homeowners across the state, Upstate Capital presented itself in promotional materials and flyers as the Association for Better Living (ABL), Inc., a non-profit organization. Before ceasing operations in 2002, ABL specialized in upgrading housing conditions in Central New York. Michael Gilman of Dewitt happens to be Director of Operations for Upstate Capital as well as President of ABL.

Starting in July of 2007, Upstate Capital sent flyers portraying itself as ABL to seniors statewide promoting a “new government program” that “protects seniors” by providing a monthly, tax-free income with no income or credit qualifications. The company also claimed that the “lifetime” program required no repayments.  Consumers were directed to call the company to obtain a free packet of information on the program. They would then be contacted by an Upstate Capital representative “on behalf” of ABL.

The solicitation, however, neglected to say that the source of the money was actually a loan, and that the product the company is peddling was actually a reverse mortgage.

A reverse mortgage is a loan product available to seniors (62 and over in the United States), and is used to release the home equity in the property as one lump sum or multiple payments.  In a reverse mortgage, the home owner makes no payments and all interest is added to the lien on the property, which is due and payable upon the transfer or non-use of the property by the homeowner.

Source – New York State Attorney General