Judge orders compensation for elderly black victims of reverse mortgage scam

Clyde Ross

Photo by Sophia Nahli Allison

Clyde Ross, 92, is one of five defrauded homeowners that a Cook County judge ordered scammer Mark Diamond to compensate.

A Cook County judge has ordered a Chicago businessman behind a reverse mortgage scam targeting elderly African-Americans to compensate five of his victims and quit operating his business while his case winds through the courts.

Mark Diamond, who may have defrauded more than 100 homeowners in a mortgage and home repair scheme, was also ordered to pay a fine of $340,000 by Cook County Circuit Court Judge David B. Atkins last week.

Illinois Attorney General Lisa Madigan sought the injunction against Diamond; testimony from the five people who will receive restitution was included in her office’s request for the injunction.

“This is a significant victory for people whose lives were destroyed by Mark Diamond,” Madigan said in an email.  “Diamond’s equity-stripping schemes financially devastated too many older African Americans and their families. This win will prevent him from conning people out of their life savings and homes in Illinois.”

Diamond could not be reached for comment.

Reverse mortgages are a tool for senior citizens to convert a portion of their home’s value into cash. The loan doesn’t have to be repaid until the person moves out of the house or dies. If family members want to keep the house, they have to pay off the debt.

Last January, The Chicago Reporter wrote about how Diamond has been accused in many federal cases of swindling elderly black homeowners on the city’s South and West sides and sued dozens of times in Circuit Court. Diamond would convince the homeowner to take out the mortgage by saying the money would pay for home repairs, maneuver to get most or all of the money from the transaction, and perform shoddy work, if anything was done at all, according to several of the lawsuits.

Mark Diamond arrives at a court appearance at Daley Plaza on April 1, 2015.

Photo by Grace Donnelly

Mark Diamond arrives at a court appearance at Daley Plaza on April 1, 2015.

Madigan said she filed  the injunction request in October 2014 after an uptick in the number of complaints against Diamond.

The goal of the injunction was to stop Diamond from conducting business while a 2009 case she filed on behalf of dozens of elderly black homeowners is adjudicated, she said. The 2009 lawsuit alleged that Diamond and other mortgage and home repair companies had stripped nearly $1.3 million in equity from the homeowners, many of whom lost their houses in foreclosure.

Last June, Atkins granted a preliminary injunction against Diamond.

New law targets reverse mortgage scams

In response to Diamond’s activities, Housing Action Illinois helped develop new consumer protection legislation, said Bob Palmer, policy director of the non-profit advocacy organization. Gov. Bruce Rauner signed the bill into law last August.

“One purpose of the new consumer protection law for people considering reverse mortgages is to eliminate the high pressure sales pitches that Mark Diamond seemingly used to get seniors to take out loans even though he had a clear conflict of interest and [they] didn’t fully understand the implications of taking out a reverse mortgage,” Palmer said.

Under the new law, which took effect on Jan. 1, the Attorney General’s office has prepared an education document for consumers, Palmer said. Lenders and brokers have to provide this information to potential borrowers no later than when the senior requests an application for a reverse mortgage, he said.

Sen. Jacqueline Collins (D-16), who introduced the legislation, said she was “gratified” that Diamond will not be able to take advantage of other people, but added that he should be prosecuted and that his other victims should be compensated.

Diamond has yet to face criminal charges.

The FBI carried out a federal search warrant at Diamond’s office in the Logan Square neighborhood last March.

FBI Special Agent Garrett Croon declined to comment.

Louvenia Hood, board member of the Illinois Anti-Foreclosure Coalition, also said Diamond and those who worked with him should be prosecuted.

“I’m talking about attorneys, mortgage companies, title companies and banks,” said Hood, who has a relative that said she was swindled by Diamond.  “They had to be working with him to let him do what he did.”

Seeking compensation for more homeowners

Madigan spokeswoman Maura Possley said the next step in the legal case is to obtain restitution for the many other consumers affected by Diamond.

Like 89-year-old Lillie Williams, a homeowner in the North Lawndale neighborhood.

Diamond took close to $120,000 she said she received under a reverse mortgage contract; Williams was left with about $1,000. She said Diamond did some home repairs, but never gave her a bill for the work.

Atkins’ decision sparked mixed emotions in her.

“I’m glad about it, but I’m sad about it because I’m reminded of what happened,” she said.

A hearing to determine restitution for people who were not part of the request for an injunction will be held on Feb. 8, Possley said.

Clyde Ross, 92, was among the five people Atkins ordered Diamond to pay. Ross will receive $67,901.93, according to the decision.

Ross signed a contract with Diamond in 2012 to alter his bathroom to accommodate his son, a former Marine who was wounded in the line of duty and confined to a wheelchair, according to testimony.

The work on the bathroom left if more hazardous than before, and Diamond took all of the money from the reverse mortgage, said Ross, a major figure in the Contract Buyers’ League that fought for residents’ housing rights on Chicago’s West Side in the 1960s.

He’s skeptical that he will receive any money.

“Diamond’s not going to pay nothing back,” Ross said. “He doesn’t care about the judge. I was happy to hear about it, but how can I get the money?

“What the judge rules don’t mean nothing.”