IN THE CIRCUIT COURT OF THE FOURTH JUDICIAL CIRCUIT IN AND FOR DUVAL COUNTY, FLORIDA

FILED: DUVAL COUNTY, RONNIE FUSSELL, CLERK, 01/08/2016 09:35:00 AM 16-2016-CA-000136-XXXX-MA Filing# 36226141 E-Filed 01/06/2016 03:08:41 PM IN THE CIRCUIT COURT OF THE FOURTH JUDICIAL CIRCUIT IN AND FOR DUVAL COUNTY, FLORIDA STATE OF FLORIDA, OFFICE OF THE ATTORNEY GENERAL, DEPARTMENT OF LEGAL AFFAIRS, v. Plaintiff, HEATHROW FINANCIAL CORPORATION, a foreign corporation doing business in Florida; and DAVID M. GOLLOHER, individually and as O\Vner, officer,lllanager, or representative of Heathro\V Financial Corporation, Defendants. Case No.: Division: COMPLAINT FOR INJUNCTIVE RELIEF, CIVIL PENALTIES, AND OTHER STATUTORY RELIEF Plaintiff, State of Florida, Office of the Attorney General, Departlllent of Legal Affairs (the "Attorney General"), by and through the undersigned counsel, sues Defendants HEATHROW FINANCIAL CORPORATION, a foreign corporation doing business in Florida, and DAVID M. GOLLOHER, individually and as o\vner, officer, lllanager, or representative of Heathro\V Financial Corporation, (collectively HEATHROW FINANICAL CORPORATION and DAVID M. GOLLOHER are referred to herein as "Defendants"), and alleges: 1

Jurisdiction and Venue 1. This is an action for injunctive and declaratory relief, costs, attorney's fees, penalties, and other available statutory relief pursuant to the Florida Deceptive and Unfair Trade Practices Act ("FDUTP A"), Chapter 501, Part II, Florida Statutes (2015). 2. The Court has subject matter jurisdiction pursuant to Chapter 501, Part II, Florida Statutes. 3. The amount in controversy satisfies the jurisdictional threshold of the Court. 4. The injunctive and other equitable relief requested in this Complaint are within the jurisdiction of the Court. 5. Pursuant to Florida Statute sections 95.11(3) and 501.207(5), all of the acts, practices, occurrences, and transactions upon which this Complaint is based occurred within four (4) years of the filing of the Complaint. 6. Pursuant to Florida Statute sections 47.011 and 47.051, venue is proper in the Circuit Court of the Fourth Judicial Circuit, in and for Duval County, Florida, as at least one of the Defendants' violations offdupta occurred in Duval County, and Duval County is the place where the cause of action accrued. 2

7. Pursuant to Florida Statute section 501.203(2), the alleged statutory violations occurred in or affected residents of more than one judicial circuit in the State of Florida, and affected the residents of more than one state. 8. At all relevant times, the Defendants engaged in trade or commerce, as defined in Florida Statute section 501.203(8). The Parties 9. The Attorney General is an "enforcing authority" under FDUTP A and is authorized to bring this action and seek injunctive and other statutory relief pursuant to Florida Statute sections 501.207 and 501.2075. 10. Pursuant to Florida Statute section 501.207(2), the Attorney General conducted an investigation of the alleged matters, and the Florida Attorney General Pamela Jo Bondi determined that this enforcement action against the Defendants serves the public interest. 11. Heathrow Financial Corporation ("Heathrow") is a Georgia corporation doing business in Florida and is registered with the Florida Department of State with a mailing address of 25 Hurwood A venue, Merritt Island, Florida 32953. 12. David M. Golloher ("Golloher") resides at 1286 Earl Drive, Merritt Island, Florida 32952. In connection with the matters alleged herein, he transacts or has transacted business in Florida and throughout the United States. 3

13. Defendant Golloher is the Chief Executive Officer, Chief Financial Officer, and Secretary of Heathrow. At all relevant times, he has formulated, directed, controlled, had the authority to control, or participated in the various acts and practices of Heathrow, including the acts and practices set forth in this Complaint. The Defendants' Business Practices 14. According to the Attorney General's investigation, Defendants have engaged in a course of conduct to advertise, market, sell, provide, offer to provide, or arrange for others to provide mortgage assistance relief services, including but not limited to loan document and transaction reviews, mortgage loan modification services, and foreclosure defense services. 15. Defendants target consumers who are in financial distress, behind on their mortgage loans, or in danger of losing their homes to foreclosure. 16. Defendants have initiated contact with consumers in various ways, including but not limited to Defendants' outbound telemarketing calls and through Defendants' websites. Consumers have called the telephone numbers and reached representatives of Defendants. These representatives have given Defendants' sales pitch to the consumers. 17. Defendants represented to consumers that they can provide financial relief by obtaining modifications of the consumers' home loan mortgage by 4

reducing the interest rate, by making monthly payments lower, and/or by reducing the principal balance of their mortgages, or that there is a high probability they will do so. 18. Defendants charged consumers an upfront fee for their mortgage relief services. The upfront fee was typically $975, which was collected through a $500 payment in the first month and a $475 payment in the second month. In addition, Defendants charged consumers a recurring fee of$175 per month. 19. By collecting an upfront fee, Defendants require consumers to pay for a service before the consumers have received the benefit of the service. Defendants should not collect any fee from the consumer before the consumer has executed a written agreement with the consumer's loan holder memorializing any mortgage assistance relief negotiated by the Defendants. 20. Defendants often misrepresent the likelihood of negotiating, obtaining, or arranging the represented mortgage relief services. 21. Defendants often misrepresent the amount of time that it will take to accomplish the represented mortgage relief services. 22. Defendants fail to disclose in a clear and prominent manner that: (i) the consumer may stop doing business with Defendants or reject Defendants' offer without having to pay for the services; (ii) Defendants are not associated with the government and their services are not approved by the government or the 5

consumer's mortgage holder or servicer; and (iii) even if the consumer uses Defendants' services, the consumer's mortgage holder or servicer may not agree to the represented mortgage modification. 23. Defendants often misrepresent consumers' obligations to make scheduled periodic payments to their mortgage holder or servicer by telling consumers to stop making payments to their mortgage holder or servicer and assuring them that this is the normal procedure for obtaining the represented mortgage modification. 24. Defendants do not disclose in a clear and prominent manner that if consumers stop making mortgage payments to their mortgage holder or servicer that they could lose their home and damage their credit rating. 25. Defendants tell consumers to stop making payments to their mortgage holder or servicer and to start making payments to the Defendants to begin the mortgage modification process. 26. Defendants instruct consumers to stop communicating directly with their mortgage holder or servicer, to forward all correspondence from their mortgage holder or servicer to Defendants, and that Defendants will handle all communications with the mortgage holder or servicer. 27. Consumers who follow the Defendants' instructions and stop making mortgage payments to their mortgage holder or servicer receive correspondence 6

from their mortgage holder or servicer about such nonpayment and the possibility of foreclosure. 28. Consumers, concerned about foreclosure, contact Defendants who fail to accurately inform consumers about the progress of the represented mortgage modification and make further misrepresentations intended to convince consumers that the Defendants are making progress with their cases so that the consumers continue making payments. 29. As a result of Defendants' acts and practices, consumers suffer substantial economic injury, including: paying thousands of dollars to Defendants for little or no service in return, going into foreclosure, and even losing their homes. 30. After consumers have signed up with Defendants and paid the requested advance fees, Defendants have failed to obtain a loan modification, principal reduction, or other relief to stop foreclosure or make the consumers' mortgage payments affordable. 31. Consumers, including senior citizens as that term is defined in Florida Statute section 501.2077(1)(e), have complained to the Attorney General and other state and federal agencies that the Defendants do not deliver mortgage relief services as promised. 7

32. Upon information and belief, military servicemembers and other such persons enumerated in Florida Statute section 501.2077(1) have also been victims of Defendants' business practices. 33. The Defendants' violations offdutpa have caused consumers to suffer past and ongoing substantial injury resulting in the unjust enrichment of the Defendants. Absent injunctive relief by the Court, the Defendants are likely to continue to injure consumers, reap unjust enrichment, and harm the public interest. 34. The Attorney General has incurred reasonable attorneys' fees and costs in its investigation and in maintaining this action against the Defendants and, pursuant to Florida Statute sections 501.2075 and 501.2105, the Attorney General is entitled to an award of same. Count I: Violation offdupta (Unfair or Deceptive Acts or Practices: Mortgage Relief Services) 3 5. The Attorney General incorporates and adopts by reference paragraphs 1 through 34 as if set forth fully herein. 36. FDUTPA, specifically Florida Statute section 501.204(1), makes unlawful "[ u ]nfair methods of competition, unconscionable acts or practices, and unfair or deceptive acts or practices in the conduct of any trade or commerce." 37. As set forth in paragraphs 14 through 33 herein, Defendants engaged in unfair, deceptive, and unconscionable acts or practices in the conduct of trade or 8

commerce in violation of Florida Statute section 501.204(1) by their conduct in adverting, marketing, selling, providing, offering to provide, or arranging for others to provide mortgage assistance relief services, including but not limited to mortgage loan modification services and foreclosure defense services. 38. In truth and in fact, Defendants do not obtain mortgage relief services for their clients. 39. Defendants willfully engaged in the acts and practices when they either knew or should have known that such acts and practices were unfair or deceptive or otherwise prohibited by law. Count II: Violation of FDUTP A (Violation of Rule 2-18.002, Florida Administrative Code) 40. The Attorney General incorporates and adopts by reference paragraphs 1 through 34 as if set forth fully herein. 41. Florida Statute sections 501.203(3)(c) states that a violation of FDUTPA may be based upon a violation of "[a]ny law, statute, rule, regulation, or ordinance which proscribes unfair methods of competition, or unfair, deceptive, or unconscionable acts or practices." 42. Rule 2-18.002 of the Florida Administrative Code requires that any contract which includes a provision for consumer services to be rendered in the future on a continuing basis must include the date of the transaction and the name 9

and address of the seller and contain a notice of the consumer's three (3) day right to cancel the contract. The notice of the right to cancel must be placed in immediate proximity to the space reserved for the signature of the consumer in a written contract or on the front page of the receipt if a written contract is not used. 1 43. Defendants' contract does not contain the required cancellation notices or the required seller information. 44. By failing to provide the notices and address of the seller, Defendants violated Rule 2-18.002 and, therefore, engaged in deceptive and unfair acts and practices in trade or commerce in violation of Florida Statute section 501.204. 45. Defendants willfully engaged in the acts and practices when they either knew or should have known that such acts and practices were unfair or deceptive or otherwise prohibited by law. Defendants' Violation of the MARS Rule and Regulation 0 46. The Mortgage Assistance Relief Services Rule ("MARS Rule"), 16 C.F.R. Part 322, recodified as Mortgage Assistance Relief Services ("Regulation O"), 12 C.F.R. Part 1015, prohibits unfair or deceptive acts or practices in connection with the marketing and sale of mortgage relief services. 2 47. The MARS Rule and Regulation 0 define "mortgage assistance relief service provider" as "any person that provides, offers to provide, or arranges for 1 Rule 2-18.002 was adopted under authority of Chapter 501, Part II, Florida Statutes. 2 12 C.F.R. Part 1015 (2014) (originally codified as 16 C.F.R. Part 322 (2010)). 10

others to provide, any mortgage relief service" other than the loan holder, loan servicer, or agent or contractor of a loan holder or servicer. 16 C.F.R. 322.2, recodified as 12 C.F.R. 1015.2. 48. The MARS Rule and Regulation 0 prohibit any mortgage relief service provider from requesting or receiving payment of any fee or other consideration until the consumer has executed a written agreement between the consumer and the consumer's loan holder or servicer that incorporates the offer that the provider obtained from the loan holder or servicer. 16 C.F.R. 322.S(a), recodified as 12 C.F.R. 1015.5(a). 49. The MARS Rule and Regulation 0 prohibit any mortgage relief service provider from misrepresenting, expressly or by implication, any material aspect of any mortgage assistance relief service, including but not limited to the likelihood of negotiating, obtaining, or arranging any represented service or result. 16 C.F.R. 322.3(b)(l), recodified as 12 C.F.R. 1015.3(b)(l). 50. The MARS Rule and Regulation 0 prohibit any mortgage relief service provider from failing to place a statement in every general commercial communication disclosing that: a) the provider is not associated with the government and its service is not approved by the government or any lender, and b) in certain cases, a statement disclosing that the lender may not agree to modify 11

the loan, even ifthe consumer uses the provider's service. 16 C.F.R. 322.4(a)(l)- (2), recodified as 12 C.F.R. 1015.4(a)(l)-(2). 51. The MARS Rule and Regulation 0 prohibit any mortgage relief service provider from failing to place a statement in every consumer-specific commercial communication: 1) confirming that the consumer may stop doing business with the provider or reject an offer of mortgage assistance without having to pay for the services, 2) disclosing that the provider is not associated with the government and its service is not approved by any government or its lender, 3) in certain cases, a statement disclosing that the lender may not agree to modify the loan, even if the consumer uses the provider's services, and 4) in certain cases, a statement disclosing that if the consumer stops paying the mortgage, the consumer may lose the home or damage their credit. Count III: Violation of FDUTP A (Violations of MARS Rule and Regulation 0) 52. The Attorney General incorporates and adopts by reference paragraphs 1 through 34 as if set forth fully herein. 53. Florida Statute section 501.203(3)(c) states that a violation of FDUTPA may be based upon a violation of "[a]ny law, statute, rule, regulation, or 12

ordinance which proscribes unfair methods of competition, or unfair, deceptive, or unconscionable acts or practices." 3 54. Defendants violated the MARS Rule and Regulation 0 in the following ways: a. Collection of Advance Payments. In numerous instances, in the course of providing, offering to provide, or arranging for others to provide mortgage assistance relief services, Defendants have asked for and have received payment before consumers have executed a written agreement between the consumer and the loan holder or servicer that incorporates the offer obtained by Defendants, in violation of the MARS Rule, 16 C.F.R. 322.5(a) and Regulation 0, 12 C.F.R. 1015.5(a). b. Material Misrepresentations. In numerous instances, in the course of providing, offering to provide, or arranging for others to provide mortgage assistance relief services, Defendants, in violation of the MARS Rule, 16 C.F.R. 322.3(b)(l), and Regulation 0, 12 C.F.R. 1015.3(b)(l), have misrepresented, expressly or by implication, material aspects of their services, including, but not limited to Defendants' likelihood of obtaining 3 Fla. Stat. 501.203(3) specifically provides that a FDUPTA violation may be based upon any rules promulgated pursuant to the Federal Trade Commission Act or the standards of unfairness and deception set forth by the Federal Trade Commission. A violation of the MARS Rule or Regulation 0 constitutes an unfair or deceptive act or practice in or affecting commerce in violation of Section 5(a) of the FTC Act 15 U.S.C. 45(a). 13

mortgage loan modifications for consumers that will make their payments substantially more affordable. c. Prohibited Representations. In numerous instances, in the course of providing, offering to provide, or arranging for others to provide mortgage assistance relief services, Defendants have made the following prohibited representations in violation of the MARS Rule and Regulation 0: (i) representing that consumers cannot or should not contact or communicate with their mortgage lender or servicer, in violation of MARS Rule 16 C.F.R. 322.3(a), and Regulation 0, 12 C.F.R. 1015.3(a); (ii) misrepresenting the amount of time it will take to accomplish the represented mortgage modification, in violation of MARS Rule 16 C.F.R. 322.3(b)(2), and Regulation 0, 12 C.F.R. 1015.3(b)(2); and (iii) misrepresenting consumers' obligations to make scheduled period payments to their mortgage holder or servicer, in violation of MARS Rule 16 C.F.R. 322.3(b)(4), and Regulation 0, 12 C.F.R. 1015.3(b)(4). d. Failure to Disclose. In numerous instances, in the course of providing, offering to provide, or arranging for others to provide mortgage assistance relief services, Defendants, have failed to make the following 14

disclosures or have failed to make the disclosures in a clear and prominent manner in violation of the MARS Rule and Regulation 0: (i) failing to disclose to specific consumers that the consumer may stop doing business with the Defendants or reject any offer the Defendants' obtain from the consumer's lender without having to pay for the Defendants' services, in violation of MARS Rule 16 C.F.R. 322.4(b)(l), and Regulation 0, 12 C.F.R. 1015.4(b)(l); (ii) failing to disclose to specific consumers that the Defendants are not associated with the government and the Defendants' services are not approved by the government or the consumer's mortgage lender in violation of MARS Rule 16 C.F.R. 322.4(b)(2), and Regulation 0, 12 C.F.R. 1015.4(b)(2); (iii) failing to disclose to specific consumers that even if the consumer uses the Defendants' services, the consumer's mortgage holder or servicer may not agree to the represented mortgage modification, in violation of MARS Rule 16 C.F.R. 322.4(b)(3), and Regulation 0, 12 C.F.R. 1015.4(b)(3); and (iv) failing to disclose to specific consumers that if the consumer stops making mortgage payments, that such nonpayment could result in loss of the consumer's home and damage to the consumer's credit 15

rating, in violation of MARS Rule 16 C.F.R. 322.4(c), and Regulation 0, 12 C.F.R. 1015.4(c). 55. By their actions or omissions as set forth in Paragraph 54(a)-(d), Defendants violated the MARS Rule and Regulation 0 and, therefore, engaged in deceptive and unfair acts and practices in trade or commerce in violation of Florida Statute section 501.204. 56. Defendants willfully engaged in the acts and practices when they either knew or should have known that such acts and practices were unfair or deceptive or otherwise prohibited by law. Count IV: Violation of FDUTP A (Violations of Telemarketing Sales Rule 16 C.F.R. 310.3) 4 57. The Attorney General incorporates and adopts by reference paragraphs 1 through 34 as if set forth fully herein. 58. Florida Statute section 501.203(3)(c) states that a violation of FDUTPA may be based upon a violation of "[a]ny law, statute, rule, regulation, or ordinance which proscribes unfair methods of competition, or unfair, deceptive, or unconscionable acts or practices." 4 The Telemarketing Sales Rule ("TSR"), 16 C.F.R. Part 310 defines telemarketing as "a plan, program, or campaign which is conducted to induce the purchase of goods or services... by the use of one or more telephones and which involves more than one interstate telephone call." 16 C.F.R. 310.2( cc). A telemarketer is defined as "any person who, in connection with telemarketing, initiates or receives telephone calls to or from a customer or donor. 12 C.F.R. 310.2(bb). 16

59. Defendants have engaged in telemarketing by a plan, program, or campaign conducted to induce the purchase of mortgage relief services by the use of one or more telephones and which involves more than one interstate phone call. 60. Defendants have initiated outbound telephone calls to consumers in the United States to induce the purchase of Defendants' mortgage relief services. 61. It is a deceptive telemarketing act or practice to fail to disclose, prior to a consumer paying for goods or services, all material restrictions, limitations, or conditions to purchase, receive or use the goods or services that are the subject of the sales offer in violation of 16 C.F.R. 310.3(a)(l)(ii). 62. It is a deceptive telemarketing act or practice to misrepresent, directly or by implication, in the sale of services any material aspect of the performance, efficacy, nature, or central characteristics of services that are the subject of a sales offer in violation of 16 C.F.R. 310.3(a)(2)(iii). 63. It is a deceptive telemarketing act or practice to make a false or misleading statement to induce any person to pay for services in violation of 16 C.F.R. 310.3(a)(4). 64. Defendants violated the Telemarketing Sales Rule in the following ways: 17

a. Failure to Disclose. Defendants failed to disclose the material restrictions, limitations, and conditions on their mortgage refund services in violation of 16 C.F.R. 310.3(a)(l)(ii). b. Misrepresentation of Mortgage Relief Services. Defendants misrepresented material aspects of the performance, efficacy, nature, and central characteristics of their mortgage relief services in violation of 16 C.F.R. 310.3(a)(2)(iii). c. False Statements to Induce Purchase of Services. Defendants made false or misleading statements to induce consumers to pay for their mortgage relief services in violation of 16 C.F.R. 310.3(a)(4). 65. As set forth above, Defendants violated the provisions of 16 C.F.R. 310.3 and, therefore, engaged in deceptive and unfair acts and practices in trade or commerce in violation of Florida Statute section 501.204. 66. Defendants willfully engaged in the acts and practices when they either knew or should have known that such acts and practices were unfair or deceptive or otherwise prohibited by law. Prayer for Relief WHEREFORE, the Attorney General respectfully requests that the Court grant the following relief: 18

1. Entry of an order declaring that the Defendants violated Florida Statute section 501.204(1), by advertising and offering for sale goods and services as defined in Florida Statute section 501.203(8), accepting full payment for such goods and services, willfully failing to provide such goods and services after they had been fully paid for, and willfully failing to provide refunds when the goods and services were defective. IL Entry of an order temporarily and permanently enjoining the Defendants, their officers, agents, employees, or any other person who act under, by, through, or on behalf of the Defendants, from violating Chapter 501, Part II, Florida Statutes. ni. Entry of an order granting restitution to all consumers, known and unknown, found to have been damaged by the Defendants' violations of Florida Statute section 501.204(1). 1v. Pursuant to the Attorney General's Motion for Temporary Injunction with Asset Freeze filed contemporaneously with this Complaint, entry of an order freezing the Defendants' assets, including Defendants' assets during the pendency of this action until further order of the Court. v. Entry of an order against the Defendants, jointly and severally assessing civil penalties in the amount of $10,000 for each act or practice found to be in violation of Florida Statute section 501.2075. 19

vi. Entry of an order against the Defendants, jointly and severally assessing civil penalties in the amount of $15,000 for each act or practice found to be in violation of Florida Statute section 501.2077. VIL Entry of an order awarding the Attorney General its reasonable attorney's fees and costs of bringing and maintaining this action. vni. Entry of an order granting such other relief as the Court deems just and proper, including, but not limited to, all other relief permissible under Florida Statute section 501.207(3). Demand for Jury Trial The Attorney General files this Demand for Jury Trial in accordance with Florida Rule of Civil Procedure 1.430 and requests a trial by jury for all issues so triable. Dated: January 6, 2015 Respectfully submitted, Office of the Attorney General Isl Robert Edelman Robert Edelman, Esq. Assistant Attorney General Florida Bar No. 48589 1300 Riverplace Blvd., Suite 405 Jacksonville, FL 32207 Tel.: (904) 348-2720 Fax: (904) 858-6918 Service e-mail: oag.ec.jax@myfloridalegal.com Corres. email: robert.edelman@myfloridalegal.com 20