A District Court judge in New York has denied a motion to dismiss a complaint filed against a collection “kingpin” and his family by the Consumer Financial Protection Bureau after they were sued for attempting to fraudulently transfer ownership of a $1.6 million house to keep it from being seized by the government in an enforcement action.
A copy of the ruling in the case of CFPB v. Douglas MacKinnon et al can be accessed by clicking here.
The government alleges that Douglas MacKinnon, who knew he was being investigated by the CFPB for its debt collection activities, transferred ownership of the home in question to his wife and daughter for $1. The wife and daughter then granted a $900,000 mortgage to Douglas’s brother, allegedly as a means to encumber the property and ensure it could be used as a source of recovery.
Douglas MacKinnon was sued by the CFPB for “running a large-scale debt-collection operation that used illegal tactics to extort money from consumers” and a judgment for $60 million was entered against him — a fine that MacKinnon has not yet made any attempt to pay.
So the CFPB went after MacKinnon’s assets, including the house.
In filing the motion to dismiss, the defendants claimed that the transfer and mortgage were not effectuated with fraudulent intent. But Judge Frank P. Geraci of the District Court for the Western District of New York noted that the defendants made a tactical error at this stage of the process and failed to read the allegations in the light most favorable to the plaintiffs, which is what must be done at the motion to dismiss stage of the case.
Looking for proof that the transfer and mortgage were not legitimate, Judge Geraci needed to look no further than who was still living in the house — Douglas MacKinnon.
” … Plaintiffs have identified several hallmark badges of fraud that permit the inference that the transfer of the property and the execution of the mortgage were performed with the actual intent to hinder, delay, or defraud a creditor,” Judge Geraci wrote.
Last month, a judge threatened to have MacKinnon arrested and his family members fined
