DISCLAIMER: This article is based on a complaint. The defendant has not responded to the complaint to present its side of the case. The claims mentioned are accusations and should be considered as such until and unless proven otherwise.
Experian Information Solutions — one of the three major credit reporting agencies — has filed a lawsuit against the law firm Stein Saks, PLLC, and its partners, alleging a wide-ranging fraud and racketeering scheme designed to extort settlements through fabricated lawsuits. The complaint, filed in the District Court for the Central District of California, outlines a complex operation involving fake credit denial letters and sham lawsuits under the Fair Credit Reporting Act (FCRA).
Experian has accused Stein Saks and its founders, Yaakov Saks and Judah Stein, of orchestrating a nationwide scheme to file frivolous FCRA lawsuits. According to the complaint, the law firm, along with several co-conspirators, including other attorneys and individuals from credit repair organizations, manufactured fake evidence to support these lawsuits, aiming to force Experian into settling for fraudulent amounts.
The lengthy complaint details how the defendants allegedly created fake credit denial letters from mortgage companies such as Cornerstone First Mortgage and Funding Resources Mortgage Corp. These letters were used to fabricate claims of injury and actual damages, which were then submitted in federal courts across the country. The scheme is said to have involved recruiting consumers to act as plaintiffs, who often were unaware of the fraudulent nature of their claims.
The two schemes laid out in the complaint are just the “tip of the iceberg,” according to Experian. Since 2022, the defendants have filed at least 34 other lawsuits that allege mortgage application denials from 11 different mortgage lenders, all of which have confirmed that the respective plaintiffs either did not apply for a mortgage, or for a small number of plaintiffs, applied for and were approved for a mortgage. At least half of the lenders are brokers that cannot make loans in the jurisdiction in which the defendants alleged the consumer was seeking a mortgage.
The complaint also alleges that the defendants engaged in money laundering to conceal the proceeds of their fraudulent activities. Settlement funds were allegedly funneled through client trust accounts and distributed among the conspirators, often leaving the consumer plaintiffs with little to no compensation.
Experian claims that the fraudulent lawsuits have caused significant harm, both financially and reputationally. The company has incurred substantial legal fees defending against these claims.
