Local real estate agent Don Johnson is the subject of a civil suit—alleging
a variety of deceptive, unprofessional, negligent, or fraudulent foreclosure
consulting activities—filed last month by the Indiana Attorney General’s
The 33-count suit, filed before the Indiana Real Estate Commission (IREC) on
Nov. 19, is the second such suit to name Johnson in seven months, the first
one alleging on his part—and on the part of 21st Century Legal Services
Inc., a firm with which he was associated—violations of the Credit Services
Organization Act and the Mortgage Rescue Protection Fraud Act.
Johnson was previously disciplined in July 2009 by the IREC “for engaging in
material deception in the course of professional services by utilizing false
and misleading advertisements regarding mortgage debt forgiveness,” the most
recent suit notes. Johnson’s real estate principal broker’s license was
placed on indefinite probation at the time and a hearing is scheduled for
Dec. 15 to hear his petition for withdrawal of his license’s probationary
The Nov. 19 suit makes the following general allegations:
•Johnson had been acting as a foreclosure consultant for 21st Century Legal
Services Inc., prior to 21st Century’s “being raided and subsequently
dissolved by the FBI.”
•In his role as consultant, Johnson met with consumers in his office,
prepared loan modification documents, and forwarded those documents to 21st
•Johnson took up-front money from those consumers and forwarded those moneys
to 21st Century. He “claimed to make no income off these transactions,”
telling consumers “that he only hoped in return for his services, good
referrals, or the opportunity to work with the consumers in the future,” but
from April through July 2009 Johnson received “six wire transfers from 21st
Century for approximately $60,000.”
•In addition, Johnson “prepared bankruptcies on some of these consumers’
behalf, without a license to practice law.”
The Nov. 19 suit cites several cases in detail.
One case involves a woman “laid off from her job” who wanted to list her
house on Brown Street in Chesterton for sale. Johnson advised her to work on
a loan modification with 21st Century instead of selling and “assured (her)
that he could lower her monthly payments,” the suit alleges. Johnson then
told her to cease her mortgage payments and instead to pay him the
equivalent of four mortgage payments, totaling $2,694, which she did,
sending Johnson three checks and one credit card payment “processed through
(Johnson’s) kickboxing business,” the suit alleges.
The woman did cease her mortgage payments, then two months later began
receiving foreclosure notices” and in February 2010 was notified that her
house was scheduled for a sheriff’s sale, the suit alleges. At this point
the woman requested a refund but was told “that a refund could not be issued
because of a class-action suit against 21st Century,” the suit alleges. In
February 2010 the woman filed for bankruptcy to avoid foreclosure and to
keep her home.
In March 2009 a man—“due to loss of employment”—asked Johnson to assist with
a loan modification on his property on Annabelle Court in Chesterton.
Johnson told the man that he could reduce his interest rate from 7.25
percent to 4.2 percent, the man signed a contract for loan modification
services, and he remitted to Johnson $4,500, the suit alleges. Johnson
“assured (the man) that he would refund any moneys if the loan modification
In July 2009, however, the man was notified that his property was scheduled
for sheriff’s sale. Johnson then prepared Chapter 13 bankruptcy documents on
the man’s behalf, telling him “that the bankruptcy filing was just a tactic
to stall the sheriff’s sale but that no actual plan would be filed in the
bankruptcy court,” the suit alleges. When the man filed the paperwork in the
U.S. Bankruptcy Court, Northern District of Indiana, “an employee of the
court commented that the paperwork was incomplete and she recognized the
paperwork as another faulty filing prepared by (Johnson),” the suit alleges.
In September 2009, the man signed a letter of release provided by Johnson,
“believing it was a release to get a refund of the moneys promised by
(Johnson).” But the man “has never received a refund,” the suit alleges.
In January 2010 the man again filed for bankruptcy and shortly thereafter
received notice from his mortgage servicer that it had never received any
funds either from Johnson or 21st Century, the suit alleges. The man
“negotiated independently with his servicer” but “now owes approximately
$30,000 more on his mortgage.”
The suit alleges as well that Johnson, in the course of making short-sale
offers on properties, would include with those offers “an availability of
funds letter issued on Fifth Third Bank letterhead” indicating that Johnson
had in excess of $150,000 available to him to make such offers.
That letter was dated Nov. 6, 2009 but on April 5, 2010, Johnson “altered”
the date of the letter, “creating the fraudulent letter that was circulated
to agents in the region, in order to portray (Johnson) had sufficient funds
for the short-sale offers,” the suit alleges.
In addition, the suit alleges that Johnson “conducts clean-outs and
re-modeling projects on properties that (he) does not own.”
Johnson does so by employing contractors “to either re-model a property so
(Johnson) can start marketing the property prior to ownership or strip the
property in order to reduce the appraised value for (Johnson’s) initial
purchase,” the suit alleges.
Johnson “then has these contractors replace all of the items so the new
appraisal will make it appear (Johnson) has made extensive improvements to
the property for added value,” the suit alleges. “This allows (Johnson) to
re-sell the property at a much greater value than what he purchased it for.”
The Nov. 19 suit specifically accuses Johnson of the following, among other
•Of engaging in material deception in the course of professional activities,
in violation of Indiana Code, by preparing a false bankruptcy petition
without a license to practice law.
•Of violating both the Mortgage Rescue Protection Act and the Credit
Services Organization Act by failing to obtain a surety bond and file it
with the Attorney General’s Office; by failing to provide a written
statement prior to contracting services; and by failing to provide
homeowners written notice of their rights.
•Of continuing to practice although “unfit to practice due to professional
incompetence,” by failing “to account for and remit funds belonging to (a
client) once the loan modification process was unsuccessful.”
•Of engaging in material deception, by failing to notify a client—this one
the owner of a property on Commodore Lane in Porter—that the property had
been sold at a sheriff’s sale and continuing to collect rental payments from
the tenants of the property.
•Of engaging in material deception, by “forging a Fifth Third Bank letter.”
•Of engaging in material deception, by haring “contractors to clean-out
properties to reduce their value, only to have the same contractors
re-install the items to make it appear that (Johnson) has made extensive
improvements to the property to raise the selling price.”
Molly Butters, spokesperson for the Attorney General’s Office, told the
Chesterton Tribune that, if the charges against Johnson are sustained,
the administrative law court which has jurisdiction in the matter could
order Johnson to pay restitution, penalties, and fines, and could also
impose discipline ranging from a letter of reprimand to the revocation of
Johnson did not return a call today from the Tribune.