Attorney General James And Superintendent Lacewell Hold Hedge Fund Responsible For More Than $2.5 Million In Consumer Relief

Attorney General James and Superintendent Lacewell Hold Hedge Fund Responsible for More Than $2.5 Million in Consumer Relief

Atalaya Capital Management Will Also Pay $250,000 in Civil Penalties

NEW YORK – New York Attorney General Letitia James and New York Superintendent of Financial Services Linda A. Lacewell today announced a settlement with New York-based hedge fund Atalaya Capital Management LP, for its role in funding and assisting the illegal, deceptive, and unlicensed mortgage lending business of Vision Property Management, LLC and its affiliates.

"Aspiring homeowners across the state can rest assured that the corrupt partnership that defrauded New Yorkers and tricked our state's homeowners into buying decrepit homes for nearly a decade is finally over," said Attorney General Letitia James. "Not only are we ensuring that Atalaya will no longer be able to invest in or assist Vision Property Management's illegal, deceptive, or abusive schemes that targeted New Yorkers, but, today, we are finally providing their innocent victims with some semblance of restitution. Anyone who preys on innocent, hard-working New Yorkers is on notice that my office will hold them accountable and make them pay the price."

“This settlement will help put an end to Vision’s illegal and predatory operations, which were facilitated by investments from Atalaya, and provides a measure of restitution to New York consumers who were left holding the bag with further debt, uninhabitable properties, and broken dreams,” said Superintendent Linda A. Lacewell. “DFS will continue to use all of the tools at its disposal to protect New Yorkers from predatory companies seeking to take advantage of them.”

Earlier this month, Attorney General James and Superintendent Lacewell filed a lawsuit in federal court against Vision Property Management for offering disguised, predatory subprime home loans and illegal finance-lease hybrid agreements to New York residents since at least 2011. The suit alleges that Vision has been specializing in buying severely distressed properties and then marketing those properties — at a substantial markup to consumers — without making any necessary repairs or renovations, and without fully disclosing to consumers the many conditions that exist and repairs that must be made for safe habitation. Atalaya Capital Management not only invested heavily in Vision, but helped Vision design its illegal racket, and participated in much of Vision’s fraudulent business and decision-making that preyed upon New York consumers.

The investigation — conducted in coordination between the Office of the New York Attorney General and the New York Department of Financial Services — found that Atalaya:  

• Funded and invested in Vision’s property acquisitions, starting in approximately 2012;
• Helped Vision structure the financing agreements used for many New York consumers;
• Conducted due diligence on Vision’s operations and reviewed the performance of the properties sold by Vision;
• Was included on emails about individual properties and participated in decisions about whether to modify the terms of consumers’ contracts;
• Knew or should have known that Vision was charging consumers payments, and subsequently accounting for those payments in ways that made them illegal and deceptive; and
• Was either aware or should have been aware that Vision was engaged in an illegal, predatory mortgage lending business, but nevertheless agreed to fund its property acquisitions, which thereby helped Vision expand its operations.

Under the settlement being announced today, Atalaya will pay at least $20,000 in restitution to each of approximately 108 New York consumers who entered into a loan or purported lease agreement with Vision that was financed in whole or in part by Atalaya. Two other New York consumers whose properties are still owned by Atalaya’s affiliate will receive the deed to their home and legal title without the need for any future monthly payments. In total, Atalaya is expected to provide more than $2.5 million in restitution and cancelled payments to these 110 customers. Additionally, under the settlement, Atalaya will pay $250,000 in civil penalties and agree to abide by injunctive terms that will help ensure that it does not fund or otherwise assist with any illegal, deceptive, unfair, or abusive conduct by the companies it invests in in the future. 

The matter is being handled by Assistant Attorney General Noah Popp of the Consumer Frauds and Protection Bureau, under the supervision of Jane M. Azia, Chief of the Consumer Frauds and Protection Bureau, and Chief Deputy Attorney General for Social Justice Meghan Faux. The Bureau of Consumer Frauds and Protection is overseen by Chief Deputy Attorney General for Economic Justice Christopher D’Angelo.

Additional attorneys at the Department of Financial Services involved with this litigation include Peter C. Dean, Deputy Superintendent and Deputy General Counsel of the Real Estate Finance Division, and Cynthia M. Reed, Supervising Attorney in the Consumer Protection and Financial Enforcement Division.