A state district judge on Monday declined the state’s request to seize assets of Mukhtiar Singh Khalsa, doing business as Praedium Preservation, for alleged violation of consumer laws protecting homeowners in foreclosure and instead announced a limited temporary restraining order.
The New Mexico Attorney General’s Office alleged in a complaint and motion seeking to freeze assets, appoint a receiver and impose civil penalties that the organization “has victimized at least 50 New Mexico homeowners” and not only taken their money, but also left them in a worse position than before they went to Praedium for help.
Praedium Preservation is a nonprofit incorporated by Khalsa, its president, in New Mexico in 2014 to advise consumers of their legal rights in foreclosures.
The attorney general’s 97-page complaint, filed July 26, alleges that “the enterprise” – the individuals and entities collectively involved – took thousands of dollars in illegal fees and payments from consumers in distress, some of whom testified at a hearing before 2nd Judicial District Judge Alan Malott on Monday. Praedium Preservation, through Khalsa, also has engaged in the unauthorized practice of law, and taken possession of homes in foreclosure and collected rent on them, the complaint says.
After hearing testimony, Malott ruled that the defendants must scrupulously comply with federal debt relief counselor legislation known as the MARS (Mortgage Assistance Relief Services) rule, a 2010 federal rule that bars upfront fees and requires certain disclosures in ads. Malott did not seize or freeze the assets, as requested, however. He announced from the bench that he will file a written order shortly.
The consumer protection division of the Attorney General’s Office said in requesting the TRO that they warned defendants in writing in 2014 about alleged illegal practices, but Praedium and other defendants still “brazenly continue their operations.”
In court filings, the Attorney General’s Office says one harm is that consumers believe another named defendant, New Mexico attorney Joshua Simms, “staff counsel” to Praedium Preservation, is representing them in trying to keep their homes, but in actuality clients are not allowed to meet with him and money paid by clients goes to Khalsa.
Besides Khalsa and Simms, named defendants include Paul Lucero, Gregory Molinar, Heartland Financial, and other individuals and John Doe corporations.