USA v. Intercontinental Capital Group, Inc. et al

Filing 6

Order of Settlement. Ordered by Judge Sandra J. Feuerstein on 9/28/2015. (Florio, Lisa)

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RECEIVED

FILE D
IN CLERK'S OFFICE
U S DISTRICT COURT E 0 N y

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK

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$~;.? 2 8 2015

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IN CLERK'S OFFICE
US. DISTRICT COURT E 0 NY.

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SEP 28 2015

LONG ISLAND OFFICE

LONG ISLAND OFFICE
UNITED STATES OF AMERICA,
Plaintiff,

STIPULATION AND
ORDER OF SETTLEMENT

-againstINTERCONTINENTAL
CAPITAL GROUP, INC., DUSTIN DIMISA,
AND RICHARD STEINBERG
Defendants.

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Civil Action No. 2015-5581
(Feuerstein, J.)
(Locke, M:J.)

PARTIES

This Stipulation and Order of Settlement ("Agreement") is between the United States of
America, acting through the United States Department of Justice ("DOJ"), and the United States
Attorney's Office for the Eastern District ofNew York (collectively, the "United States"), and
Dustin DiMisa ("DiMisa"), Richard Steinberg ("Steinberg"), and Intercontinental Capital Group,
Inc., (''ICG''). The United States, DiMisa, Steinberg and ICG are referred to collectively in this
Agreement as the "Parties."
RECITALS

WHEREAS, the United States commenced this action against DiMisa, Steinberg and
ICG (the "ICG Defendants"), by filing a complaint in this Court (the "Complaint"); and
WHEREAS, the Complaint, whose allegations are incorporated by reference herein,
alleges claims for relief against the ICG Defendants pursuant to the Financial Institutions
Recovery, Reform, and Enforcement Act, 12 U.S.C. § 1833a, based on certain information and
documentation the ICG Defendants caused to be transmitted to the United States and certain
financial institutions, and certain payments that ICG made to, and through, the Rainy Day

United States v.lntercontinental Capiu./ Group, Inc., eta/., (E.D.N.Y. No. CV-15-5581)
Stipulation and Order of Settlement and Dismissal, dated September 28, 2015

Foundation in 2008 and 2009, which payments the United States contends artificially
suppressed ICG's mortgage loan comparative delinquency and default ratios as reported to HUD
(the "Covered Conduct"); and
WHEREAS, the Complaint does not allege that ICG engaged in the improper origination
or underwriting of any loan; and
WHEREAS, to avoid the delay, uncertainty, inconvenience and the expense of protracted
litigation of these claims, and in consideration of the mutual promises and obligations of this
Agreement, the Parties reach a full and final settlement as set forth below; and
WHEREAS the ICG Defendants admit, acknowledge, and accept responsibility for the
following conduct alleged in the Govermnent's Complaint:
(a)

At all times relevant to the Complaint, ICG was a Direct Endorsement Lender in
the Federal Housing Administration's mortgage insurance program. Steinberg
was ICG's chief executive officer. DiMisa was ICG's president and managing
director.

(b)

HUD tracks the delinquency and default ratios ofFHA-insured mortgages for
Direct Endorsement lenders through its Neighborhood Watch System
("Neighborhood Watch"). HUD uses Neighborhood Watch to monitor Direct
Endorsement Lender compliance with HUD's underwriting and origination
regulations. FHA requires prompt and accurate reporting by Direct Endorsement
Lenders of all early payment defaults.

(c)

In eleven instances, from October, 2008 until April, 2009, when mortgage
borrowers with loans originated or refinanced by ICG could not make a payment
within the first two years of their loan's issuance, and were either delinquent,
about to enter into default, or actually in default, ICG transferred funds to the
Rainy Day Foundation. At the ICG Defendants' direction, the Rainy Day
Foundation then paid the borrowers' mortgages. The payments prevented the
borrowers' delinquency or defaults at that time, and therefore resulted in an
alteration of ICG' s overall delinquency and default ratios as reported to HUD in
Neighborhood Watch.

(d)

As a result of such payments hy the Rainy Day Foundation, individual borrowers,
and any secondary purchasers, may have been delayed in taking advantage of
HUD's comprehensive Loss Mitigation program, which offers multiple remedies
to cure borrower delinquencies and defaults.

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U~ited ~tales v. Intercontinental Capital Group, Inc., eta/., (E.D.N. Y. No. CV-15-5581)
Stipulation and Order of Settleroent and Dismissal, dated September 28, 2015

The Parties hereby agree as follows:
TERMS AND CONDITIONS

1.

This Agreement shall become effective upon being "So Ordered" by the Court

(the "Effective Date").
2.

The ICG Defendants agree to pay the United States a total of four hundred

twenty-four thousand, eight hundred and fifty-nine dollars and zero cents ($424,859.00) (the
"Settlement Amount"). The ICG Defendants shall pay the Settlement Amount by electronic
funds transfer, pursuant to written instructions to be provided by the United States Attorney's
Office for the Eastern District of New York, as· follows:
(a)

Within seven days of the Effective Date, ICG will pay the United States
one-hundred and twenty-four thousand, eight hundred and fifty-nine dollars
and zero cents ($124,859.00);

(b)

Within six months of the Effective Date, ICG will pay the United States
seventy-five thousand dollars and zero cents ($75,000.00);

(c)

Within twelve months of the Effective Date, ICG will pay the United States
seventy-five thousand dollars and zero cents ($75,000.00);

(d)

Within eighteen months of the Effective Date, ICG will pay the United
States seventy-five thousand dollars and zero cents ($75,000.00); and

(e)

Within twenty-four months of the Effective Date, ICG will pay the United
States seventy-five thousand dollars and zero cents ($75,000.00).

The ICG Defendants shall be jointly and severally liable for the payments set forth in this
paragraph 2.
3.

The ICG Defendants shall each sign a consent judgment in the form attached

hereto as Exhibit A (the "Consent Judgment"), acknowledging that they (a) are indebted to the
United States, jointly and severally, in the amount of$424,859.00; (b) have no defense,
counterclaim or offset, as of the Effective Date, to the debt created by this Agreement, except to
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United States v. Intercontinental Capital Graup, Inc., et a/., (E.D.N. Y. No. CV-15-5581)
Stipulation and Order of Settlement and Dismissal, dated September 28, 2015

the extent that a portion of the Settlement Amount shall have been paid, in which event the ICG
Defendants shall have an offset in the amount of the payments made as of the date, if any, of the
Court's so-ordering of the Consent Judgment; and (c) confess judgment to the United States as a
result of their failure to pay a debt owed to the United States. The United States shall hold this
Consent Judgment in escrow and not submit the same to any court to be "so ordered" provided
that (a) the ICG Defendants make payments in accordance with the schedule of payments set
forth in paragraph 2 above, or (b) any default by the ICG Defendants in making these payments
in accordance with the schedule of payments set forth in paragraph 2 above is not cured in
accordance with paragraph 4 below.

4. In the event of a default by the ICG Defendants in making the payments in accordance
with the schedule set forth in paragraph 2 above, and such default remains uncured for 14 days after
notice sent to the ICG Defendants in the manner provided in this paragraph, the United States shall have
the right, at its sole option and discretion, to submit the Consent Judgment to any court to be "so
ordered," and to declare due and owing the entire amount of the confessed judgment, in the amount of
$424,859.00, less any amounts paid towards the Settlement Amount by the ICG Defendants to the United
States, before any such default, plus any interest until fully and finally paid. The United States shall give
written notice of such default, and of its declaration of the same, by certified mail return receipt
requested, to each of the ICG Defendants and to their undersigned counsel, and also shall provide counsel
with an email copy of any notice of default. The ICG Defendants shall have 14 days from the date of
mailing the notice of default in which to cure such default. In the event the default remains uncured after
the expiration of the 14-day period from the date of mailing of the notice, the United States shall have the
right of execution upon the Consent Judgment for the entire $424,859.00, plus interest running from the

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U~lled ~tales v. Intercontinental Capital Gr~up, Inc., eta/., (E.D.N. Y. No. CV-15-5581)
Stipulation and Order of Settlement and Dismissal, dated September 28,2015
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Effective Date (less any amounts paid towards the Settlement Amount by the ICG Defendants to the
United States), until fully and finally paid.
5.

Subject to paragraph 6 below (concerning excluded claims), the United States, on

behalf of itself and its officers, agencies, and departments, releases ICG and all of its current and
former officers (including, but not limited to, Steinberg and DiMisa), directors, employees,
agents, affiliates, and assigrtS from any civil or administrative monetary claim of any type
(including but not limited to claims for attorney's fees, costs, and expenses of every kind and
however denominated), that the United States has or may have for the Covered Conduct under
any statute, regulation or the common law, including but not limited to the False Claims Act, 31
U.S.C. §§ 3729-3733, the Program Fraud Civil Remedies Act, 31 U.S.C.§§ 3801-3812, the
Financial Institutions Reform, Recovery and Enforcement Act, 12 U.S.C. § 1833a, and the
common law claims of gross negligence, breach of fiduciary duty, indemnification, and unjust
enrichment.

6.

Notwithstanding any term of this Agreement, specifically reserved and

excluded from the scope and terms of this Agreement as to any entity or person are the
following claims of the United States:
(a)
(b)
(c)
(d)
(e)

(f)

7.

Any liability arising under Title 26, U.S. Code (Internal Revenue
Code);
Except as expressly stated herein, any administrative liability;
Any criminal liability;
Any liability to the United States (or its agencies) for any conduct other
than the Covered Conduct described above;
Any claims based upon such obligations as are created by this Agreement;
and
Any administrative claims by the United States Department of Housing and
Urban Development concerning the covered conduct.

The ICG Defendants finally and fully release the United States, its agencies

(excluding HUD), employees, servants, and agents from any claims (including claims for
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United States v. Intercontinental Capital Group, Inc., eta/., (E.D.N.Y. No. CV-15-5581)
Stipulation and Order of Settlement and Dismissal, dated September 28, 2015

attorney's fees, costs, and expenses of every kind and however denominated) that the ICG
Defendants have asserted, could have asserted, or may assert in the future against the United
States, and its agencies (excluding HUD), employees, servants, and agents, related to the
Covered Conduct and the United States' investigation and prosecution thereof.
8.

Nothing in this Agreement constitutes an agreement by the United States

concerning the characterization of the Settlement Amount for purposes of the Intemal Revenue
laws, Title 26 of the United States Code.
9.

Upon receipt of the initial payment described in Paragraph 2(a) above, the

United States shall, within five business days of receipt sign and file in this action a Notice of
Dismissal, pursuant to Federal Ru1es of Civil Procedure 41. Despite the terms or filing of any
stipu1ation of dismissal, the Court shall retain jurisdiction over this Agreement and the Parties
to enforce the obligations of each party under this Agreement. Each of the Parties shall bear its
own legal and other costs incurred in connection with this matter, including the preparation and
performance of this Agreement.
10.

The ICG Defendants represent that this Agreement is freely and voluntarily

entered into without any degree of duress or compu1sion whatsoever.
11.

This Agreement is governed by the laws of the United States. The Parties agree

that exclusive jurisdiction and venue for any dispute arising between and among the Parties
under this Agreement is in the United States District Court for the Eastern District ofNew York.
12.

For purposes of construction, this Agreement shall be deemed to have been

drafted by all Parties and shall not, therefore, be construed against any single party for that
reason in any subsequent dispute.

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United States v. Intercontinental Capital Group, Inc., et a/., (E.D.N. Y. No. CV-15-5581)
Stipulation and Order of Settlement and Dismissal, dated September 28, 2015

13.

This Agreement constitutes the complete agreement between the Parties. This

Agreement may not be amended except by written consent of the Parties.
14.

The undersigned represent and warrant that they are fully authorized to execute

this Agreement on behalf of the entities indicated below.
15.

This Agreement may be executed in separate counterparts, each of which

constitutes an original and all of which constitute one and the same Agreement.
16.

Facsimiles of signatures and scanned or other electronic signatures shall

constitute acceptable, binding signatures for purposes of this Agreement.
IN WITNESS WHEREOF, the parties hereto affix their signatures and consent to
entry of the foregoing.

UNITED STATES OF AMERICA

KELLY T. CURRIE
Acting United States
Attorney
Eastern District ofNew York
271 Cadman Plaza East
Brooklyn,NewYmk ll201

Septembe~Ol5

Bl~wJr.JJ~
EDWARD K. NEWMAN
JOHN VAGELATOS

ROBERTSCH~CHER

Assistant United States Attorneys

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United Stata v. Intercontinental Capital Group, Inc.. et al., (E.D.N~
Stipulation and Order of Settlement and Dismissal, dated Scptcm~ 2_015

INTERCONTINENTAL CAPITAL GROUP

BUCKLEY SANDLER LLP
September~ 2015

By:

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ANDREW W. sClfriJ:ING
l.

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ROSS E. MORRISON
1133 Avenue of the Americas, Suite 3100
New York, New York 10036
[e-mail]

[e-mail]
Attorneys for Intercontinental Capital Group

September~ 2015

By:

September~ 2015

By:
President
Intercontinental Capital Group

DATED:

Centra! Islip, New York
September}$__, 2015

s/ Sandra J. Feuerstein
The Honorable
United States District Judge

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