The U.S. Trustee Program has secured over $1.1 million in penalties against 12 defendants who orchestrated a nationwide scheme targeting homeowners facing foreclosure.
A federal bankruptcy court in Louisiana found “overwhelming evidence” that the defendants funneled desperate homeowners into frivolous bankruptcy cases while collecting fees for fake loan modification services.
The scheme exploited vulnerable Americans at their most desperate moment, forcing them into doomed bankruptcy filings that provided no real relief. At least 186 homeowners fell victim to the operation, which promised help but delivered only mounting bills and legal troubles.
NVA Financial Services LLC, its president Steven Nahas, managing attorney Karen Kisch, and nine associates ran the fraudulent enterprise. The defendants charged homeowners upfront retainers of $1,100 followed by $500 monthly payments for services they never provided.
One West Monroe, Louisiana, homeowner’s experience revealed the scheme’s cruelty. After paying the initial fee and multiple monthly charges, he received no communication from the Louisiana counsel supposedly representing him.
As foreclosure loomed, an NVA associate sent him a bare-bones bankruptcy petition listing only his mortgage lender. The associate instructed him to file it himself, providing no legal guidance or support.
The court dismissed his case within a month for missing credit counseling proof and filing fees. Yet NVA continued debiting his account for “loan modification services” while pressuring him to file again.
When the homeowner hired legitimate counsel, the defendants urged him to fire the attorney and let them continue “working his file.” His new lawyer successfully reopened the case and negotiated an actual loan modification.
“This judgment makes clear that those who abuse the bankruptcy system to exploit struggling homeowners will be held accountable,” said Acting Director Ramona D. Elliott of the Executive Office for U.S. Trustees. “The USTP will remain vigilant to root out schemes that threaten the integrity of the bankruptcy system.”
The court’s August 28 ruling followed an eight-day trial examining how defendants violated multiple bankruptcy code sections. The judgment found they operated as unregistered petition preparers, debt relief agencies, and attorneys while hiding their involvement.
Beyond the financial penalties, the court suspended Kisch and the Louisiana counsel from bankruptcy practice. Both face referrals to attorney disciplinary boards for professional conduct violations.
Two associates also face disciplinary referrals for unauthorized law practice. The comprehensive ruling sends a clear message about protecting bankruptcy system integrity.
The U.S. Trustee Program oversees bankruptcy cases nationwide through 21 regions and 88 field offices. Its mission focuses on protecting all stakeholders — debtors, creditors, and the public — from fraudulent schemes that undermine the system’s purpose.