The suit, filed last week by attorney David Tubman, names virtually every employee of OF Lending Group, the now-defunct Pleasanton firm that owner William Hogarty touted as a solution for people who were underwater on their homes.
Twenty-two of the firm's former clients are suing for fraud, breach of contract, and other violations of California law. According to the lawsuit, OF Lending demanded advance fees from homeowners who were desperate to save their homes from foreclosure.
"Bill Hogarty and OF Lending and the defendants promised vulnerable homeowners, to save them a lot of money with the result they could stay in their homes. OF lending's promise was to negotiate on behalf of these people with their lenders, knowing that these people were not successful in their own attempts," Tubman said. "OF lending demanded illegal upfront fees. OF Lending told homeowners they were putting their money in a trust account to protect their money."
Hogarty later told some of those clients he spent the money on day-to-day operations of OF Lending. Tubman said the company based its fees on how much employees could talk their prospective clients into giving, and that often workers would walk into a conference room where another was meeting with a client and claim they'd just saved another homeowner.
Specifically named in the lawsuit are Hogarty's now estranged wife, Christy Hogarty, and his former wife Micaelanne Hogarty, along with James Riviera, Tiffany Carr and Gregory Lomba.
Hogarty is not named.
"The reason we can't go after Bill Hogarty is because he's filed for bankruptcy," Tubman said. Once a bankruptcy claim is filed, all other claims are put on hold -- what's known as a stay.
Tubman said some of the banks OF Lending worked with called the company's efforts "amateurish." He said those lenders went for months without hearing back from OF Lending, which often didn't return calls.
"They failed to deliver on their promise. They did not competently negotiate with lenders," Tubman said. "They failed to deliver and, to add insult to injury, they failed to refund their clients' money, and those moneys demanded were illegal to begin with."
Clients have described themselves as angry and embarrassed to have been taken in by the company.
"My wife and I placed our faith and trust in OFLG. It became clear that they were only interested in our money, and not in saving our underwater home," said Webster Loudd, a retired Oakland schoolteacher who is now a Baptist minister.
Hogarty, 47, who won the 2005 Mr. California Bodybuilding Championship also faces criminal charges stemming from a July 3 altercation with his roommate, John Robinson.
Robinson told police "Hogarty tried to kill me. He came barging into my room and said he was going to kill me, over and over, and then almost choked me to death."
According to a police report, "Hogarty opened the victim's door, slammed the door against the wall and said 'I know you're talking to my wife.'" When Robinson replied that she calls him when she's drunk, Hogarty again threatened to kill him and put him in a chokehold.
"I blacked out then put my finger in his eye," Robinson told police. He then retrieved a sheath knife from under his mattress and held Hogarty at bay, calling police and sitting with his back against his bathroom door until the sheriff's deputies arrived, the report said.
Robinson also told police Hogarty was subject to violent rages due to his use of steroids.
Hogarty was in court Tuesday to ask Judge Hugh Walker to let him stay at his father's house, which sits on the same property as Hogarty's home, known as The Mansion, which is now in foreclosure.
"I think that's too close," Walker said.
Robinson has been allowed to stay in the 12,978-square-foot mansion, with eight bedrooms, a 12-car garage and swimming pool, because Hogarty has a restraining order that keep the two separated.
That mansion was touted as Northern California's answer to the Playboy mansion and was the scene of risqué parties, such as the Fallen Angels Lingerie Party and Mardi Gras at the Mansion.
Hogarty is set to return to court Aug. 6 to enter a plea in the criminal case.