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A series of federal lawsuits filed by eight black first-time homebuyers alleging that a New York real estate company targeted minorities as part of a conspiracy to sell overvalued, broken-down homes financed with predatory loans will go forward following a federal judge’s rejection of the defendants’ motions to dismiss. Eastern District of New York Judge Raymond J. Dearie whittled the parties’ “protestation and hyperbole” down to two core issues: Did the plaintiffs sufficiently plead their racial discrimination claims and were the claims against the individual defendants � about a half-dozen lawyers, appraisers and lenders, along with the president of real estate company United Homes, Yaron Hershco � pleaded with sufficient specificity? Dearie, who sits in Brooklyn, found in favor of the plaintiffs on both questions, and aside from dismissing a few fairly minor causes of action, allowed the cases to go forward in their entirety. “[G]iven both the general and specific allegations in the pleadings, it should be acknowledged that even the most casual reading would leave no one in doubt of what is being alleged,” Dearie wrote in Barkley v. Olympia Mortgage, No. 04cv875. “And the highly interdependent nature of the alleged scheme underscores the contribution of each defendant to the conspiratorial endeavor.” One of many While the Eastern District courts are currently hearing other similar cases � recently, Magistrate Judge Marilyn D. Go sanctioned Better Homes Depot for spoliation of evidence in a nearly identical set of claims ( M&T Mortgage v. Miller, No. 02cv5410) � the present action may be the most prominent. The plaintiffs claim that United Homes oversaw a conspiracy to rip off minorities seeking to join the real-estate rush of the early 2000s. The company has sold more than 1,000 houses in the past few years, according to a recent news report. Its ongoing development projects include a 296-unit, $168 million condominium in Brooklyn. The plaintiffs’ allegations share numerous common elements. After responding to ads on the subway or local newspapers promising “We Make Dreams Come True,” the plaintiffs were rushed through a streamlined process in which the various defendants conspired to sell them overpriced, defective houses at unfair mortgage rates based on a succession of misrepresentations, the complaints say. The plaintiffs filed a series of lawsuits against United Homes that were consolidated for pretrial purposes. The defendants � United Homes, its subsidiaries and attorneys Michael Cheatham, Benjamin Turner and Edward L. Schiff, among others � moved to dismiss, setting forth numerous defenses. They argued, among other things, that the buyers failed to allege “discriminatory intent” as required under the federal statutes. Dearie disagreed, citing the claims regarding United Homes’ targeting of minorities and its execution of its “fraudulent scheme.” A dismissal The judge did dismiss as time-barred a number of the plaintiffs’ lesser claims, including a Truth in Lending Act cause of action and several claims against appraiser Joseph D. Gaeta. Alan M. Vinegrad of Washington-based Covington & Burling represented United Homes. Reached by phone last week, Vinegrad said, “United Homes will continue to vigorously defend the lawsuits and is confident that ultimately United Homes will prevail.” Richard J.J. Scarola of New York’s Scarola Ellis; Meghan Faux and Brigitte Amiri of South Brooklyn Legal Services; and Nina Simon and Jean Constantine-Davis of AARP Foundation Litigation represented the plaintiffs. In a conference call last week, Scarola said, “The decision is probably the first time a New York federal court has come to grips with this issue � the intersection of predatory lending and race discrimination � and Judge Dearie has made a clear statement that will have strong precedential value in this area.”

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