A July 7 Metro article about a court case surrounding the foreclosure rescue business of Rodney Byrd incorrectly described Kevin Judd as one of his partners. Byrd listed Judd as a partner in paperwork creating B&B General Partnership. However, a D.C. Superior Court judge found that Judd had no idea his name was on the partnership papers and that he did not contribute any money to the entity. (Published 7/15/04)

Hattie Mae Smith was 70 and seriously ill when businessman Rodney Byrd first visited her Northwest Washington home. She was facing foreclosure on the house she had lived in for 25 years.

The bedridden Smith, a retired post office supervisor, turned to Byrd and his Creative Investment Co. for a rescue. Within months, one of Byrd's partnerships wound up owning the home and reselling it for a profit -- and Smith was threatened with eviction.

Smith died in 2002, but not before getting legal help and filing a lawsuit against Byrd. Last week, a judge in D.C. Superior Court awarded her estate $415,000 in damages after finding that Byrd had no intention of helping Smith save her home and that his actions violated D.C. consumer protection laws.

Judge Joan Zeldon issued an opinion that called Byrd's conduct "outrageous." She wrote that Smith was not the first victim of his business dealings, and expressed hope in her ruling that the judgment will "deter Byrd from acquiring the homes of other frail and vulnerable people by illegal means."

Byrd, 37, who advertises himself as a foreclosure rescue specialist and property investor, denied wrongdoing and plans to appeal. In an interview last week, he disputed the allegations made against him in court and defended his business practices, adding, "I didn't force anyone to sign anything."

The AARP's Legal Counsel for the Elderly, which represented Smith and her family, has had clients prevail against Byrd in three other cases, according to AARP lawyers and court records. The other cases also involved people facing foreclosure who said that Byrd failed to help them, the records showed.

AARP lawyers said they fear the case is only one example of a bustling "foreclosure rescue scam" business in the Washington area and other cities where housing prices have skyrocketed.

"There are many low-income elderly residents living in valuable properties that are increasingly being targeted by unscrupulous con artists," said James T. Sugarman, a lawyer with AARP.

Sugarman urged property owners to be cautious in dealing with businesses that offer to rescue them from foreclosure. Those facing foreclosure, particularly over small amounts, can often renegotiate their loans or sell the properties for more than they owe, he said.

A banner outside Byrd's Tenleytown office promotes his services in stopping foreclosures and buying houses. His company circulates fliers to those facing foreclosure, following up on legal notices.

A recent flier, for example, says that the company offers "a number of creative programs that will allow you to keep your home." It adds: "You must act now, before someone else owns your home. Rest assured, The Creative Investment Company is here to help you."

Zeldon heard evidence about Smith's experience with Byrd during a trial in January and recapped the details in a pair of opinions issued later. In May, Zeldon held Byrd liable for damages. Then, last week, she set the amount.

When Smith got a flier in late 1999, the widow had about $150,000 equity in her house. Yet she had fallen about $2,300 behind on a $12,300 mortgage for her two-story brick rowhouse in the 1400 block of Monroe Street NW, in Columbia Heights, Zeldon wrote. She was current on a $38,000 mortgage. Several foreclosure sale notices for the house had been published.

Smith had been hospitalized with serious circulatory problems for a month that fall, Zeldon wrote. Her doctor told the court that Smith had periods of confusion during the hospital stay and that she was emaciated. She was released in November 1999 to a bedroom in her home equipped with a wheelchair and hospital bed.

Even after Smith came home, problems remained. The family testified that the 60-pound woman was in the habit of talking to the television.

Byrd met alone with her twice, Zeldon wrote in the May opinion, in a section that summed up the financial transactions that followed.

In April 2000, Smith signed several documents transferring her home to one of Byrd's partnerships, B & B General Partnership, for $33,000. By then, an appraiser hired by Byrd had valued the house at $200,000. Smith's lawyers said that she had no idea that she was signing over the house, and that she received no money from Byrd.

A partner of Byrd's, Kevin Judd, took over the house in June 2000 for $150,000.

In September 2000, Smith and two relatives were told to get out of the house. They avoided eviction, however, after consulting lawyers. The lawsuit was filed in January 2001; Smith died a year later.

Judd sold the property in September 2003 for $282,500. He also was named in Smith's lawsuit. He and a co-defendant paid $127,500 to settle claims against them before trial, Zeldon said.

Stephen E. Hessler, Judd's attorney, said his client "settled completely" but admitted no wrongdoing. Judd, a bankruptcy lawyer, had taken out a mortgage on the house and planned to move in, Hessler said.

In the opinion she released in May, Zeldon wrote: "Despite the lip service given by Byrd and [Creative Investment Company] to helping people keep their homes, Byrd, the 'foreclosure specialist,' knocked on Hattie Smith's door for the purpose of acquiring her home for a pittance.

"It is not difficult for the Court to understand how the elderly and frail Hattie Smith would have trusted Byrd. . . . He is youthful, attractive and dresses very well," Zeldon added. "He appears outwardly to be a respectable person. Indeed, he has the appearance of a professional, educated person."

The judge announced the damages award last Wednesday, writing that Byrd's actions were "calculated to take advantage of a frail, elderly and vulnerable widow." Her award was calculated based on triple damages, plus $100,000 in punitive damages.

Byrd said last week that Smith's lawyers "have a personal crusade to put me out of business, to try to make me look bad within the community. . . . But I totally rebuke everything they have said."

The allegations that he had previously taken advantage of elderly, unsuspecting homeowners are "totally not true at all. . . . That is totally biased, totally untrue," Byrd said. "I have many elderly homeowners that would say that I helped them get their homes back."

He declined to say exactly how many houses he now has an interest in, but estimated that he owned fewer than 10.

Details about the Smith case first were reported in an article in the City Paper last December.

Karl E. McDonald, Byrd's attorney, said that the nature of Byrd's business is "inherently risky" because it involves offering assistance to those facing foreclosure. "It can be anticipated that on occasion, once the pressure of foreclosure has been relieved, that they might want to back out on the deal," he said.

That was not what happened with Hattie Smith, her attorneys said.

"Miss Smith was a civil servant for a long time. She paid her dues, paid her bills," said her lead attorney, Jeremy S. Simon, of the law firm of Wilmer Cutler Pickering Hale and Dorr, who handled the case pro bono. "She was not a deadbeat. . . . She got old and sick."

Smith's granddaughter, Tina Jackson, who represented Smith's estate after her death, had lived in the house on Monroe Street with her grandparents from age 11 to 18. She said that her grandmother "loved that house," the first home the couple had owned.

Jackson said she found it ironic that she and Byrd were high school classmates years ago in the District. With appeals, it is unclear when Jackson, of Fort Washington, might collect the money that the judge says Byrd owes the estate.

"It isn't about the money anyway," she said. "I want him to stop. I don't want him to do this to anyone else."

Hattie Mae Smith was the victim of a "foreclosure rescue scam," her attorneys say. Rodney Byrd was ordered to pay her estate $415,000.