The Case for Discipline of Attorney Who Present False Claims in Support of Foreclosure

Lawyers are not permitted to make up claims and file lawsuits or other processes to seek a remedy. They must be representing a client who is the owner of the claim. In foreclosure, this is not the case. Wall Street has weaponized the necessary standard protections for lawyers into a vehicle for promoting false claims.

The failure of counsel to

(1) report that they do not represent the named claimant and that they have no information from any client or other source supporting the existence of a claim possessed by the named claimant, and

(2) actively violating the ethical rules by presenting the false implication that they represent the named claimant,

is a clear violation of the most basic attribute of ethical disciplinary rules: the goal of giving the court the best information available upon which it could base a reasonable decision. 

see https://e-discoveryteam.com/2018/10/14/judge-pauley-reminds-lawyers-of-their-duty-to-verify-client-representations/

I am amending all past advice after careful reflection and research:

Because lawyers are the face of the scheme, they are often blamed for their clients’ illegal conduct and false testimony. Usually, this provides no foundation for a  civil or disciplinary claim against the lawyer, much less a criminal complaint.

I have consistently counseled lawyers and pro se homeowners to refrain from making such claims because the courts are made up of lawyers who protect each other. There are also solid legal reasons why such claims fail and should fail.

It is not up to the lawyer to prove the case to himself or herself, it is up to them to advocate h best possible narrative on behalf of their client. If it were otherwise, no lawyer would ever take any case, one way or the other. And that is because all witnesses are unreliable, and most of them lie.

Here are some comments from an article I recently received from a reader (and note what I have highlighted in bold):

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The ethics issue is whether [the lawyer] violated Model Rule of Professional Conduct 3.3, Duty of Candor Toward the Tribunal, which states:

Advocate

(a) A lawyer shall not knowingly:

(1) make a false statement of fact or law to a tribunal or fail to correct a false statement of material fact or law previously made to the tribunal by the lawyer;

(2) fail to disclose to the tribunal legal authority in the controlling jurisdiction known to the lawyer to be directly adverse to the position of the client and not disclosed by opposing counsel; or

(3) offer evidence that the lawyer knows to be false. If a lawyer, the lawyer’s client, or a witness called by the lawyer, has offered material evidence and the lawyer comes to know of its falsity, the lawyer shall take reasonable remedial measures, including, if necessary, disclosure to the tribunal. A lawyer may refuse to offer evidence, other than the testimony of a defendant in a criminal matter, that the lawyer reasonably believes is false.

(b) A lawyer who represents a client in an adjudicative proceeding and who knows that a person intends to engage, is engaging or has engaged in criminal or fraudulent conduct related to the proceeding shall take reasonable remedial measures, including, if necessary, disclosure to the tribunal.

The official Comment to Rule 3.3 has some good insights into the purpose of this requirement:

Offering Evidence

[5] Paragraph (a)(3) requires that the lawyer refuse to offer evidence that the lawyer knows to be false, regardless of the client’s wishes. This duty is premised on the lawyer’s obligation as an officer of the court to prevent the trier of fact from being misled by false evidence. A lawyer does not violate this Rule if the lawyer offers the evidence for the purpose of establishing its falsity.

6] If a lawyer knows that the client intends to testify falsely or wants the lawyer to introduce false evidence, the lawyer should seek to persuade the client that the evidence should not be offered. If the persuasion is ineffective and the lawyer continues to represent the client, the lawyer must refuse to offer the false evidence. If only a portion of a witness’s testimony will be false, the lawyer may call the witness to testify but may not elicit or otherwise permit the witness to present the testimony that the lawyer knows is false.

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The point here is that lawyers representing foreclosure mills fail to make an important disclosure to the court that is absolutely required under the rules of court and the disciplinary rules: the truth about their representation. It should be noted that when challenged, the lawyer admits to not having contact with nor knowing the identity of the creditor.

The lawyers do not represent XYZ Bank, NA as trustee for a trust. They have never had any contact with XYZ, nor have they received instructions from XYZ and XYZ does not pay them. XYZ is not a client in the remotest sense of the word since XYZ is neither the prior recipient of any money due from the homeowner nor the future intended recipient of any money from the homeowner or the property of the homeowner.

The lawyer who records the notice of default and sends the notice of sale or who files a foreclosure complaint has done so solely because the lawyer has agreed to accept electronic instructions from an anonymous source. The lawyers in the law firm that acts as the foreclosure mill are instructed by their superiors to use the information and forms provided in the electronic communication to secure a foreclosure sale.

To whom does that law firm and that lawyer report? How do they report? They report using the same medium of communication to a regional law firm that has been retained by someone other than XYZ Bank.

The failure of counsel to (1) report that they do not represent the named claimant and that they have no information from any client or other source supporting the existence of a claim possessed by the named claimant, and (2) actively violate the ethical rules by presenting the false implication that they represent the named claimant, is a clear violation of the most basic attribute of ethical disciplinary rules: the goal of giving the court the best information available upon which it could base a reasonable decision. 

Lawyers are not permitted to make up claims and file lawsuits or other processes to seek a remedy. They must be representing a client who is the owner of the claim. In foreclosure, this is not the case. Wall Street has weaponized the necessary standard protections for lawyers into a vehicle for promoting false claims.

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PRACTICE NOTE: THERE MIGHT BE A GOOD ARGUMENT HERE FOR  CHALLENGING THE OPPOSING LAWYER FOR HAVING A CONFLICT OF INTEREST — UNLESS THE CONFLICTING PARTIES ALL SUBMIT SWORN STATEMENTS WITH THE COURT WAIVING THE CONFLICT.

Here is my thinking. The foreclosure mill is not acting on behalf of any client with which it maintains a formal or informal attorney-client relationship. It is acting as the nominee/agent for a regional law firm that has been hired by a sham intermediary representing the interests of an investment bank that is NOT a creditor.

So the foreclosure mill lawyer is following the instructions of his superiors in a foreclosure mill that has a contractual relationship with a regional law firm that is not a client. The regional law firm has been tasked with monitoring litigation and issuing directions and instructions to the foreclosure mill.

Although it is contractually obligated to its client — i.e., the sham intermediary who hired the regional law firm — the regional law firm is in a position to know, with certainty, that the client has no interest in the litigation. In fact, it is likely tha that the regional law firm — and not the foreclosure mill — has actual knowledge that the foundation for claims of authority to pursue litigation and claims is an investment bank, the identity of which is well known to them.

So my theory is that an expert affidavit that details all this might be sufficient (ie., probable cause) to challenge the opposing lawyer for lack of authority to represent the named claimant and also for conflict of interest in the absence of either

  • (a) a sworn affidavit from someone who is an officer or employee of the named claimant or
  • (b) sworn affidavits from the regional law firm, the sham intermediary and the investment bank that waives any potential conflict of interest and waives attorney-client privilege — something you will NEVER see.
  • You might need such an affidavit from the company currently claimed to be a servicer as well as potentially its predecessors since most “reports” supposedly generated from transactions conducted by the “Servicer” relies on similar reports by predecessors.

Just a thought. I could be wrong.

I think the problem here is what I have been complaining about for decades. For all their talk and boasts, lawyers generally avoid battle, and when confronted with an inevitable battle, they seek the easy way out. The few lawyers who seem to win their cases consistently are those who are not afraid to get opposing counsel and the judge angry enough to kill them and their client. They are not afraid to receive incoming hits or respond to the blows landed by their adversary or the judge.

The starting point, even for good lawyers, is legal research. But Wall Street has turned that on this head as well.

Anyone who does legal research will find scant appellate opinions in favor of the homeowner where the opinion was approved for publication. So you find very little support for the proposition that the “mortgage loans” or “foreclosures” were scams that invoked remedies that were not legally, morally or ethically available.

The reason for this is a simple strategic decision, If you are filing millions of foreclosures and you lose only thousands of them, you don’t appeal because you don’t want to risk creating a body of appellate law that supports homeowners. So the foreclosure mills or their bosses never appeal a loss.

Second, when homeowners win their cases, they are greeted with offers of settlement that are hard to resist. This prevents the entry of judgment, or the judgment itself becomes hard to find as the record is scrubbed. Many lawyers will tell you this cannot happen. But I know from personal experience that there are dozens of cases where I personally have proof that it happened. And I have proven it to highly skeptical lawyers.

So if the person doing legal research using advanced algorithms like Lexis Nexis, they will never find the action, the result or any of the papers filed by either side.

This leaves most homeowners and their lawyers with the idea of proceeding to mount an expensive challenge as an article of faith — to do what the Federal and State regulatory agencies are supposed to do but didn’t. I have repeatedly proven the defense narrative in court such that I can say without any reasonable doubt that all of these cases are winnable — even if few of them are actually fought to a successful conclusion.

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Neil F Garfield, MBA, JD, 75, is a Florida licensed trial and appellate attorney since 1977. He has received multiple academic and achievement awards in business, accounting and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. THE COMMENTS ON THIS BLOG AND ELSEWHERE ARE BASED ON THE ABILITY OF A HOMEOWNER TO WIN THE CASE NOT MERELY SETTLE IT. OTHER LAWYERS HAVE STRATEGIES DIRECTED AT SETTLEMENT OR MODIFICATION. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.

But challenging the “servicers” and other claimants before they seek enforcement can delay action by them for as much as 14 years or more. In addition, although currently rare, it can also result in your homestead being free and clear of any mortgage lien that you contested. (No Guarantee).

Yes you DO need a lawyer.
If you wish to retain me as a legal consultant please write to me at neilfgarfield@hotmail.com.

Please visit www.lendinglies.com for more information.

One Response

  1. Truly EXCELLENT ARTICLE Neil – thanks!!

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