Robo-Litigation: Attorney Misconduct at Foreclosure Mills

Millions of dollars per month are being paid to foreclosure mills employing young attorneys who are probably not aware of the fact that they are participating in fraud, forgery, perjury, and fabrication. Even those who suspect that there are problems with the cases that they are filing wish to keep their jobs just as their employer will do virtually anything to maintain the relationship with pretender lenders who do not have any stake or risk of loss in loans that were funded by third parties.

Dustin A Zacks  has written an extensive article in the Cleveland state law review that details the various dubious acts by the law firms and the attorneys that they hire. The article challenges courts and the Bar Association to get more involved in discipline of attorneys who are consistently breaching their code of ethics and the disciplinary rules of their Bar Association.

Specifically, the article examines how the foreclosure mills differ in makeup from  traditional large law firms.  The article presents an examination of three policy options to prevent another surge in attorney misconduct: changing ethical rules, improving ethical education, and increasing state bar association funding and authority.

Strategically it is important for those attorneys who challenge the enforceability of the debt, note, mortgage, default, sale or even the right to collect on these  fatally defective documents that are regularly used in litigation against consumers and homeowners. I encourage all practitioners to read the article in its entirety, since it contains numerous clues as to what to expect from the other side as they pursue claims without merit.

“Robo-litigation”
http://www.legalethicsforum.com/blog/2013/05/robo-litigation.html

Hiding Behind Advice of Counsel No Better Than Ratings

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Editor’s Comment:

In an article entitled “Legal Beagles in Cross Hairs” WSJ reports that the SEC and many others in law enforcement have on-going investigations into the role of attorneys not misconduct of their clients. For the most part it is an attorney’s solemn duty to represent and advocate the position of his or her client to the utmost of their ability without violating the law. Everyone is entitled to a lawyer no matter how reprehensible their conduct might have been when they committed the act.

But the SEC seems to be leading the way, starting with indictments and convictions of attorneys that kicks aside the clients’ defense of “I did it on advice of counsel.” in wide ranging probes law enforcement agencies are after the attorneys who said it was OK — upon receiving lavish payments, that what the Banks did in setting the securitization structure for the cash trail and setting up the securitization procedure for the document trail and then setting up the contents of the documents that would provide coverage for intentional acts of theft, forgery, fabrication and a variety of other acts.

The attorneys who gave letters of opinion to the investment banks blessing securitization of home and commercial mortgages as they were presented and launched are in deep hot water. This is especially true since the law firms that engaged in these “blessings” had lawyers quitting their jobs leaving behind memorandums to the partners that the law firm itself was committing crimes. The similarity between the blessing of the law firm and the ratings of Moody’s, S&P, Fitch is surprising to some people.

And the attorneys who suggested severance settlements conditioned on employed lawyers or other witnesses on a sudden onset of amnesia are also in the cross-hairs, getting stiff long-term sentences. These are all potential witnesses in what could be come nationwide probes that were blocked by “advice of counsel” claims and brings to mind those many cases where the lawyer for Wells, US Bank, or BOA was fined and sanctioned for lying to the court about facts which they most certainly knew or should have known — like the name of their client.

As these probes continue it may be seen as scapegoating the attorneys or as chilling the confidentiality of the relationship between lawyer and client. But that rule of confidentiality and the defines of advice of counsel vanishes when the conduct of the attorney or indeed a whole law firm is that of a co-conspirator. It is especially unavailable when you have a foreclosure mill that is forging, fabricating and filing documents on behalf of extremely well paying clients.

It would therefore seem to be an appropriate time to file complaints with law enforcement including police and regulatory authorities that are well-written, honed down to a sharp point and which attach at least some evidence beyond the mere allegation of wrong-doing on the part of the attorney or law firm. If appropriate lay people can file the same complaints as grievances with the state Bar Association that is required to regulate and discipline the behavior of lawyers. And attorneys for homeowners and judges who hear these cases are under an obligation to report evidence of wrongdoing or else face disciplinary charges of their own resulting in suspension or disbarment.

Legal Eagles in Cross Hairs

By JEAN EAGLESHAM

The Securities and Exchange Commission is intensifying its scrutiny of lawyers who gave a green light to certain mortgage-bond deals before the financial crisis or have tried to thwart investigations by the agency, according to people familiar with the matter.

The move is at an early stage and might not result in any enforcement action by the SEC because of the difficulty proving lawyers went beyond their legal duty to clients, these people cautioned. In the past, SEC officials generally have gone after lawyers only when accusing them of active involvement in securities fraud or serious misconduct, such as faking documents in a probe.

In recent months, though, some SEC officials have grown frustrated by what they claim is direct obstruction of a few investigations and a larger number of probes where lawyers coach clients in the art of resisting and rebuffing. The tactics include witnesses “forgetting” what happened and companies conducting internal investigations that scapegoat junior employees and let senior managers off the hook, agency officials say. “The problem of less-than-candid testimony … is a serious one,” Robert Khuzami, the SEC’s director of enforcement, said at a conference last month. The stepped-up scrutiny is aimed at both internal and outside lawyers.

Claudius Modesti, enforcement chief at the Public Company Accounting Oversight Board, an accounting watchdog created by the Sarbanes-Oxley Act, said at the same event: “We’re encountering lawyers who frankly should know better.”

The SEC enforcement staff has recently reported more lawyers to the agency’s general counsel, who can take administrative action against lawyers for alleged professional misconduct.

The SEC hasn’t disclosed the number of referrals. Only one lawyer has ever been banned for life from representing clients before the agency because of professional misconduct.

Earlier this year, Kenneth Lench, head of the SEC’s structured-products enforcement unit, said the agency needed to “seriously consider” charges against lawyers in “appropriate cases.” Mr. Lench said he saw “some factual situations where I seriously question whether the advice that was given was done in good faith.”

In July, the Commodity Futures Trading Commission gained the new power to take civil action against anyone, including lawyers, who makes “any false or misleading statement of a material fact.”

The agency, which oversees the futures and options market, hasn’t taken any action yet under the expanded power, according to a person familiar with the matter. A CFTC spokesman declined to comment.

“Frankly, I wish we had the power the CFTC has,” Mr. Khuzami said.

The SEC’s focus on advice provided by lawyers in mortgage-bond deals is part of the wider push by officials to punish alleged wrongdoing tied to the financial crisis. So far, the SEC has filed crisis-related civil suits against 102 firms and individuals, and more cases are coming, according to people familiar with matter.

Some former government officials say stepping up regulatory scrutiny of lawyers for their work on cases snared in investigations by the SEC could send a chilling message. “The government needs to be careful not to deter lawyers from being zealous advocates for their clients,” says John Wood, a former U.S. Attorney for the Western District of Missouri.

The only lawyer hit with a lifetime ban by the SEC for his work on behalf of a client is Steven Altman of New York. The client was a witness in an SEC investigation, and the agency alleged that Mr. Altman suggested in a recorded phone conversation that the client’s recollection of certain events might “fade” if she got a year of severance pay.

Last year, an appeals court rejected Mr. Altman’s bid to overturn the 2010 ban. Jeffrey Hoffman, a lawyer for Mr. Altman, couldn’t be reached for comment.

In December, a federal grand jury in Los Angeles indicted lawyer David Tamman on 10 criminal counts related to helping a former client cover up an alleged $20 million fraud. Prosecutors claim Mr. Tamman changed and backdating documents, removed incriminating documents from investor files and lied to SEC investigators in sworn testimony.

“The truth is that my client was set up and made a scapegoat,” says Stanley Stone, a lawyer for Mr. Tamman, adding that his client acted under the advice and guidance of senior lawyers at his former law firm, Nixon Peabody LLP. “We’re going to prove at trial that what was done was not criminal,” Mr. Stone says.

A Nixon Peabody spokeswoman says Mr. Tamman was fired in 2009 “as soon as we learned that he was under SEC investigation and he failed to explain his actions to us.” The law firm has asked a judge to throw out a wrongful-termination suit filed by Mr. Tamman.

A criminal trial last year shows how the SEC could face daunting hurdles in bringing enforcement actions against lawyers for providing bad advice.

“A lawyer should never fear prosecution because of advice that he or she has given to a client who consults him or her,” U.S. District Judge Roger Titus in Maryland ruled when dismissing all six charges against Lauren Stevens, a former lawyer at drug maker GlaxoSmithKline PLC. GSK +0.19%

Ms. Stevens was accused by prosecutors of lying to the FDA and concealing and falsifying documents related to an investigation by the U.S. agency. The federal judge refused to let a jury decide the case, saying that would risk a miscarriage of justice.

Reid Weingarten, a lawyer for Ms. Stevens, couldn’t be reached. A spokeswoman for the Justice Department declined to comment.

Despite the government’s defeat, “the mere fact she was charged sends a strong signal to other lawyers about the risks of being seen as less than forthcoming in their representation s to the government,” says Mr. Wood, the former federal prosecutor in Missouri. He now is a partner at law firm Hughes Hubbard & Reed LLP.


MFI-Miami To File Bar Complaint Against Orlans Associates For Conspiracy and Fraud

PERJURY ALLEGED

April 5, 2011

For Immediate Release
Contact:            Stephen Dibert, President, MFI-Miami

Email: steve@mfi-miami.com or www.mfi-miami.com

 

MFI-Miami: 888.737.6344 or Cell 561.317.9978

 

MFI-Miami To File Bar Complaint Against Orlans Associates For Conspiracy and Fraud

 

Traverse City, MI- MFI-Miami, LLC, a mortgage fraud investigation company, announced today that on Thursday, April 7, 2011, it will be filing a complaint for Attorney Misconduct with the Michigan Attorney Grievance Commission against three attorneys from the Troy, Michigan law firm of Orlans Associates.  Details of the complaint as follows: Marshall R. Isaacs for knowingly filing fraudulent documents into public record, Linda Orlans for allowing one of her Notaries to make false statements that they witnessed Marshall R. Isaacs sign an affidavit when he did not sign it, and Timothy Myers for perjury in the case of Lucas v. Orlans Associates and BAC Home Loan Servicing, LP (Case #10-113498-NO).

An MFI-Miami investigation concluded that BAC Home Loan Servicing did not own the Lucas loan when they initiated the foreclosure and at the time of the Sheriff’s sale as the three attorneys claim on public record and in public filings.  Orlans representing BAC Home Loan Servicing LP claim that they maintained the right to transfer ownership to Fannie Mae with a Sheriff’s Deed.  However, according to an Affidavit that was made public in February of 2011 by BAC Home Loan Servicing, LP, the Lucas mortgage was in fact assigned to Fannie Mae in 2005.

“The evidence suggests Orlans and Associates is using robo-signing to expedite the foreclosures for BAC Home Loan Servicing, LP,” said Steve Dibert, President of MFI-Miami.

 

MFI-Miami intends to request an investigation by the Michigan Judicial Tenure Commission into how Oakland County Circuit Judge Martha Anderson handled this case.  According to Steve Dibert, “She refused to hear key pieces of evidence of attorney misconduct committed by attorneys involved in the case.”

 

MFI-Miami is also be sending a copy of its investigation with a copy of the complaint to the offices of Michigan Attorney General Bill Schuette, Fannie Mae CEO Mike Williams and Acting Director of the Office of Thrift Supervision, John Bowman.   Copies will be sent to Barbara DeSoer, President of Bank of America Home Loans and Elizabeth Warren, Special Advisor for the Consumer Financial Protection Bureau.

About MFI-Miami

Headquartered in Boynton Beach, Florida and with an office in Traverse City, Michigan, MFI-Miami, LLC conducts compliance examinations and investigates the securitization instruments of clients’ mortgages. For more information, visit www.mfi-miami.com, contact 888-737-4366 ext. 701, or email steve@mfi-miami.com

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