Attorney General Kamala D. Harris Sues Law Firms Engaged in National “Mass Joinder” Mortgage Fraud

18 Aug

SAN FRANCISCO — Attorney General Kamala D. Harris today announced that the California Department of Justice, in conjunction with the State Bar of California, has sued multiple entities accused of fraudulently taking millions of dollars from thousands of homeowners who were led to believe they would receive relief on their mortgages.

Attorney General Harris sued Philip Kramer, the Law Offices of Kramer & Kaslow, two other law firms, three other lawyers, and 14 other defendants who are accused of working together to defraud homeowners across the country through the deceptive marketing of “mass joinder” lawsuits. “Mass joinder” lawsuits are lawsuits with hundreds, or more, individually named plaintiffs. This is the first consumer action by the Attorney General’s Mortgage Fraud Strike Force.

Kramer’s firm and other defendants were placed into receivership on Monday, Aug. 15. The legal actions were designed to shut down a scheme operated by attorneys and their marketing partners, in which defendants used false and misleading representations to induce thousands of homeowners into joining the mass joinder lawsuits against their mortgage lenders. Defendants also had their assets seized and were enjoined from continuing their operations. Nineteen DOJ special agents participated as the firms were taken over Wednesday, Aug. 17, along with 42 agents and other personnel from HUD’s Office of Inspector General, the California State Bar, and the Office of Receiver Thomas McNamara at 14 locations in Los Angeles and Orange Counties. Sixteen bank accounts were seized.

“The defendants in this case fraudulently promised to win prompt mortgage relief for millions of vulnerable homeowners across the country,” said Attorney General Harris. “Innocent people, already battered by the housing crisis, were targeted for fraud in their moment of distress.”

“The number of lawyers who have tried to take advantage of distressed homeowners in these tough economic times is nothing short of shocking,” said State Bar President William Hebert. “By taking over the practices of four attorneys accused of fraudulent marketing practices, the State Bar can put a stop to their deplorable conduct as part of our ongoing effort to protect the public.”

It is believed that at least two million pieces of mail were sent out by defendants to victims in at least 17 states. Defendants’ revenue from this scam is estimated to be in the millions of dollars.

As alleged in the lawsuit, defendants preyed on desperate homeowners facing foreclosure by selling them participation as plaintiffs in mass joinder lawsuits against mortgage lenders. Defendants deceptively led homeowners to believe that by joining these lawsuits, they would stop pending foreclosures, reduce their loan balances or interest rates, obtain money damages, and even receive title to their homes free and clear of their existing mortgage. Defendants charged homeowners retainer fees of up to $10,000 to join as plaintiffs to a mass joinder lawsuit against their lender or loan servicer.

Consumers who paid to join the mass joinder lawsuits were frequently unable to receive answers to simple questions, such as whether they had been added to the lawsuit, or even to establish contact with defendants. Some consumers lost their homes shortly after paying the retainer fees demanded by defendants.

This mass joinder scam began with deceptive mass mailers, the lawsuit alleges. Some mailers, designed to appear as official settlement notices or government documents, informed homeowners that they were potential plaintiffs in a “national litigation settlement” against their lender. No settlements existed and in many cases no lawsuit had even been filed. Defendants also advertised through their web sites.

When consumers contacted the defendants, they were given legal advice by sales agents, not attorneys, who made additional deceptive statements and provided (often inaccurate) legal advice about the supposedly “likely” results of joining the lawsuits. Defendants unlawfully paid commissions to their sales representatives on a per client sign-up basis, a practice known as “running and capping.”

Defendants’ alleged misconduct violates the following laws:
-False advertising, in violation of section 17500 of the Business and Professions Code
-Unfair, fraudulent and unlawful business practices, in violation of section 17200 of the Business and Professions Code
-Unlawful running and capping, in violation of section 6152, subdivision (a) of the Business and Professions Code (i.e., a lawyer unlawfully paying a non-lawyer to solicit or procure business)
-Improper fee splitting (defendants unlawfully splitting legal fees with non-attorneys)
-Failing to register with the Department of Justice as a telephonic seller.

Homeowners who have paid to be added to one of the lawsuits should contact the State Bar if they feel they may be victims of this scam. They can also contact a HUD-certified housing counselor for general mortgage related assistance.

The Department of Justice has seized the practices of the following non-attorney defendants:
Attorneys Processing Center, LLC; Data Management, LLC; Gary DiGirolamo; Bill Stephenson; Mitigation Professionals, LLC; Glen Reneau; Pate Marier & Associates, Inc.; James Pate; Ryan Marier; Home Retention Division; Michael Tapia; Lewis Marketing Corp.; Clarence Butt; and Thomas Phanco.

The State Bar has seized the practices and attorney accounts of the attorney defendants:
The Law Offices of Kramer & Kaslow; Philip Kramer, Esq; Mitchell J. Stein & Associates; Mitchell Stein, Esq.; Christopher Van Son, Esq.; Mesa Law Group Corp.; and Paul Petersen, Esq.

Attorney General Harris is challenging the defendants’ alleged misconduct in marketing their mass joinder lawsuits; her office takes no position as to the legal merits of any claims asserted in the mass joinder lawsuits filed by defendants.

Victims in the following states are known to have received these mailers, or signed on to join the case. This is a preliminary list that may be updated:

Alaska, Arizona, California, Colorado, Connecticut, Florida, Hawaii, Maryland, Massachusetts, Michigan, Missouri, Nevada, New Jersey, New York, Ohio, Texas, Washington

The complaint, temporary restraining order, examples of marketing documents and photos of the enforcement action are available with the electronic version of this release at http://oag.ca.gov/news.

11 Responses to “Attorney General Kamala D. Harris Sues Law Firms Engaged in National “Mass Joinder” Mortgage Fraud”

  1. MARIO KENNY August 18, 2011 at 7:50 pm #

    Okay great work, but how come they seem to always take out the sardines? and the sharks are never in trouble, I call wimps, they are wimps, they fear the sharks so they hunt the sardines instead, to please the other sardines.

    Now if they took out a bank or a wall street big snob, or a real white color criminal, then! yuh talking, other than that its all the same BS, it all rolls down the hill in the end, meanwhile millions have lost their homes and the book is not been written just yet.

    I guess its not stinking sufficient at the moment.

    • Fito August 21, 2011 at 5:21 pm #

      Hello,What a surprised I got when read this article, I am one of those plaintiff (sardines as you called) but soon after I read the posting I was able to put an stop payment on my check . Not many people are posting comments on this, makes me wonder.

      • Dan August 22, 2011 at 9:14 am #

        I am contemplating suing BofA, through Brookstone Law in southern California, $1250 initial payment, then $3000, then $250 a month till settlement or end of lawsuit. Does anyone have any info concerning this?

  2. Fito August 24, 2011 at 9:25 am #

    Hello, Dan. The law office of Kramer & kaslow were a legit bizz even as I type I check their status and still active after the alledge take over or receiver ship. So we are not supposed to pay upfront fees to nobody;but nobody wants to take cases with out first get pay.And even if Brookstone firm is legit I am not so sure.
    Ben, with all rights reserved.

  3. Martin S Friedlander August 26, 2011 at 12:24 pm #

    This a cop out lawsuit to cover up Obama cover up of the banks use of MERS. The NYAG opted out.Shut down MERS and you shut down foreclosures. You are shutting down the wrong people. If you did your job private lawyers would not be needed.
    Call me and I will help you pro bono.

  4. CONNIE MARTINEZ September 26, 2011 at 11:36 am #

    Dear Kamala, I want to Thank you for looking out for us Homeowners who have been ROBBED from the CROOKS who have taken advantage of so many HONEST hardworking people. THE LAWFIRM OF VICTOR E. HOBBS ROBBED OUR FAMILY OF $90,000 DOLLARS AND THEY SET US UP SO THEY COULD STEAL OUR HOME. THEY SOLICITED US BY MAIL,PROMISED A LOAN MOD.,ALSO PROMISED TO GO AFTER THE LENDERS AND SERVICES FOR PREDATORY LENDING. WE WERE OVERCHARGED FROM THE VERY BEGINING OF OUR LOAN. THE LAWFIRM OF VICTOR E. HOBBS TOLD US TO STOP MAKING OUR MORTGAGE PAYMENTS AND THEY WOULD STOP A FORECLOSURE WITH A TRO.TEMPORARY RESTAINING ORDER. THEY LIED TO US AND OUR HOME GOT FORECLOSED ON. WE HAD BEEN OVERPAYING OUR MOTGAGE,INSURANCE,AND ESCROW. WE WERE WRONGFULLY ILLEGALLY FORECLOSED ON BY THESE RACIST LAWYERS. THEY HAVE DESTROYED OUR LIVES. THEY HAVE INVADED OUR PRIVACY BY HACKING INTO OUR PHONES. THEY HAVE HAD PEOPLE STOCK US AND BULLY US. WE HAVE BEEN TREATENED. OUR HOME BROKEN INTO AND THESE BULLIES ADMITTED TO IT. EVEN NAMING NAMED BRAND ITEMS AND THEIR LOCATIONS INSIDE OUR HOME. THEY HAVE DESCRIBED ME AND LET ME KNOW THAT THEY WILL HURT ME AND MY FAMILY AND WILL MAKE IT LOOK LIKE AN ACCIDENT. SOMEONE DISCONNECTED THE GAS FROM OUR DRYER AND MADE US VERY SICK. THANKFULLY MY HUSBAND THOUGHT TO CHECK THE DRYER AND SURE ENOUGH, IT WAS LEAKING GAS. WE COULDVE DIED. I DONT KNOW FOR SURE THAT THEY WERE RESPONSIBLE BUT THEY HAD THREATENED US AND THATS WHY I BEIEVE THEY WERE RESPONSIBLE FOR THIS. THEY HAVE REDIRECTED MY PHONE CALLS TO OTHER PLACES. THEY HAVE REDIRECTED ME TO SITES WHERE A MAN WAS BEING DECAPITATED. I EVEN CONFRONTED ONE OF THE LAWYERS AT THE LAWFIRM AND HE ACCIDENTLY CONFESSED TO HACKING INTO MY PHONE AND HAD KNOWLEDGE THINGS THAT I HAD NOT TOLD HIM ABOUT. HE ALSO GOT ALL CHOAKED UP AND HUNG UP ON ME WHEN I HAD CAUGHT HIM. I HAVE PICTURES,LICENCE PLATE NUMBERS AND TONS OF EVIDENCE OF THIS CONSPIRACY TO DEFRAUD US. I EVEN HAVE CREDIT REPORTS WITH PROOF THAT OUR IDENTITYS WERE STOLEN AND SEVERAL HOME EQUITY LOANS HAD BEEN TAKEN. PLEASE HELP.

  5. tawanna smith . November 3, 2011 at 11:34 pm #

    Every body who names is on those banks company data can file a police report , for dealing with people that have hi jacked a group of banks by I’d fraud and benifiary owner fraud . The trustee defrauded the benifiary owner of those banks around 2001 and 02 . Benifiary agent for the benifiary owner . They never serve him nothing , they took 500 million dockets out a office of the old owner to the new benifiary owner after he was passed away . Deceased . Now u no their no law saying a trustee can do all of that . And the judge and the police and congress no that too , because they the one passed the laws saying benifiary rights . And birth rights and property rights human rights justic for all . All of that is bull crap , who all on pay roll of a fraud ? Everybody names that on those companies system can sue them banks and the goverment . The owner by benifiary of those banks has fraud and still has it . And look like it started 2001 up to now rolling into 2012 now . What kind of carmal headed for earth , in god we trust a law office and judge all of these people has to touch a holy bible and swear to the law . Where is the law ? Protester go to jail better than a theft and killer . Not one ceo of a bank has came out and said this stuff isent right . Why cause they all got money . If money ment for u , u don’t have to steel it .

  6. Brad Henschel July 12, 2012 at 1:35 am #

    The State Bar and the Mortgage Bankers sponsored a law that lawyers cannot charge for loan modification until the work is complete. Failure to comply results in a $10K fine. Lawyers are not stupid, they stopped taking such cases. Now foreclosures are going faster thanks to the State Bar and Kamala siding with the banks. The laws just signed by Gov Brown won’t do anyone any good when the Bar uses summary procedures of B&P 6007 to take a lawyers license who dares sue a bank for any reason. Now you consumers don’t have any lawyer who is willing to lose their license to the Bank lovers at the STate Bar. Hate the Bar not the lawyers. The Bar is homeowners worst enemy.

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