Jerry Brown

Is this what Jerry Brown wants to do to legitimate loan modification firms?

WARNING: THIS VIDEO IS NOT SUITABLE FOR THE OFFICE AND CONTAINS VIOLENT IMAGES

Jerry Brown

Jerry Brown and Cal Bar Continue Kristallnacht-style Raids and Smear Campaigns Against Modification Lawyers

The Cal Bar put out the below press release a couple of days ago and I believe there is more to this story than what the Cal Bar is saying.  Just like their cases against Green Credit Solutions and Paul Lucas, what the Cal Bar is not saying is how many total clients did these attorneys have and how many people were actually helped.

The Cal Bar is about to lose their case against Green Credit Solutions because when they confiscated all the files out of their office, they  neglected to refer these homeowners to other attorneys or giving give them legal assistance to them. Thus, leaving hundreds of homeowners without legal representation and putting them at greater risk of losing their homes.  Matter of fact, because of the Cal Bar’’s actions, some actually did.  At the hearing this week, it was revealed that the Cal Bar only had 19 legitimate complaints against Green Credit Solutions.  They claimed last year they had 900.  This out of 3500 clients GCS had signed up.

The Cal Bar, the California AG’s office and the FTC publicly tarred and feathered Paul Lucas for scamming people by raiding and ransacking his offices, confiscating files and blocking his access to his firm’s bank accounts like something out of a 1930’s gangster movie.  They even attempted to have his law license revoked.  Only problem was, he wasn’t scamming people.  The FTC and the Cal Bar lost their case because Paul Lucas could prove he successfully modified 90% of the loans he handled and he was later re-instated as a member of the California Bar.  According to Cal Bar everything is now right in the universe.  Wrong!  Thanks to the internet, Paul Lucas will be permanently labeled, “Scam Artist”

So think about all that while reading this or any press releases put out by them or Jerry Brown’s office.

San Francisco, June 02, 2010 — Continuing its effort to protect the public from lawyers who take advantage of distressed homeowners, the State Bar prosecutor’s office has secured orders of involuntary inactive enrollment for Southern California attorneys Eric Douglas Johnsonand Mark Alan Shoemaker.

Besides the two involuntary inactive enrollments, the State Bar’s Office of Chief Trial Counsel has obtained the resignations of 13 attorneys involved in loan modification misconduct since creation of the Loan Modification Task Force in April 2009.  Five loan modification trials are pending. Another 2,000 active investigations related to loan modification are being conducted.

In separate May actions, State Bar Court Judge Richard Honn ruled that the conduct of  Johnson (State Bar #224065), 55, of Los Angeles, and Shoemaker (State Bar #134828), 49, of Long Beach, pose a “substantial threat of harm” to their clients or the public, and both were ordered involuntarily enrolled as inactive members of the State Bar under Business and Professions Code 6007.

Johnson associated with several non-attorney legal organizations, lending his name and status as an attorney to a firm offering bankruptcy filing and assistance, a business handling forensic audits and loan modifications and two other loan modification companies. Honn cited cases in which homeowners were promised that their homes would not be foreclosed but the homeowners lost them anyway after having made significant payments to the non-attorney companies.

Johnson “lacked control and failed to supervise” any of the organizations with which he was associated, Honn wrote in his May 18 order. “This lack of control and failure to supervise consequently led to, among other things, the unauthorized practice of law, misrepresentations and client harm.”

Shoemaker, whose case was investigated and prosecuted with the invaluable help of the California Department of Real Estate, has owned and operated a loan modification business called Advocate for Fair Lending since 2008. Shoemaker “used Advocate and his status as an attorney to convince cash-strapped homeowners to pay him thousands of dollars in hopes of saving their homes from foreclosure,” Honn wrote in his May 28 order. Shoemaker, however, “often did little to nothing to help these clients. In fact, many of these homeowners were worse off after retaining [Shoemaker’s] services.”

The order referred to 18 examples in which Advocate clients, who signed power of attorney when they contracted with Advocate, were not helped and asked for refunds. A few did get refunds; many others did not. Some clients reported that their lenders said they had never been contacted by Advocate on their behalf. Shoemaker argued that he was merely the president of Advocate and did not represent any Advocate clients in a legal capacity.

“Advocate’s clients were also [Shoemaker’s] clients,” Honn wrote. “An attorney cannot use a power of attorney form to absolve themselves of the ethical mandates they have sworn to uphold.”

Jerry Brown

Jerry Brown Goes After Another Bogus Mod Company – He may actually have a real one this time!

LOS ANGELES – Attorney General Edmund G. Brown Jr. today announced that nine men engaged in a Southern California boiler room, tricked out in high-roller style with a roulette wheel and other casino equipment, have been charged with 97 criminal counts for stealing at least $2.3 million from more than 1,500 desperate homeowners who were promised loan modifications but received no relief.
Arrested Tuesday and Wednesday night were Gregg Scott Quinn, 37, of Camarillo and Juan Pierre Washington, 40, of Winnetka, who worked as company sales managers and supervisors. They are being held at Los Angeles County Jail.

Gary Arnold Eisenberg, 71, of Westwood, a top telemarketer with the company, and Ira Itskowitz, 58, a sales manager, each spent more than five years in federal prison for previous fraud convictions and are already in federal custody for violating parole in connection with their participation in the scheme.

The four principal owners of the business, Niv Iskin, 30, of Reseda, Reviv Karpman, 38, of Tarzana, Tomer Kogman, 29, of Receda and Avraham Yechizkia, 34, of Encino; and a sales manager, Barel Iskin, 23, of Woodland Hills, are still being pursued by law enforcement.

“This company was just a boiler room, long on promises and upfront fees but short on foreclosure relief,” Brown said. “Its operators cruelly defrauded citizens trying valiantly to hang on to their homes.”

Brown’s office initiated its investigation in March 2009 in response to numerous consumer complaints against the defendants’ Canoga Park-based loan modification business, which operated as Mason Capital Group, LLC and Gretchen Fox and Associates.

When agents executed a search warrant at the office, they found a Las Vegas casino-themed sales floor complete with craps, poker and black jack tables fashioned as workstations, and a roulette wheel that top-selling telemarketers spun for cash bonuses (see photos attached).

Between January 2008 and June 2009, the four owners took in at least $2.3 million in up-front fees, which ranged from $1,000 to $5,000, from more than 1,500 homeowners throughout the country. In almost every case, no loan modifications were completed, as promised. Financial records indicate that the four owners spent hundreds of thousands on private school tuition, travel, entertainment, shopping and other personal expenses while running Mason Capital Group, LLC and Gretchen Fox and Associates.

To corral sales, the four owners used a telemarketing operation that targeted homeowners facing mortgage payment increases or foreclosure. During an initial call, the telemarketers touted the company’s team of “attorneys, forensic accounting personnel, and loan negotiators” available to negotiate reductions in interest rates, monthly payments and principal balances; their supposed 90% to 100% loan modification success rate and refund guarantee. The telemarketers then collected financial information from homeowners to determine if they “qualified” for the company’s services.

Soon after the initial call, homeowners received a follow-up call to inform them that their case had been “reviewed” and “approved.” Telemarketers closed sales by insisting the approval would expire unless homeowners acted quickly, while reminding them about the refund guarantee if promised results were not achieved.

In fact, the company completed very few loan modifications, rarely contacted lenders, failed to honor the refund guarantee, employed unlicensed “loan processors” and had no legal staff negotiating with lenders.

While homeowners waited, they were told their loan modifications, or refunds, would be voided if they tried independently to contact their lender. Many lost their homes to foreclosure as a result.

To skirt the state’s foreclosure laws, avoid paying refunds and conceal profits, the owners changed company names, claimed bankruptcy and shifted loan modification files to another business they created called, American Financial Group, LLC.

Investigators located victims in dozens of California cities, including: American Canyon, Anaheim, Antioch, Artesia, Atwater, Bakersfield, Ceres, Chico, Cotati, Cloverdale, Crestline, Delano, Elk Grove, Encino, Fountain Valley, Fremont, Fresno, Guerneville, Hanford, Hayward, Hercules, Hood, Indio, La Jolla, Lancaster, Laguna Hills, Lodi, Long Beach, Los Angeles, Manteca, Modesto, Montclair, N. Hollywood, Newhall, Newman, North Highlands, Oakdale, Oakland, Ontario, Palmdale, Pittsburg, Pleasanton, Poplar, Porterville, Redding, Richmond, Riverbank, Rodeo, Sacramento, San Jose, San Pablo, Santa Clara, Santa Rosa, Sebastopol, Stanton, Stockton, Tracy, Tulare, Turlock, Union City, Upland, Valley Village, Van Nuys, Visalia, W. Sacramento and Yuba City.

Brown’s office will seek restitution for victims of this scam.

By law, all individuals and businesses offering mortgage foreclosure consulting or loan modification and foreclosure assistance services must register with Brown’s office and post a $100,000 bond. It is also illegal for loan modification consultants to charge up-front fees for their services.

Non-profit housing counselors certified by the U.S. Department of Housing and Urban Development provide free help to homeowners. To find a counselor in your area, call 1-800-569-4287.

If you are a homeowner who has been scammed, contact Brown’s office at 1-800-952-5225 or file a complaint online at:www.ag.ca.gov/consumers/general.php.

Brown has sought court orders to shut down more than 30 fraudulent foreclosure relief companies and has brought criminal charges and obtained lengthy prison sentences for dozens of other deceptive loan modification consultants. For more information on Brown’s action against loan modification fraud visit: http://ag.ca.gov/loanmod.

The 97 criminal counts filed against the nine defendants, include 63 counts of grand theft, 26 counts of unlawful foreclosure consulting, 7 counts of tax evasion and 1 count of conspiracy.

The United States Postal Inspection Service assisted in the investigation.

Copies of the complaint, filed in Los Angeles County Superior Court, and the Arrest Warrant are attached.

Jerry Brown

Is the California DRE Even Relevant Anymore?

Since starting MFI-Mod Squad back in January, I have witnessed a lot of craziness from illegally-run loan modification companies. They’re often staffed by convicted felons, unlicensed lawyers, or government bureaucrats who confuse motion with action. 

 This has been most prevalent in California, which became a mecca for illegally-run and shady loan modification companies within the past twenty-four months. Under California statute, enforcement of the regulations that govern mortgage lending and modifications was the responsibility of the Department of Real Estate (DRE). 

 From November 2007 until September 2008, DRE did nothing to reign in the loan modification industry. It wasn’t until complaints began pouring in about these companies that DRE began requiring modification companies who charge an advance fee to have an advance fee agreement on file with them. That, however, didn’t stop the unethical practices committed by the vast majority of these companies. DRE’s advance fee requirements were hardly enforced.

 A perfect example of this was Loan Safe Solutions. The company was operated by Moe Bedard, a convicted felon whose DRE license was terminated when he was incarcerated. Bedard began Loan Safe Solutions after he left prison and operated it until May 2009, when his company lost its office space through eviction. It was commonly known in the modification and lending industry since the spring of 2008 that Bedard was operating outside DRE guidelines, but DRE did nothing. 

 See http://www.mfi-modsquad.com/would-you-hire-this-guy-to-do-your-loan-mod

 There are other shady companies that DRE did nothing to punish. Federal Loan Modification is another example. It was finally shut down after it was fined to death by the Federal Trade Commission (FTC). The FTC acted after being grilled by reporters about MFI-Mod Squad’s list of the twenty worst loan modification companies, which was published in April.

 See http://www.mfi-modsquad.com/bad-loan-modification-companies

 It wasn’t until early this year that DRE initiated a statewide dragnet against these companies because DRE was trying to keep the Governator’s bean counters at bay. Schwarzenegger’s people were looking for ways to do budget cuts and eliminate California’s massive $38 billion deficit. 

 Though good for a few blurbs on the Internet, this dragnet did little to actually scare these companies, which were working with equally unscrupulous law firms. 

 Due to actions initiated by other entities, the situation did eventually improve over the past several months. The California Attorney General’s office stepped in and began filing lawsuits against loan modification companies and requiring that $100,000 surety bonds be filed with their office.  The State Bar of California elected a new president. Her core mission was to bring integrity back into the legal profession, beginning with attorneys who charged advance fees for loan modifications and then failed to perform any work on the files. 

 Then, of course, SB 94 was introduced and was then signed by Schwarzenegger last week.  

With all these issues, is it fair to ask if DRE is even relevant? If they are, how can they be made more effective? Do they need new leadership and a new mandate?

Jerry Brown

Jerry Brown is Cracking the Whip on Mod Companies

The California AG’s office has started a new site about fraudulent modification companies.  You can see it here:

http://ag.ca.gov/loanmod/

The AG’s office also sent letters to the 386 modification companies that have not posted their $100,000 bonds as required under California law.  They must file a bond within 10 days or face up to a year in jail or a $25,000 fine.

You can see who they are here:

http://ag.ca.gov/cms_attachments/press/pdfs/n1780_registry_list.pdf

One of the people on that list is Barnhart Capital run by Beau Barnhart.   His other company, New Beginnings LMS made our Top 20 Worst Mod Company list back in March.   

The AG also sent out a letter to Emodifymyloan.com’s President Chris Mozillo (yes, Angelo’s nephew) demanding they substansiate their advertising claims within 20 days.

Jerry Brown

Sorry California, Your Right To Legal Counsel Is About To Be Taken Away!

By Martin Andelman

What do you call 500 lawyers at the bottom of the ocean?  A good start.

Very funny stuff, right?  Unless, of course, you’re being sued… or you’re charged with a crime… or you’ve just been fired without cause… or if your spouse just walked out after 20 years… or if you’ve been cited for Driving Under the Influence… or harmed as a result of another’s gross negligence.  When you need an attorney to enforce or otherwise protect your rights, you’re not laughing at lawyer jokes nearly as much.  In fact attorneys, I would imagine, get hugged a lot too… maybe just as often as they’re made fun of, I don’t really know.

From its very beginning, American society has been based on law… and forged by lawyers.  Our lawyers have been charged with setting our nation’s values—through the “landmark cases” that brought major reforms, and through the trust in a lawyer’s day-to-day dealing with his or her clients.  In point of fact, our lawyers must be the conscience of our legal system, and of the people—because if not them, who?

It occurs to me that there are certain professions that we need to trust in our society, and attorneys are one of them.  Police officers are another and physicians a third.  Police brutality, for example, is seen as being the very serious offense that it is, not solely because of its victims, but because it threatens to teach a segment of society that the police cannot be trusted.  And that can be a very dangerous thing.

Police officers, for the most part, are looking out for our safety and if we don’t trust them, it’s quite possible that we could be harmed as a result, perhaps fatally harmed.  And physicians are another group of professionals that in general we need to trust, because if we don’t, we put our health at risk.

Attorneys are a profession that we need to trust when we need them.  We trust that what we tell our lawyer is “privileged,” meaning that our lawyer is prohibited from disclosing whatever we’ve said to others. And it’s important that we trust this to be the case, because if we can’t tell our lawyer the truth, he or she may not be able to provide us with a proper defense and we may be deprived of life, liberty, or property as a result.

Yet, here in California, the legislature is dangerously close to passing a bill that would establish quite clearly that lawyers… all lawyers… are individuals not to be trusted.  And even more so, that attorneys in large number are the type of criminals that left unchecked would plot to steal $3,000 from homeowners distressed as a result of being at risk of losing their homes.

The bill in question, California Senate Bill 94, which was proposed by Banking & Finance Committee Chair, Senator Ron Calderon, was originally designed to prevent a company or individual from charging an upfront fee when offering to help a homeowner avoid foreclosure by working with his or her lender or servicer to obtain an agreement to modify the terms of his or her mortgage.

Now widely referred to as “loan modifications,” there is little question that few homeowners knew of such terminology just a few years ago.  But as the foreclosure crisis steadily tightened its grip on California homeowners over the last 18 months, the term loan modification has quickly become a part of the lexicon.

Initially, many who had been employed in the mortgage industry prior to its meltdown, seeing it as a variation of a refinance transaction, entered the completely unregulated field, and predictably problems ensued.  And although neither the precise cause, nor the extent of these problems has been ascertained, there is no question that some percentage of the operators of these early loan modification companies were unscrupulous con artists who defrauded homeowners out of several thousand dollars by promising to save their homes from foreclosure.

How many scams took place?  No one is certain, but any number is too many according to some.

The State of California’s response was less than coordinated.  The Attorney General and Department of Corporations was one possibility for regulation and enforcement, the California Department of Real Estate was another, and when law firms entered the picture, the California Bar Association was a third.

The initial front-runner was the Department of Real Estate, who introduced their “Advance Fee Agreement,” beginning in October of 2008.  The idea was simply to allow licensed individuals to accept a fee in advance, but required that fee to be placed in a trust account and only withdrawn as earned.  Months later, the Attorney General introduced the requirement that individuals post a $100,000 bond in order to operate as a foreclosure consultant.

Law firms, however, who were already well regulated and under the jurisdiction of the California Bar, remained law firms and presumably functioned as such.

Then, beginning in late 2008 and into early 2009, the California Bar started to receive an inordinate number of complaints each month, between 900-1100, and the sheer number in addition to the allegations was troubling to say the least.  It seemed that some attorneys were allowing firms to operate under their license to practice law, but no law was actually being practiced at the organization in question.  Mortgage brokers had realized that one way around the DRE’s Advance Fee Agreement, which limited the cash flow a company could utilize, was to become an “attorney backed firm,” a hybrid with no basis in law or business convention.

The California Bar sent out an Ethics Alert in February of 2009, warning attorneys that the Bar Association did not condone such practices, and that any attorney involved in such a scheme could be at risk of losing their license to practice law.  The Bar faced a significant problem with the volume of complaints, however.  An attorney had to read each complaint to determine what type of allegation each contained and having never before received anywhere the number being received, they were dramatically understaffed.

Then in February of 2009, Senator Calderon introduced SB 94 and the committee meetings began.  The bill passed through the Senate Banking and Judicial Committees in May and Senate Appropriations in early June.  The bill as written at that time would prohibit mortgage and real estate licensed individuals from accepting advance fees in connection with a loan modification, but attorneys were largely exempt.

Then, just days before July 4^th, with the California Assembly’s Committee on Banking and Finance scheduled to hold a hearing on a similar bill (AB 764) on July 6^th, the bill was amended to ban attorneys from accepting any fees or retainers in advance when representing a client in connection with a loan modification.

The negotiations to obtain a loan modification were widely believed to be 3-4 weeks… but in truth often required 5-9 months, and as a result, the effective outcome of SB 94 and/or AB 764 would be that no attorneys could afford to take on a client who was seeking representation in the negotiations with their lender.  And this would effectively deprive California’s homeowners from being able to engage legal representation.

Attorneys who defend the most unpopular accused persons are especially important.  The more heinous or unpopular the offense, the more necessary the right to counsel, and one of the hazards of pre-trial publicity is that the jury pool can become “tainted”.  Newspaper articles, talk shows, the many opinionated programs on cable television can all serve to poison the public against a defendant… and in this case the defendant is the legal profession, access to which is now crucial to hundreds of thousands of homeowners if they are to remain in their home.

One of the most misunderstood phrases in literature is from Shakespeare.  Shakespeare’s exact line, ”The first thing we do, let’s kill all the lawyers,” was stated by Dick the Butcher in ”Henry VI, Part II”.  Dick was a follower of the rebel Jack Cade who thought that if he disturbed law and order, he could become king.

Shakespeare meant it as a compliment to attorneys and judges who instill justice in society.

To pass into law a piece of legislation that so clearly, thoroughly and seriously maligns the legal profession, based on allegation and innuendo would cause our society harm that could conceivably last for generations.  To believe that attorneys in large number are defrauding distressed homeowners out of $3,000 fees for work that can take many months to complete, stretches the imagination past the point of credulity.

Most notably, CNNMoney.com recently asked homeowners who attempted to obtain a loan modification through the HAMP program WITHOUT ASSISTANCE OF ANY KIND to write in and share their experiences.  Well over 500 letters were received and the overwhelming number expressed intense feelings of extreme dissatisfaction and disappointment.

Additionally, in the last two weeks, we have all learned that banks and servicers have not fulfilled their promises to modify mortgages per the agreed to terms of HAMP, much to the administration’s chagrin.  Treasury Secretary Geithner and President Obama have both admitted the program has not worked effectively and now promise tighter controls.

A review of the complaints received by CNN.com clearly shows that those losing their homes and unable to obtain the help promised by the administration are crestfallen and angry at the failure of their government.

To effectively brand attorneys as untrustworthy thieves and scammers, based on complaints that to this date remain unread, in light of the recent evidence and testimony in Congress, would be unconscionable and result in irreparable harm to California’s homeowners and potentially all Americans who need access to legal representation today, perhaps more than ever before in our nation’s history.

I urge you to speak out immediately against this poorly conceived legislative proposal that would effectively deprive homeowners in California from their right to counsel and damage the reputations of attorneys throughout the nation.

The answer is enforcement of existing laws, not new legislation that will make it illegal for reputable attorneys to charge reasonable fees to clients who wish to engage their services.  Because homeowners need help.

IF YOU’RE WILLING TO  STAND UP AND BE COUNTED,

PLEASE EMAIL ME RIGHT AWAY AT:

MANDELMAN@MAC.COM

And please forward a link to this article to everyone you know.

This threat is very, very real.