State Bar of California

Cal Bar goes after O.C. loan mod lawyer

An Orange County lawyer who signed retainer agreements with homeowners facing foreclosure but then “did little or nothing to help them” was placed on involuntary inactive enrollment, the State Bar of California announced.

The Bar cited complaints from clients in 8 states against lawyer Brian Colombana, 29, of Lake Forest.

“The Chief Trial Counsel’s office continues to send the message that attorneys guilty of misconduct – especially toward homeowners who are at their most vulnerable when facing the loss of their homes – will be prosecuted and disciplined,” Interim Chief Trial Counsel Russell Weiner said.

From the Bar:

“State Bar Court Judge Richard Honn said in his June 17 ruling that the conduct of Brian Colombana …  “poses a substantial threat of harm to his clients or the public.” Honn cited 13 declarations against Colombana by clients from California, South Carolina, Minnesota, Nevada, New Mexico, Maryland, Utah and New York who paid upfront fees to one of the loan modification companies with which Colombana was affiliated, including Loan Negotiators of America, Housing Law Center and Mortgage Law Center.

“In most cases, clients never even met the attorney but dealt with non-attorney representatives of the loan modification companies. Through the companies, Colombana ‘convinced numerous cash-strapped homeowners to pay him thousands of dollars in hopes of saving their homes from foreclosure,’ Honn wrote. ‘. . . Many of these homeowners were worse off after retaining respondent’s services.’

“The judge noted that many of the homeowners were current with their mortgages but then were advised by Colombana’s affiliates to stop paying. “Soon these clients were behind on their mortgage payments and facing foreclosure, and [Colombana] wasn’t there to help,” Honn wrote.

“In ordering involuntary inactive enrollment, Honn said Colombana continues to harm clients by failing to refund unearned fees or communicate with them and demonstrates a pattern of behavior likely to continue to cause substantial harm.”

The action against Columbana stems from efforts by the State Bar’s Task Force on Loan Modification to stop lawyers who ”exploit the vulnerabilities of frightened homeowners who face foreclosure by promising services that are never delivered,” the Bar says.

Since the task force was created last April, seven involuntary enrollments have been ordered and 13 resignations obtained from lawyers who engaged in misconduct related to loan modifications. The Bar says there are 5 loan modification trials pending and 2,000 active investigations.

Read more here: http://www.ocregister.com/articles/lawyer-254168-bar-enrollment.html

State Bar of California

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

State Bar of California

Cal Bar Crackdown Nabs 5 More Shady Mod Lawyers

San Francisco, November 10, 2009 — The State Bar of California announced today that action has been taken against five more lawyers under investigation for loan modification misconduct, bringing to 14 the number of attorneys who have resigned or been placed on involuntary inactive enrollment since creation of the bar’s Loan Modification Task Force in April.

 

“I am very pleased with the results being obtained by members of our Loan Modification Task Force,” said Interim Chief Trial Counsel Russell Weiner. “They have exceeded my expectations. Our office has been aggressively investigating and prosecuting attorneys alleged to have committed loan modification misconduct. Any attorney thinking that he or she can commit loan modification misconduct and get away with it for a significant period of time should think again.”

 

On Nov. 2, Timothy Thurman [#216048], 37, resigned with charges pending following his arrest by FBI agents in October at his Altadena home. He was charged with creating and using a court order containing what he knew to be a forged signature of a federal judge. Thurman allegedly gave the document to his clients, who had sought Thurman’s help to avoid eviction, telling them to give it to the sheriff, who became suspicious and contacted the judge. Thurman’s practice, Trinity Law Group in Los Angeles, which he started earlier this year, was doing lender litigation and loan modification. State Bar investigators worked with the FBI in the investigation.

 

On Nov. 4, the Loan Modification Task Force obtained the resignations with charges pending of Gary Davidson [#32110], 75, of Costa Mesa, and Eric Douglas Johnson [#224065], 55, of Culver City.

 

On Nov. 4, Paul Lucas [#163076], 48, of the Lucas Law Center in Aliso Viejo, was ordered involuntarily inactive for posing “a substantial threat of harm to (his) clients or the public” under Business and Professions Code 6007. State Bar Court Judge Lucy Armendariz said Lucas had inaccurately described his firm’s refund policy and its business relationship with Future Financial Services. She also said that Lucas had formed a partnership with a nonlawyer in violation of State Bar rules and aided in the unauthorized practice of law.

 

Armendariz noted that the Lucas Law Center, Future Financial and others had generated 45 State Bar complaints and 89 Better Business Bureau complaints. The Federal Trade Commission also issued a preliminary injunction against Lucas Law Center and Future Financial Services. Armendariz said Lucas, through his staff, agents and advertisements, misrepresented the scope of his service to clients, collected advance fees under false pretenses, recklessly advised clients to stop making mortgage payments, failed to perform services, failed to promptly refund earned fees and repeatedly failed to respond to client inquiries.

 

On Nov. 6, Sean Rutledge [#255938], 34, of Irvine, who started United Law Group in August 2008, was enrolled as an inactive member of the State Bar pending further order under Business & Professions Code 6007. Rutledge “promised to help troubled homeowners – many of whom were in arrears or on the brink of foreclosure – modify their home loans and maintain financial stability,” State Bar Court Judge Richard Honn wrote in his order of inactive enrollment. “Instead, he took their money and time and offered little or nothing in return. In fact, due to their loss of money and time, many of respondent’s clients ended up in a worse position than they were in when they originally turned to respondent for help… respondent has engaged in a pattern of client neglect involving failing to perform, failing to communicate, and/or failing to refund unearned fees in 14 separate client matters.”

 

The Loan Modification Task Force has received more than 1,250 complaints and is investigating almost 250 lawyers. Each task force investigator oversees about 135 cases, and almost 20,000 attorney files have been removed from the offices of attorneys whose loan modification practices have been shut down or abandoned. State Bar investigations are up 69 percent over 2008.

 

The State Bar has been working with local law enforcement as well as the state Attorney General’s Office and the FBI to address the problem of businesses and law firms preying on people about to lose their homes through foreclosure. Orange County Deputy District Attorney George McFetridge Jr. said coordination between the State Bar and his office in combating “these criminal enterprises that prey on desperate homeowners” has been invaluable. “I’m also thrilled that the State Bar has taken such an aggressive stance against attorneys who employ cappers, split fees with non-attorneys, engage in false advertising and commit fraud on the public,” he wrote in a letter to State Bar President Howard Miller.

 

State Bar of California

Cal Bar yanks 7 licenses

San Francisco, October 21, 2009 — The State Bar’s loan modification task force announced today that it obtained the resignations of three California attorneys as a result of misconduct related to their loan modification activities. It also placed another attorney on inactive status, charging his work poses a threat to the public, and has undertaken similar efforts against two other lawyers.

In addition, James Parsa [#153389], a southern California lawyer who extensively advertises his loan modification work, resigned today. He faced interim suspension from practice as a result of a 2001 misdemeanor conviction for sex with a child under 18 that he never reported to the bar.

Parsa, 44, has advertised heavily throughout California for the past several months, offering to help homeowners facing foreclosure. Although he provided evidence to the bar that he was in fact working on cases, an investigator uncovered two 2001 misdemeanor convictions for sex with an underage girl. The bar court ordered that Parsa be placed on interim suspension. His resignation will make the suspension moot.

The State Bar created a 10-person loan modification task force in March after receiving thousands of calls from homeowners complaining that lawyers have done no work after taking fees purportedly to help avoid foreclosure. The task force has 738 active investigations underway.

Last month, it released the names of 16 attorneys it was investigating for possible misconduct related to loan modification. Four of the six who resigned or face inactive enrollment were on that list. “We are very pleased that we have been able to remove these practitioners from the practice of law quickly in order to protect the public,” said Interim Chief Trial Counsel Russell Weiner.

Until recently, attorneys were able to legally accept advance fees from borrowers for residential loan modification work and other forms of mortgage loan forbearance services. Lawyers’ services were in demand by foreclosure relief companies and operators that could not otherwise receive payment until contracted or promised loan modification work was completed. However, on Oct. 11, Gov. Schwarzenegger signed SB 94, which prohibits attorneys and any other persons from collecting an advance fee for residential loan modification and mortgage loan forbearance services. The measure took effect immediately. Details about the new law are at the Department of Real Estate home page, www.dre.ca.gov.

The attorneys who resigned from the State Bar are:

• CAMERON EDWARDS [#222549], Alliance Law Center in San Diego, resigned Sept. 25.
• RONALD RODIS [#181873], of Rodis Law Group and America’s Law Group in Newport Beach, resigned Oct. 13.
• JEFFREY NEMEROFSKY [#213014], U.S. Advocacy Law Group and U.S. Financial Products, in Laguna Niguel, resigned Oct. 16.

The three are ineligible to practice law pending a California Supreme Court order accepting the resignations.

Those the bar is seeking to place on involuntary inactive status for posing “a substantial threat of harm to (their) clients or the public” under Business & Professions Code §6007(c) are:

• PAUL LUCAS [#163076], of Lucas Law Center in Aliso Viejo. The State Bar petitioned to put him on inactive status Sept. 21; Lucas did not reply to the petition and the State Bar Court has taken the matter under submission.
• SEAN RUTLEDGE [#255938], of United Law Group in Irvine, has a hearing Oct. 23; the bar filed its petition Sept. 22. The bar earlier charged him with seven counts of misconduct in handling a loan modification for a client who paid an advance $3,500 fee. Rutledge never took any action to negotiate with the client’s mortgage lender, the bar charges.

In addition, CHRISTOPHER L. DIENER [#187890], of Irvine, principal attorney for Home Relief Services LLC, was placed on inactive status Oct. 9, due to the State Bar Court judge’s finding that he poses a substantial threat of harm to his clients and the public.

Attorney General Jerry Brown sued Diener last summer and accused him of telling homeowners he and his company would act as sole agent and negotiators and directed the homeowners to stop contacting their lender. None of the known victims received a loan modification with the company’s assistance. Brown accuses the company and Diener of bilking thousands of homeowners out of thousands of dollars each.

Founded in 1927 by the state legislature, the State Bar of California is an administrative arm of the California Supreme Court, serving the public and seeking to improve the justice system for more than 80 years. All lawyers practicing law in California must be members of the State Bar. By October 2009, membership reached more than 223,000.

State Bar of California

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?

State Bar of California

Cal Bar Continues Blood Thirsty Pursuit of Shady Mod Lawyers! 3 More Nabbed!

San Francisco, August 12, 2009 — Continuing its aggressive pursuit of lawyers who commit professional misconduct by taking advantage of vulnerable homeowners, The State Bar of California announced today that it has obtained the resignations of two lawyers and filed charges against a third for their loan modification activities.

The State Bar’s special team on loan modification complaints coninues to investigate more than four hundred active complaints from consumers about lawyers’ roles in loan modification scams.

The team, comprised of six investigators and four attorneys in the Office of the Chief Trial Counsel, led by Supervising Trial Counsel Suzan J. Anderson, is working with local prosecutors, the office of the Attorney General of the State of California, and the California Department of Real Estate.

Among the State Bar’s recent results:

• On August 3, State Bar prosecutors obtained attorney Christian Dillon’s (Bar No. 89376) resignation with charges pending. At that time, Dillon was under investigation for consumer complaints received by the bar regarding his affiliation with USMAC Law Group. Dillon has been enrolled as an inactive member of the State Bar and is ineligible to practice law pending a Supreme Court Order accepting his resignation.
• On August 4, State Bar prosecutors obtained attorney Nabile Anz’s (Bar No. 183324) resignation with charges pending. Anz ran the Federal Loan Modification Law Center in Irvine. In July the bar had filed in the State Bar Court an application to have Anz enrolled involuntarily inactive, alleging that Anz abandoned clients who retained Federal Loan Modification Law Center by failing to perform on behalf of those clients, closing Federal Loan Modification Law Center without any notice to clients and failing to return unearned fees. Along with the resignation, the Office of the Chief Trial Counsel filed in the State Bar Court a Stipulation whereby Anz admitted the misconduct alleged in the application for involuntary inactive enrollment. Anz has been enrolled as an inactive member of the State Bar and is ineligible to practice law pending a Supreme Court Order accepting his resignation.
• On August 5, State Bar prosecutors filed an application against attorney Christopher Diener (Bar No. 187890) who was affiliated with Home Relief Services, to have Diener enrolled involuntarily inactive. Bar prosecutors allege that Diener misrepresented the scope of his services to clients, collected advanced fees from clients under false pretenses, and failed to perform any services to obtain a loan modification on behalf of his clients. A hearing on that application is scheduled for August 28 in State Bar Court.

“The State Bar of California is firmly committed to its mission of protecting the public,” said Interim Chief Trial Counsel Russell Weiner. “As long as the need exists, this office will continue to devote substantial resources to the investigation and prosecution of attorneys who lose sight of their ethical responsibilities and take undue advantage of desperate homeowners under the pretense of helping them with mortgage loan modifications.”

Founded in 1927 by the state legislature, the State Bar of California is the administrative arm of the California Supreme Court in bar admissions and discipline matters, serving the public and seeking to improve the justice system for more than 80 years. All lawyers practicing in California must take and pass the California bar exam to become licensed to practice law in California. By August 2009, membership reached more than 223,000.

State Bar of California

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.