California AG targets law firms in foreclosure rescue scheme
California Attorney General Kamala Harris filed suit this week against three Los Angeles area law firms, several lawyers and 14 others in a multi-million dollar foreclosure-relief scam. It's the first major consumer action spawned by the AG's Mortgage Fraud Strike Force, Harris' office said. In the complaint, the California AG alleges the defendants promised to place distressed homeowners into mass joinder lawsuits, where they would have the opportunity to obtain foreclosure relief by arguing against mortgage lenders in conjunction with hundreds of other similarly situated plaintiffs. Instead, the AG says the defendants pocketed the distressed borrowers' retainer fees and never delivered on their promises, leaving some homeowners to face foreclosure anyway. The Southern California area law firms named in the AG's suit include the Law Offices of Kramer & Kaslow, Mitchell Stein and Associates Inc. and Mesa Law Group Corp. Representatives for those firms were not immediately available for comment. The state placed the law firms into receivership Aug. 15 after the AG's office in collaboration with the State Bar of California and the California Department of Justice completed their investigation and filed the case. The AG's office said the defendants used "false and misleading representations to induce thousands of homeowners into joining the mass joinder lawsuits against their mortgage lenders." Rather than getting help, the AG's office claims the homeowners ended up unable to retrieve the most basic information about their case. By the end of the investigation, 16 bank accounts were seized. "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." Legal claims filed against the multiple defendants include charges of false advertising; unfair, fraudulent or unlawful business practices; unlawful running and capping and improper attorney fee splitting. The California Department of Justice seized the practices of all Los Angeles area parties with alleged ties to the scheme, including Attorneys Processing Center; Data Management LLC; Mitigation Professionals; Pate Marier & Associates; Home Retention Division; and Lewis Marketing Corp. Potential victims of the scheme stepped forward in 17 different states. Write to: Kerri Panchuk.