California AG Accuses Loan Modification Firm, Attorney Of Filing Phony Lawsuits To String Homeowners Along, Collect Upfront & Monthly Fees

From the Office of the California Attorney General:

• Attorney General Edmund G. Brown Jr. [Monday] sued a foreclosure consultant and an attorney -- Paul Noe Jr. and Mitchell Roth - who conned 2,000 desperate homeowners into paying exorbitant fees for "phony lawsuits" to forestall foreclosure proceedings.(1) These lawsuits were filed and abandoned, even though homeowners were charged $1,800 in upfront fees, at least $1,200 per month and contingency fees of up to 80 percent of their home's value.

• "Noe and Roth ripped off homeowners desperate for help by charging unconscionable fees for phony lawsuits," Brown said. "Instead of aggressively pursuing the lawsuits, Noe and Roth strung them along so they could continue to rake in fees."(2)

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• After filing the lawsuits, Roth did virtually nothing to advance the cases. He often failed to make required court filings, respond to legal motions, comply with court deadlines, or appear at court hearings. Instead, Roth's firm simply tried to extend the lawsuits as long as possible in order to collect additional monthly fees.

• Under the terms of the agreement, United First charged homeowners approximately $1,800 in upfront fees, plus at least $1,200 per month. If the case was settled, homeowners were required to pay 50 percent of the cash value of the settlement. For example, if United First won a $100,000 reduction of the mortgage debt, the homeowner would have to pay United First a fee of $50,000. If United First completely eliminated the homeowner's debt, the homeowner would be required to pay the company 80 percent of the value of the home.

For the entire California AG press release, see Brown Sues Foreclosure Consultant and Attorney Who Conned Homeowners into Paying Thousands for Phony Lawsuits.

For the California AG's lawsuit, see People v. United First, Inc., et al.

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(1) Brown's lawsuit contends that Noe, Roth and United First:

• Violated California's credit counseling and foreclosure consultant laws, Civil Code sections 1789 and 2945;
• Inserted unconscionable terms in contracts;
• Engaged in improper running and capping, meaning that Roth improperly partnered with United First, Inc. and Noe, who were not lawyers, to generate business for his law firm violating Section 6150 of the California Business and Professions Code, and
• Violated Section 17500 of the California Business and Professions Code.

(2) In addition to the current hot water this pair is in, Paul Noe Jr. was convicted of wire fraud in 1989 and the subject of a California Department of Insurance Cease and Desist Order in 2004; and Mitchell Roth resigned for the California State Bar in late May 2009, after the State Bar closed his law firm (see SF Weekly: State Bar Takes Over 'Son of Super Swindler' Law Firm -- 2,000 Con Jobs Too Late).