Cal. AG Tags Forensic Loan Audit Firm, Others w/ $60M Suit; Says Litigation Mill "Littered Courts w/ 100s Of Suits That Have Scant Chance Of Success"

From the Office of the California Attorney General:

• Attorney General Edmund G. Brown Jr. [] filed a $60 million lawsuit against a pair of Sacramento companies that lured desperate homeowners with a deceptive marketing scheme that promised to obtain mortgage modifications through the use of computer-generated "forensic loan audits."

• "These defendants dangled the term ‘forensic loan audit' as a sure-fire remedy for the mortgage problems of homeowners in distress," Brown said. "In fact, it was no remedy at all, and hundreds of desperate California homeowners took the bait and lost their money -- and sometimes their homes."

• Brown filed the $60 million lawsuit against US Loan Auditors, My US Legal Services, and five individuals, including two attorneys, who operate a fraudulent mortgage audit scheme that preys on desperate homeowners anxious to save their homes. The suit demands civil penalties, restitution for victims, and permanent injunctions to keep the companies and other defendants from fraudulently marketing forensic loan audits and legal services of little value.

***

• My US Legal Services bilks clients for months, filing cookie-cutter complaints with little or no merit, billing unjustified monthly fees, and then dodging clients' phone calls or stringing them along with false assurances that a settlement is in progress. Hundreds of California homeowners, many of them facing possible loss of their homes, have been duped into paying thousands of dollars to the two companies -- one homeowner paid more than $55,000 -- but received little or no relief.

• Meanwhile, the litigation mill run by My US Legal Services has littered courts with hundreds of lawsuits that have scant chance of success. Two federal judges have expressed concern about the legitimacy of these lawsuits and have several times sanctioned attorneys involved.

• In addition to the companies, Brown is suing the three owners: attorney and real estate broker James Sandison, Jeffrey Pulvino, and Shane Barker, as well as two California attorneys, Sharon L. Lapin and Jonathan G. Stein. The State Bar filed disciplinary charges [] against Sandison for alleged misappropriation of clients' funds and aiding the unauthorized practice of law.

For the California AG press release, Brown Files $60 Million Lawsuit Against Fraudulent Forensic Audit Loan Modification Scam.

For the lawsuit, see People v. US Loan Auditors, Inc., et al.

(1) Go here for a sample solicitation entitled "Notice Regarding Predatory Lending Your Immediate Participation Is Requested."

A portion of the solicitation appears to cleverly simulate a government document and resembles IRS Form w-2 or IRS Form 1099, possibly to create the illusion that the source of the mailing is a government agency. The remainder of the solicitation is also designed in a manner that one could reasonably associate with an official government document (although, in the fine print, the outfit conveniently slips in the standard 'we are not a government agency, nor are we affiliated with one' language).

The form of envelope which was allegedly used to send the mailing appears to simulate an envelope that a recipient of which might associate with one coming from a federal government agency, and contains the caption "PREADATORY LENDING INVESTIGATION" as well as the following 'boxed' boilerplate warning:

CONFIDENTIAL: DOCUMENTS ENCLOSED FOR
ADDRESSEE ONLY: $2000 FINE OR 5 YEARS
IMPRISONMENT OR BOTH FOR ANY PERSON
WHO TAMPERS WITH OR OBSTRUCTS DELIVERY.
U.S. CODE TITLE 18, SEC. 1702

For those interested in a piece of Federal consumer protection law historical trivia, use of mailings that are designed to simulate government documents in an attempt by alleged scam artists to con people out of money is a trick that's been around for decades, and, at least when used in the context of bill collection activities by debt collectors, was declared illegal in 1978 by the Fair Debt Collection Practices Act. See U.S. CODE TITLE 15, SEC. 1692(e)(9), which declares the following conduct to be a violation of the FDCPA as an unfair or deceptive practice:

• The use or distribution of any written communication which simulates or is falsely represented to be a document authorized, issued, or approved by any court, official, or agency of the United States or any State, or which creates a false impression as to its source, authorization, or approval.