Tuesday, July 30, 2013

Foreclosure Mill Law Firm Accused Of Running Inflated Fee Racket In Connection With Charges For Serving Legal Notices On Homeowners; Colorado AG: Firm Pocketed $5M+ In Profits

In Denver, Colorado, The Denver Post reports:

  • By charging up to six times the market rate for serving foreclosure notices on property owners, Colorado's second-largest foreclosure law firm generated millions of dollars in profits on the backs of homeowners and taxpayers, according to a state attorney-general lawsuit.

    Attorney General John Suthers said his office is investigating whether Aronowitz & Mecklenburg in Denver "misrepresents its posting costs" when it bills homeowners for its foreclosure expenses — charges that hit $150 while the person who does the posting is paid $7 plus mileage, according to the lawsuit filed last week in Denver District Court.

    "The subpoena is necessary to aid the investigation of possible deceptive conduct" under the state's consumer-protection act, Suthers said in the lawsuit.

    By owning Xceleron, the company that posts a pair of notices on a property advising homeowners of their rights during the foreclosure process — notices that are required by law — Aronowitz & Mecklenburg "has generated millions of dollars personally to the three partners (of the firm) by charging a posting fee five to six times the market rate," Suthers' office said in the lawsuit.

    When compared with its actual cost, the mark-up is even higher, Suthers' office said in the lawsuit.

    Investigators with the attorney general's office estimate the profits top $5 million, according to a court affidavit.

    Attorneys at the law firm did not respond to requests for comment.

    The lawsuit seeks to force the law firm to comply with investigative subpoenas that Suthers' office issued in April for detailed documents explaining the charges. The law firm — headed by Robert Aronowitz; his daughter, Stacey Aronowitz; and his son-in-law, Joel Mecklenburg — provided some documents, Suthers said, but has withheld many more, citing attorney-client privilege.

    "The law firm should not be able to charge such costs to the public but then refuse to provide the authority to charge those costs," the attorney general's office said in its court filing.

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