California AG Speaks Out on Mass Joinder & Tort Litigation Raids

California Attorney General Kamala D. Harris today announced that the California Department of Justice, in conjunction with the State Bar of California, has sued multiple entities accused of fraudulently taking millions of dollars from thousands of homeowners who were led to believe they would receive relief on their mortgages.

Attorney General Harris sued Philip Kramer, the Law Offices of Kramer & Kaslow, two other law firms, three other lawyers, and 14 other defendants who are accused of working together to defraud homeowners across the country through the deceptive marketing of “mass joinder” lawsuits. “Mass joinder” lawsuits are lawsuits with hundreds, or more, individually named plaintiffs. This is the first consumer action by the Attorney General’s Mortgage Fraud Strike Force.

Kramer’s firm and other defendants were placed into receivership on Monday, Aug. 15. The legal actions were designed to shut down a scheme operated by attorneys and their marketing partners, in which defendants used false and misleading representations to induce thousands of homeowners into joining the mass joinder lawsuits against their mortgage lenders. Defendants also had their assets seized and were enjoined from continuing their operations. Nineteen DOJ special agents participated as the firms were taken over Wednesday, Aug. 17, along with 42 agents and other personnel from HUD’s Office of Inspector General, the California State Bar, and the Office of Receiver Thomas McNamara at 14 locations in Los Angeles and Orange Counties. Sixteen bank accounts were seized.

“The defendants in this case fraudulently promised to win prompt mortgage relief for millions of vulnerable homeowners across the country,” said Attorney General Harris. “Innocent people, already battered by the housing crisis, were targeted for fraud in their moment of distress.”

“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.”

It is believed that at least two million pieces of mail were sent out by defendants to victims in at least 17 states. Defendants’ revenue from this scam is estimated to be in the millions of dollars.

See also  Your Remedy Is In The Law - YRIITL - Just Scary Wrong in Mass Joinder Marketing

As alleged in the lawsuit, defendants preyed on desperate homeowners facing foreclosure by selling them participation as plaintiffs in mass joinder lawsuits against mortgage lenders. Defendants deceptively led homeowners to believe that by joining these lawsuits, they would stop pending foreclosures, reduce their loan balances or interest rates, obtain money damages, and even receive title to their homes free and clear of their existing mortgage. Defendants charged homeowners retainer fees of up to $10,000 to join as plaintiffs to a mass joinder lawsuit against their lender or loan servicer.

Consumers who paid to join the mass joinder lawsuits were frequently unable to receive answers to simple questions, such as whether they had been added to the lawsuit, or even to establish contact with defendants. Some consumers lost their homes shortly after paying the retainer fees demanded by defendants.

This mass joinder scam began with deceptive mass mailers, the lawsuit alleges. Some mailers, designed to appear as official settlement notices or government documents, informed homeowners that they were potential plaintiffs in a “national litigation settlement” against their lender. No settlements existed and in many cases no lawsuit had even been filed. Defendants also advertised through their web sites.

When consumers contacted the defendants, they were given legal advice by sales agents, not attorneys, who made additional deceptive statements and provided (often inaccurate) legal advice about the supposedly “likely” results of joining the lawsuits. Defendants unlawfully paid commissions to their sales representatives on a per client sign-up basis, a practice known as “running and capping.”

Defendants’ alleged misconduct violates the following laws:

  • False advertising, in violation of section 17500 of the Business and Professions Code
  • Unfair, fraudulent and unlawful business practices, in violation of section 17200 of the Business and Professions Code
  • Unlawful running and capping, in violation of section 6152, subdivision (a) of the Business and Professions Code (i.e., a lawyer unlawfully paying a non-lawyer to solicit or procure business)
  • Improper fee splitting (defendants unlawfully splitting legal fees with non-attorneys)
  • Failing to register with the Department of Justice as a telephonic seller.

Homeowners who have paid to be added to one of the lawsuits should contact the State Bar if they feel they may be victims of this scam. They can also contact a HUD-certified housing counselor for general mortgage related assistance.

The Department of Justice has seized the practices of the following non-attorney defendants:
Attorneys Processing Center, LLC; Data Management, LLC; Gary DiGirolamo; Bill Stephenson; Mitigation Professionals, LLC; Glen Reneau; Pate Marier & Associates, Inc.; James Pate; Ryan Marier; Home Retention Division; Michael Tapia; Lewis Marketing Corp.; Clarence Butt; and Thomas Phanco.

The State Bar has seized the practices and attorney accounts of the attorney defendants:
The Law Offices of Kramer & Kaslow; Philip Kramer, Esq; Mitchell J. Stein & Associates; Mitchell Stein, Esq.; Christopher Van Son, Esq.; Mesa Law Group Corp.; and Paul Petersen, Esq.

Attorney General Harris is challenging the defendants’ alleged misconduct in marketing their mass joinder lawsuits; her office takes no position as to the legal merits of any claims asserted in the mass joinder lawsuits filed by defendants.

Victims in the following states are known to have received these mailers, or signed on to join the case. This is a preliminary list that may be updated:

Alaska, Arizona, California, Colorado, Connecticut, Florida, Hawaii, Maryland, Massachusetts, Michigan, Missouri, Nevada, New Jersey, New York, Ohio, Texas, Washington


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26 thoughts on “California AG Speaks Out on Mass Joinder & Tort Litigation Raids”

  1. Think people. This was motivated by civil servants looking after your intrests? LOL. When the f#$% has that ever happened?  Who pays the bulk of campaign contributions to these folks? Where do they get their marching orders? Who was being sued by K & K? Who had the most to gain from this action?  Kamala Harris has endorsed giving the Banks complete amnesty from all their crimes past, present and future. Home owners are getting screwed again but not from K & K.

    • Judge…. (nice)- Fact- The banks customers were getting screwed on both ends- By the banks, and now by this mass joinder marketing thing. The banks suck & they win… face it. The party’s over. Hopefully you put some of those millions under your pillow.

    • Steve Rhode is not licensed to practice law or give legal advice in any state. It appears his website is a marketing tool to promote advertisement for debt consolidation companies.

      A licensed Attorney for 28 years

      • You would HOPE a licensed attorney for 28 years would have some ethical backbone- But if you don’t see the good in this website & are disgruntled over the fact that CA AG shut down this marketing machine, obviously taking advantage of people on their last nickel & preying on their fears, then you are just another snake. There will be more opportunities for you to steal money, don’t worry… New ponzi scheme’s come around all the time.

        • The attorney above was stating a fact about Steve Rhodes NOT having a license to practice law. His opinion was this site is marketing Debt Consolidation which is true. Nothing in regard to CA AG etc.


          • Oh, you mean the person that was spoofing they worked for a law firm in South Dakota but was really posting from the same IP address as others. Interesting indeed.

      • I am not a lawyer and don’t claim to be one. I’ve very clear about that in the terms on this site but my original question has not been answered, what are you claiming is legal advice I’ve offered?

        By the way. I called the law firm you claim to work at in your email and there is nobody associated with that firm by that name. In addition, while they are a South Dakota law firm they state they don’t have any representative from Yorba Linda, California where you are posting from. They asked me to forward this thread to them so they could investigate you spoofing their firm.

        Even more perplexing is that both sbergstein and cslitigation are posting from the same ip address. Odd, very, very odd.

        So if you are a licensed attorney for 28 years, why do you appear to be lying?

        The only lawyer licensed to practice in California under your name is Barbara Bergstein. Are you Barbara?

  2. What is interesting…”Steve, The Get Out Of Debt Guy” continues to give legal advice and isn’t a licensed attorney in any state.

  3. If it’s a scam, then the factual and legal allegations in the complaints have to be shown to be without merit. With all the lawyers in California, and the fact that the complaints are published on Kramer and kale’s website, there should be ample opportunity YO attack the legal merits f the complaints.

  4. corrections to typos on previous post:
    1.  government wanted to stop Stein and Kramer, what they have on them is nothing in comparison to what they have on banks anf government.
    2.  Nothing can be promised in a lawsuit

    • If you review the marketing examples I’ve shown on this site it would be hard to say promises were not made.

      The action taken was not a government coverup. You would be incorrect to believe so. In fact other cases continue.

      This is about deceptive marketing and fee splitting that the defendants participated in.

  5. This is not as it seems, Stein and Kramer were not scaming the innocent homeowner the banks have done that.  Ca. State Bar and Attornery General really only cares about covering up for the banks.  Stein and Kramer have sued the federal gov. Wall Street and most major banks and winning.  The attorney general could not give a damn about home owners they want to help the banks screw the public so they used what ever they could to scukence Kramer and Stein.  you all have to be really nieve to think this is in anyway to protect the homeowner.  As with any lawsuit Kramer and Stein ptomised nothing.

  6. Thanks for posting this information, Steve. I was about to get tied up with this center, but something didn’t seem right. I’ve looked at your sources with the BBB and http://kepler.sos.ca.gov/cbs.aspx. I don’t know what is really going on, but I think I’ll stay out of it…sure looks like a scam. So sad 🙁

    • I somewhat disagree. I think this got shut down with concerted and coordinated effort rather rapidly.
      I kinda look at this effort as a model to follow in the future.
      Should probably be duplicated to shut down the attorney model work around, fee splitting debt settlement firms.

      • CareOne as an example uses an “attorney model” although they don’t charge advance fees. Who thinks that type of model be shut down too? To me, even if some technicalities in the model are questionable, I don’t believe it harms consumers and that is the biggest issue.

        • I think we have established that all of the “legal model” law firms are just shells.  The lawyers get $11, and the back-end behind them like CareOne is running the 50+15=55 scam.  Everyone is forced out after they have paid some of their fees and before they get wise that it is not ever going to work.


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