Yesterday a number of law enforcement officials raided offices of lawyers and marketing participants who have been involved in mass joinder efforts.
Consumers were sold access to lawsuits with a number of claims against their lenders and were told they could get their homes free and clear, cash back, stop foreclosure, etc. These efforts were pushed by marketers that took large percentages of money “stolen” from consumers in advanced fees to enter these lawsuits.
The California Attorney General statement on the actions and raids can be seen here, California AG Speaks Out on Mass Joinder & Tort Litigation Raids.
I have now had an opportunity to review the lawsuit and documentation filed.
What you will find below is a summary of that review.
The lawsuit filed was against the following parties:
The Law Offices of Kramer & Kaslow
K2 Law
Mass Litigation Alliance
Consolidated Litigation Group
Phillip Kramer
Mitchell J. Stein & Associates
Mitchell Stein
Christopher Van Son
The Law Offices of Christopher Van Son
Mesa Law Group
Paul Petersen
Attorneys Processing Center
Data Management
Gary DiGirolamo
Bill Stephenson
Mitigation Professionals
Glen Reneau
Pate Marier and Associates
James Pate
Ryan Marier
Home Retention Division
Michael Tapia
Customer Solutions Group
Lewis Marketing Corp
Clarence Butt
Thomas Phanco
Photos from the raids to seize records and documents yesterday.
The Temporary Restraining Order issued on August 15, 2011 allowed the State of California to:
- Freeze the assets of the defendants.
- Stop all business by defendants.
- Stop all sales by defendants.
- The TRO specifically cites the Ronald v. Bank of America case BC409444 as an example of a case that has been used for deceptive marketing.
- Stop fee splitting between attorneys and non-attorneys.
- Stop unlawful attorney referrals.
- Stop false advertising.
- Stop defendants from providing advice about mass joinder lawsuits.
- Stop defendants and attorneys from engaging in consumers signing retainer agreements.
- All money paid and to be paid to defendants is frozen.
- Any account maintained at any financial institution is frozen.
- Any real property or personal property purchased or maintained from the money generated from this enterprise is frozen.
- All foreign funds held by defendants is to be returned to the United States within five days. – Source
Complaint Summary
The lawsuit filed basically says the promises made by the defendants were false and misleading. The defendants used deceptive advertising and telemarketing to recruit consumers to join mass joinder / tort litigation lawsuits.
Marketers made a number of false promises such as joining the case would stop foreclosure, reduce loan balances, result in monetary awards, and get homes free and clear of mortgages.
Marketers use deceptive mailers, as I have shown here, here, here and here.
When consumers call they speak to non-attorney marketing staff that make all sorts of false claims to try to get the consumer to buy into the suit for up to $10,000.
The complaint states that the original mass joinder case filed by Mitchell Stein, Ronald v. Bank of America, was then used by Kramer, after Kramer partnered with Stein to become “the centerpiece of a massive, deceptive marketing scheme that would transform the loan modification industry.”
In an email to defendant Reneau from Kramer, Kramer wrote: “Only morons would prefer to ‘sell’ loan mods from this day forward…and did I mention, NO REFUNDS??”
Part of the sales pitch was that once consumers paid thousands to join the lawsuits their lender would be sent a “998 demand process” in which the firm would demand a reduction in principal balance, a 2% interest rate, a 40-year term, full reconveyance of the property, and $75,000 in punitive damages. What consumers are not told is that prior demands were not accepted and there is no evidence that any lender would accept such demands.
The complaint goes on to say:
The lawyers in this case are charged with illegal fee splitting, a process known as running and capping.
For those interested, you can read the full complaint here.
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