The court appointed receiver of the law offices and companies that were raided and seized in the recent mass joinder actions in California has shown that the very issues were were all concerned about, appear to have been true.
Marketers for lawyers selling access to mass joinder and tort litigation created such a network of deception in cooperation with lawyers that it has resulted in consumers paying millions and the companies being closed.
The Receiver summarizes why the mass joinder enterprises were closed:
“Based on my investigation to date, my conclusion is that all of these enterprises are so intertwined in illegal fee-splitting, deceptive advertising, and illegal loan modification services that they cannot be operated lawfully.
While the mass joinder cases may or may not offer a potential remedy to distressed homeowners, the process by which these Non-Attorney Defendants are “selling” supposed seats at that table is terminally infected by illegal fee-splitting. No matter how many entities Kramer interjects between himself and the Non-Attorney sellers, the fact remains that he is splitting his fees with Non-Attorneys who are soliciting clients on his behalf. I need not and do not take any position as to the ultimate merit of the mass joinder cases themselves.
In the end, the Non-Attorney Defendants have embroiled themselves in a toxic and illegal business venture.” – Source
The report goes on to say how the illegal mass joinder marketing enterprises worked. It describes how attorneys contracted with “client support” operators who would operate call centers to market to homeowners to pay to join one of these suits against their lender.
The affiliate marketers operate in a multilevel marketing fashion where there are layers of affiliates who are selling and earning on the backs of others.
The affiliates buy lists of troubled homeowners and send out thousands upon thousands of provocative mailers to entice inbound calls, which are answered by telemarketers working on commission. Along the way, the telemarketers deceive, over-sell, and over-promise consumers.
The report states that some of these attorney affiliated marketers operated boiler rooms that also sold illegal loan modification services, also called alternative dispute resolution.
The raids conducted by the State of California were targeted at the following addresses:
This space was said to have been “ground zero” for much of the mass joinder and tort litigation selling. It was about 20,000 square feet that was occupied by about 60 people. The suites used had name plaques on the doors saying Ramba Law Group LLC / Kramer & Kaslow, PC. Neither of these two law firms were actually tenants in the building.
One suite as part of this location had 68 telephone sales cubicles. The lease on the space was actually in the name of Creative Realty Solutions which appears to be owned by Kevin Grom and Patrick Grom.
The Receiver report says:
The Groms have been selling mass joinder since 2010 and had recently assumed the dba Consolidated Litigation Group. Another Grom entity – Wealth Institute – is an approved “client advisor” of Defendant Attorney Process Center.”
The role of Consolidated Litigation Group was to sell mass joinder clients. Sales agents worked on 100% commission, which the Receiver reports was up to 30% of the sale. “The specific products being sold were “Kramer’s mass joinder cases, but most of the sales techniques could have been applied to any product category from beauty products to golf clubs.”
As part of this office space, Gary DiGirolamo, operating Attorneys Processing Center was processing client retainer payments received.
Additional space was used by International Workflow, which is run by Chris Fox and James Foti. It is said that both Fox and Foti spent a large amount of time recruiting sales affiliates and planned to setup a similar call center operation in Florida.
Elite Legal is owned and operated by Joe Korte and was also using some of the same office space.
The name on the door said it was Kassas Law Group but it was determined it was actually the offices of James Pate and Ryan Marier and Pate, Marier and Associates who had previously operated Mesa Law Group that had been selling mass joinder/tort litigation cases.
Attorney Paul Petterson had been the attorney attached to Mesa Law Group but at this location Pate and Marier had not recruited a new sucker, attorney Anthony Kassas.
Based on the operations the receiver heard and/or saw at the site it appeared that Pate and Marier were heavily involved in selling loan modifications which they called ADR or Alternative Dispute Resolution and also mass joinder sales.
Among the more incriminating evidence found at this location was a seething chart describing Pate as the CEO and Marier as the President.
Based on interviews conducted that day, we learned there were three “sales teams” and at least 55 people in the sales department, compared to only two attorneys on-site.
Roughly 20 people were part of the “ADR” process in which they completed the client intake process, scheduled “quality control” checks and interviews, and researched records that could be used to further solicit clients by persuading them that an examination of their records a strong case against a lender. [This is also known as the forensic loan audit.] The office had a policy of attempting to “transition” ADR customers into litigation – at an additional charge – if the lender did not respond to a written demand.
It appears that as many as 900 cases had been signed up for services between March 21, 2011 and August 16, 2011. Each “ADR” client was charged an upfront retainer (sometimes paid in monthly installments) that was generally set at $4,500. When clients were “transitioned” to litigation they paid an additional $1,750 plus $300 a month for litigation.
Among the more damning items recovered from this office was an email from Denny Lake, formally with Mesa Law Group, and now the “ADR Director.” The email to Pate and Marier dated August 10, 2011 said that Lake knew Pate and Marier “want to push people out of the pipeline and into litigation.”
Copies of other emails to staff were sales focused.
This is the location for Home Litigation Help and Michael Tapia. There were eight employees at this location, including the mother of Tapia. Melanie Diana, who was found there, said she worked from the Law Offices of Kramer and Kaslow but was paid by Attorneys Processing Center.
The goal of this office was to sell consumers on the forensic loan audit for $2,350 to determine if the homeowner was eligible for litigation. This audit was conducted by inputing consumer information into a program called “Compliance Ease.” Consumers were then sold a $1,650 access into a mass joinder lawsuit.
Telemarketers in this location were paid 25% with 5% going to his mother. The office appears to have closed 621 sales between January to July 2011.
Evidence collected at this location identified a new terms list to replace the old terms that were being talked about. a Forensic Audit was not to be called a Mortgage Compliance Review and Mass Joinder Litigation would now be called Consolidated Plaintiff Litigation.
This was what appeared to be the primary location for Home Retention Division. This office had been in operation for about 18 months and some of the evidence collected identified Consolidated Litigation Group as “a law firm” and talked about the lawyers, but Consolidated Litigation Group is not a law firm.
One email collected here was between manager Hector Almanza to a consumer complaining they had received no benefit from the forensic audit they paid for.
This location was identified as the location of attorney Paul Peterson and the name on the door was Petersen Legal Services.
One employee identified his employees as Mesa Law Group. While no scripts or other documents directly referred to mass joinder litigation, the California Bar had previously taken possession of all client files and papers.
Mitigation Professionals and Glenn Reneau were located at this site. The staff appeared to be a subcontractor on approximately 700 Kramer & Kaslow mass joinder clients and Mitigation Professionals further subcontracted them out to Neighborhood Home Relief.
Mitigation Professionals is now representing another player in the mass joinder universe – United Foreclosure Attorney Network (“UFAN”).
Reneau is a veteran of the home mortgage business and he then moved to the loan modification business and also processes loan modification cases for Kramer & Kaslow.
In October 2010, Reneau was approached by Phillip Kramer and Mitchell Stein with a new “big” opportunity in the mass joinder cases which they promoted as the vehicle for consumers to “get back” at the banks. At a meeting in October 2009, Mitchell Stein told Reneau and others to “go out there and gel all the people with Bank of America loans into the [Ronald] case.”
Thereafter, Mitigation Professionals appeared to function as an Affiliate manager and was paid a per file fee to handle client support functions for designated mass joinder plaintiffs. In one of many efforts to disguise fee-splitting, Kramer paid Mitigation Professionals $4,000 per file as to any mass joinder plaintiffs who signed on through Affiliates linked to Reneau – Mitigation Professionals kept $1,000 of that for its client support function and remitted $3,000 per file to the designated sales Affiliate.
Reneau and his staff have been cooperative from the outset. He executed a declaration describing his interaction with Stein and Kramer when they sold the joinder “big idea” to him.
This is the location of The Law Offices of Christopher J. Van Son and Van Son Law Group doing business as Consolidated Litigation Group.
Consolidated Litigation Group began after Van Son was approached by Phillip Kramer, Esq. Kramer explained that he needed to “clean up” and upgrade the Affiliate management aspect of his mass joinder business. This followed the meltdown of Mass Litigation Alliance under the control of Gary DiGirolamo.
It was the role of Consolidated Litigation Group to process documents and collect retainer fees generated by non-attorney affiliates. Van Son’s role was to answer consumer questions prior to the consumer paying a retainer.
After taking Can Son’s fee of $150 per client, Consolidated Litigation Group then paid out the rest as “marketing fees.” The primary entity receiving these marketing fees was Data Management, another Gary DiGirolamo entity that would pay part of the money to Kramer and part to Attorneys Processing Center.
Public documents state Consolidated Litigation Group struggled from the beginning since it could not originate a merchant account and had its bank account frozen for “irregular activities.”
Consolidated Litigation Group also performed “special campaigns” for Kramer. For example, when a Florida-based mass joinder attorney (Krager) put a hold on all Kramer retainer funds and started up his own mass joinder business with Kramer clients, Consolidated Litigation Group was paid $250 per file to retrieve these accounts and encourage them to “charge back” on their credit cards and ACH.
Of documents recovered at this location, a couple of sales scripts were most interesting.
These locations tuned out to be mail drops for Lewis Marketing, Clarence Butt, and Thomas Phanco. At the time of the raids, they had ceased selling Kramer mass joinder cases but were gearing up to sell UFAN mass joinder cases.
For those interested in the entire Receiver report, you can read it here.