California Lawyer Disbarred Over Loan Modification Business

Another sad story of advanced fee loan modifications tearing down yet another group of people. From the California Bar Journal.

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PAUL JEFFREY LUCAS [#163076], 50, of Aliso Viejo was disbarred July 22, 2011, and he was ordered to make restitution and comply with rule 9.20 of the California Rules of Court.

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Lucas participated in the proceedings until the first day of trial when he walked out of the hearing while the first witness was being sworn in. His default was entered and the State Bar Court found he committed 29 acts of misconduct in 10 matters. The misconduct stemmed from his representation of clients who wanted to obtain a loan modification and included eight counts of failure to perform legal services competently, five counts each of failing to return client files or refund unearned fees, four counts each of failing to communicate with clients or cooperate with the bar’s investigation, one count of forming a partnership with a non-lawyer and two counts of moral turpitude.

Lucas’ staff advised five clients to stop making their mortgage payments but didn’t negotiate loan modifications for them. He permitted his staff to make misleading statements to the clients. They falsely told one client a lawsuit had been filed, told another a suit would be filed, told one client her file was shredded, claimed an 80 percent success rate and told two clients their loan modifications were denied. In one of those cases, Lucas had not submitted any paperwork.

The bar court found that Lucas committed acts of moral turpitude by engaging in a pattern of advising his clients, through his staff and agents, to stop making their mortgage payments and then failing to perform on the clients’ behalf, as well as a pattern of making repeated misrepresentations.

In one matter, for example, a woman called the Lucas Law Center and was told by an employee that if she stopped making her mortgage payments, her chances of obtaining a loan modification would increase. A different individual contacted the woman’s lender to request a fax number, but no other work was done.

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The client received a Notice of Trustee’s sale of her home by a second lender and learned that first lender had no contact with Lucas after the request for the fax number. Yet another Lucas employee contacted the second lender, again to obtain a fax number, and sent a signed power of attorney. Although the Lucas firm had two further contacts to determine the status of the matter, it did no further work. The client filed for bankruptcy. When she asked for a return of her file and a refund, a Lucas employee said they were still working on her case and needed to keep her papers a couple of more weeks because the court may award the client some money. In fact, the law firm had not filed any legal action on the woman’s behalf. She received a refund a short time later but didn’t get her file back.

Another client paid an advance fee of $3,475 and was told by an employee of Lucas Law Center that the firm would reduce her mortgage rate to 4 percent, extend the term of her mortgage payments and possibly reduce her principal by hundreds of thousands of dollars. Although the firm sent the client’s lender a letter of authorization, it did no further work. An employee told the client the lender denied her loan modification (in fact, nothing was submitted to the lender) and a few days later advised her to skip two mortgage payments to increase her chances of obtaining a modification. The client demanded a refund. The firm returned $1,000 and the client got another $1,500 by going to the Lucas office, where she was told – incorrectly – that her file had been shredded. A new lawyer demanded a refund of the remaining money, which was not done until the bar intervened.

In recommending Lucas’ disbarment, Judge Lucy Armendariz wrote, “The serious and unexplained nature of the misconduct, the lack of participation in these proceedings as well as the self-interest underlying (Lucas’) actions suggest that he is capable of future wrongdoing and raise concerns about his ability or willingness to comply with his ethical responsibilities to the public and to the State Bar.” – Source

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