Foreclosure Mills in Florida Slipping the Net of Attorney General Investigation

I hope readers will forgive the overweight reporting on Florida, but it is serving as a test ground for how battles over foreclosures and mortgage fraud will play out around the US. Florida is not only one of the states with the highest level of foreclosures, but it also has the most cohesive group of anti-foreclosure lawyers, as well as more intensive reporting of developments within the state, thanks to sites like and So in many respects, this conflict is more advanced in Florida than in other states.

One development which has not gotten much attention is how the local foreclosure mills, which were targeted in an investigation by the state’s Republican attorney general Bill McCollum, seem to be escaping the inquiry. Given the opportunistic timing of the launch of McCollum’s probes, and the fact that the biggest foreclosure mill operator, David Stern, promptly hired the biggest Republican fixer in the state, this outcome should not be surprising. But the investigation is being sidestepped in a very obvious manner; one would think it would have been more seemly to have it peter out, post election, when media interest would have moved on. There appears to have been more than the usual winks and nods to get this matter out of the courts and safely in the hands of the Florida Bar Association:

Letter From the Florida Bar to 6th Circuit Chief Judge Mcgrady[1]

From the Palm Beach Post (hat tip Lisa Epstein):

Florida’s attorney general has no authority to investigate or discipline one of the state’s large foreclosure law firms, a Palm Beach County judge ruled Monday.

The five-page ruling from Circuit Judge Jack S. Cox was in response to a request from the Shapiro & Fishman law firm to quash an attorney general’s subpoena for information. The attorney general’s office announced in August it was investigating Shapiro & Fishman, which has offices in Boca Raton and Tampa, as well as two other large firms that represent lenders in foreclosure hearings.

Cox said the Florida Bar, not the attorney general’s office, is responsible for investigating allegations of misconduct, including complaints that foreclosure paperwork was doctored in order to rush cases through the courts.

After Monday’s ruling, the Plantation-based firm of David J. Stern, one of the so-called “foreclosure mills” targeted by the state, filed its own motion to quash the attorney general’s subpoena in Broward County.

“The attorney general’s case is over. This is a great victory for our client,” said Shapiro & Fishman attorney Gerald Richman of Richman Greer, P.A. “This was a totally unfair and inappropriate subpoena.” …

And while attorneys general in several states have announced investigations into lenders’ faulty foreclosure documents, Florida’s attorney general’s office does not have the power to investigate banks, spokesman [for the attorney general] Ryan Wiggins said.

“I can’t believe that the jurisdiction of the attorney general cannot include law firms and individuals working within law firms who may be engaged in improper conduct,” St. Petersburg attorney Matt Weidner said about Monday’s ruling. “I cannot believe that this will be allowed to stand, considering the extent of the allegations of serious wrongdoing.”

Gee, I wonder how AGs in 11 states, including Florida, managed to get a settlement from Countrywide? Or was McCullom along for the ride and the other ten AGs did all the heavy lifting?

In case you had any doubts regarding how lucrative the foreclosure mills are, and hence their ability to buy their way out of trouble, the David Stern law operations (which include title abstract companies and other aligned businesses) earned $260 million in gross revenues in 2009.

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  1. Francois T

    WTF is that?
    Only the Bar can investigate members of…the Bar? Even when they commit fraud on the Court?

    Which Court would allow members of the Bar to defraud the Court and tell the AG that he/she can’t even investigate that behavior?

    I’m assuming the AG will appeal this insane decision, no? Or is letting the decision stand the “fix” you were alluding to?

    1. Yves Smith Post author

      Yes, that is where I think this is going, that McCollum will stand pat, which effectively means letting the Bar act as the front for letting the foreclosure mills slip the noose.

    2. Nathanael

      Having read the case, AG Collum’s office refused to state that it was investigating criminal activity on the part of David J. Stern. If it had done so, the court admitted that it would have had to rule that it had the right to depose members of Stern’s law firm.

      So AG Collum threw the case. Presumably deliberately.

      1. Transor Z

        There are two cases here, one against Shapiro and another against Stern. Judge Cox was trial judge in the Shapiro action and Judge O’Connor in the Stern action. As I mention below, Judge O’Connor doesn’t sound like she’s buying.

    3. SidFinster

      “Only the Bar can investigate members of…the Bar? Even when they commit fraud on the Court?”

      Not quite. As I understand it: the Bar is responsible for professional licensing and thus can bring professional misconduct claims against attorneys. This can go beyond misconduct in court.

      The court has inherent authority to sanction courtroom participants who violate the court’s rules. These two actions are not self-negating; the court can bring a sanction or contempt while the state bar slaps its own sanctions on the offending lawyer.

      Further, neither of the foregoing prevent an injured party from bringing a malpractice claim against a lawyer who perpetuates a fraud. Getting standing may be difficult, though.

  2. attempter

    That’s about as brazen as it gets – a “judge” openly declaring an entire cadre outside the law.

    We really should take them at their word and desire. Since they want a return to medieval conditions, and since they’re declaring themselves outlaws, then that’s how it should go. They’re outlaws in the full medieval sense.

    This is, however, prefectly in line with the logic of any form of elitism including the liberal variety. The next logical step from where we are at this point – the elites being de facto above the law – is to set up a de jure multi-track legal system. There’s “the law”, and then there’s every kind of exemption for certain credentialed “nobles”, in this case system-endorsed lawyers.

    Once again we see how, whether anyone likes it or not, tries to deny it or not, this is a death struggle. They want to “outlaw” the non-rich. We can either let them do it, or instead outlaw them.

    Well, we’ll see what the appeals bring on this. But the Florida “supreme” court already indicated its distaste for the public interest on this matter.

    In the meantime, how many Floridians will be up in arms over this brazen feudal decree? How many Americans will even hear about it?

    1. nickj

      Well, King Barack the First has assumed the power of life and death over his subjects, why worry about a little bit of foreclosure?

  3. Opinionated Bloviator

    Hear ye, hear ye. From this day forth the small people will now be known only as serfs and are to be treated as such. Your TBTF ruling class has spoken. Obey.

  4. Koshem Bos

    The possibilities are endless. A lawyer kills his neighbors loses his license to practice law. Gangs of lawyers take over the governor residence for a Halloween party. Florida lawyers have three votes each in every election. Sorry that is already legal due to Citizen United.

    The solution: we all have to study French and take to the streets.

  5. Sufferin' Succotash

    Well, we already have a fiscal structure that resembles France in the 1780s, so creating the rest of the legal/social hierarchy makes sense. Of course the Constitution does forbid granting titles of nobility, but then it also guarantees property rights too.

  6. nowhereman

    Just when you might think it can’t get any worse, and before my first cup of coffee! “Stop the World I want to get off”

  7. Ella

    Chief Justice Canady is up for re-election. So are other Judges. Use your vote to let them know how you feel.

  8. Psychoanalystus

    I have 200 Red Laser Sight Pitchforks on sale today only. $20 for single orders or $100 for lots of 10. For an additional $5 we can engrave the name of your favorite lawyer or bankster on it. Order now:
    Operators are standing by.


  9. Eliot Bernstein

    hmmmm, florida lawyers trying to have criminal fraud cases turned into bar complaints but the Florida bar can only disbar an attorney for attorney misconduct and not prosecute for criminal fraud. This should be shouted down as lawyers are being charged with crimes that the Bar and Courts cannot investigate, snaky bastards. All homeowners who feel their lawyers were part of fraud should file criminal fraud charges and skip the Bar process, which is only an attorney protection agency. The Florida Bar should be disbarred and turned into a pub. I personally have a 12-Count Trillion DOllar Federal RICO & ANtitrust lawsuit against the FL Bar and FL Supreme Court and many justices. THe lawsuit has been marked legally “related” by Fed Judge Shira Scheindlin to a Whistleblower lawsuit of Christine C. Anderson a former NY Supreme Court Attorney who claims there was a “CLeaner” in the NY SUpreme Court Attorney Disciplinary Agency, Naomi Goldstein, who whitewashed complaints against US Attorneys, DA’s, ADA’s and “Favored Lawyers and Lawfirms, she also accuses New York Attorney General Andrew Cuomo of illegal representation of accused state officials. There is a Criminal RICO organization that has infiltrated the Florida Bar and everyone should fear that Bar investigations are cover ups to deny citizens of their rights for crimes committed by Lawyers Judges and Regulators.

    Eliot I. Bernstein

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