With Florida’s attorney general, defense lawyers, even members of Congress challenging the state’s “foreclosure mill” law firms, lenders’ attorneys have had little trouble from one group: The Florida Bar.
Out of the more than 200 lawyers the Bar suspended or stripped of licenses this year, none was punished for lying in a foreclosure trial or making fake documents for one, behavior that a cottage industry of critics works to document.
But that could change quickly.
This month, the Bar was investigating 43 reports of some type of foreclosure fraud involving 32 lawyers. One involves a Jacksonville judge’s ruling this year that lawyers from a South Florida firm committed “fraud on the court.” A new category solely for foreclosure fraud was added recently to the Bar’s system for tracking complaints.
To find new cases, the head of the Bar is asking judges around the state to report lawyers who break the rules — and pointing specifically to news coverage of claims about foreclosure suits.
“We haven’t received many complaints about this misconduct from the judiciary. In fact, oftentimes we have learned of these matters only from the media,” Bar President Mayanne Downs wrote last month in a letter to the chief judges of Florida’s 20 judicial circuits. Downs asked judges to send in copies of any orders they write that mention misconduct, in foreclosures or anywhere else.
In principle, foreclosure fraud can end a lawyer’s career. Knowingly giving false documents to a court or lying to a judge can lead to disbarment. Just knowing another lawyer did that and not saying anything can be grounds for suspension.
But none of that happens unless the opposing side spots the deception and challenges it in court, said Circuit Judge Jean Johnson of Jacksonville, and that traditionally hasn’t been done.
“It hasn’t been argued before me frequently,” she said. “You can’t find there’s been a fraud unless someone brings it to your attention.”
Johnson threw out one case in February after ruling that lawyers representing JP Morgan Chase used bogus documentation to try to seize a Jacksonville house.
A bogus document
Johnson concluded that government lender Fannie Mae owned the mortgage, which two mortgage companies owned previously, and Chase was simply paid to process payments and handle other loan services. That meant, the judge continued, a document from the Fort Lauderdale law firm Shapiro & Fishman that showed the original lender selling the mortgage directly to Chase was bogus, as well as being dated 16 years after Fannie Mae bought the loan.
Johnson added the law firm should have known who owned the loan anyway, because Fannie Mae had hired the firm to foreclose on the same mortgage years ago, although it was dropped when the borrowers caught up on their payments.
A tiny stack of other fraud rulings have been filed around the state, such as a Pasco County judge’s decision in March that paperwork supposedly written in 2007 was “facially impossible” because it was notarized with a notary stamp that was issued in 2008.
Many judges have gotten used to incomplete or confusing paperwork, but documents that are obviously false can still get a case thrown out, said Chip Parker, a lawyer representing Jacksonville homeowners Hank and Marilyn Pocopanni in Johnson’s case.
“This case was just particularly egregious,” Parker said. “Shapiro & Fishman absolutely knew they were committing fraud. … They couldn’t talk their way out of it.”
Chase is appealing Johnson’s ruling with a different law firm, and spokesmen for Chase and Fannie Mae declined to talk about the case except to confirm Chase was acting on Fannie Mae’s behalf.
A lawyer hired to represent Shapiro & Fishman said he wasn’t sure why the false document was created but said the firm didn’t deserve the fraud ruling.
“From everything I’ve seen so far, they’re acting in good faith,” said Gerald Richman, who also represents the firm in a court fight over an investigation launched by Florida Attorney General Bill McCollum.
Attorney general’s cases
McCollum’s office also opened investigations of three other high-volume South Florida foreclosure firms: the Law Offices of Marshall C. Watson; the Law Offices of David J. Stern; and Florida Default Law Group. Accusations against those firms have filled blogs, made headlines and caught the attention of members of Congress, who persuaded Fannie Mae and Freddie Mac last month to stop sending lawsuits to Stern’s firm.
Richman said fraud arguments are still rare in foreclosures, but he is seeing more defense lawyers trying them. For some, the goal is just to delay a foreclosure, not to resolve the debt, he argued.
He said bad documentation isn’t evidence of fraud as much as a sign that law firms are trying to handle a lot of work fast and cheap.
“A lot of these issues about fraud on the court are totally unjustified. There are mistakes that have been made because of the tremendous volume” of lawsuits, he said.
That’s not an all-purpose excuse, said Johnson, who said every lawyer has a personal duty to make sure their work meets professional standards.
That also shouldn’t mean every lapse is treated as fraud, she said, because judges have to be able to sort out sloppiness from dishonesty.
“That can be a very difficult question to answer directly,” she said, but said the argument for fraud grows when “documents have actually been created to prove a fact that is not in existence.”
A judge for 17 years, Johnson said she believes attorneys in Northeast Florida follow high ethical standards and said the cases she considered questionable were filed by mill firms. She would not say whether she had reported her fraud ruling to the bar.
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