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Attorney suspended for involvement with nonlawyers in loan modification business

Senior Editor Disciplinary Actions

The Florida Supreme Court granted an emergency suspension of a South Florida lawyer who participated with nonlawyers in a loan modification business, so the nonlawyers could receive upfront fees from clients they would be prohibited from receiving themselves.

The lawyer told Bar investigators that he has between 2,500 and 3,000 clients from that illegal arrangement, and admitted he has so many files he does not know the status of the clients’ cases.

“This particular lawyer was apparently taken advantage of by these nonlawyers; they ended up making lots of money, and he didn’t,” said Kenneth Marvin, staff counsel of The Florida Bar’s Lawyer Regulation Department.

“We hope to alert our members to be suspicious if they are enticed into association with nonlawyers in the loan modification business,” Marvin said

The Bar’s petition for emergency suspension said the lawyer is currently the subject of 20 Bar disciplinary matters filed by his clients, and the facts “establish clearly and convincingly” that the lawyer “appears to be causing great public harm.”

On July 25, in case SC11-1384, the Supreme Court ordered the lawyer suspended from the practice of law until further order of the court, to accept no new clients, to cease representing any clients after 30 days of the court’s order, and to stop disbursing or withdrawing any monies from any trust account related to his law practice without approval of the court.

“It is clear from their action that the Supreme Court of Florida will not tolerate this type of conduct,” said Jan K. Wichrowski, chief discipline counsel in the Bar’s Orlando Branch.

To protect homeowners who were in default on their mortgages or in foreclosure from fraud, deception, and unfair dealings with foreclosure-rescue consultants, in 2008, the Florida Legislature enacted §501.1377, called the Foreclosure Rescue Act.

The Bar has repeatedly warned Florida lawyers that they should be wary of associating with nonlawyer foreclosure-rescue consultants who are trying to avoid the up-front fee limitations of the statute. There have been warnings published in The Florida Bar News and
ethics updates are posted on the Bar’s website.

According to the petition, the lawyer was deposed on June 28 and admitted his law firm represents homeowners in loan modifications and foreclosure defense.

Since at least March 2010, the Bar’s investigation found, the lawyer associated with a nonlawyer who is the subject of a complaint brought by the Office of the Attorney General, alleging the nonlawyer “engaged in a systematic pattern of conduct designed and intended to induce consumers to purchase their loan modification and foreclosure-related services via a series of false and fraudulent representations.”

According to the Bar’s investigation, the lawyer allowed nonlawyers to “improperly solicit clients on his behalf for loan modifications and foreclosure defense on a nationwide basis, despite the fact that he can only practice law in the state of Florida.”

The lawyer admitted that he is aware that nonlawyers buy leads that provided names of potential clients for his law firm, according to the petition, and that he was aware that “nonlawyers telephoned potential clients to solicit their business by promising them results, such as a rate reduction on their loans.”

The lawyer split fees with nonlawyers, including paying one nonlawyer $21,000 of the $26,000 fees the lawyer was paid by another law firm to take over their cases, according to the petition, and the lawyer admitted he does not supervise or train any of the nonlawyers who worked on his clients’ files.

The lawyer “admits that he allows almost exclusive control of the office to the nonlawyers who control all the contact with the client from the initial call, to the fee agreement, to negotiations with the bank, and then advising the client of the outcome of their case,” according to the Bar’s petition.

The lawyer “admits his clients are charged between $1,500 and $3,000 up front, and that the nonlawyers determine the fee that will be charged. Respondent admits he becomes involved in his clients’ cases when the client needs representation in foreclosure defense,” according to the petition.

The lawyer did not return a call and email from the Bar News seeking comment.

( Editor’s Note: The name, offense, and case number of every Bar member disciplined by the Florida Supreme Court appears in the News’ Disciplinary Actions column. The News does not write a separate story on every lawyer disciplined; however, when the News does, its intention is to inform and educate the membership about acts of first impression or when the court specifically states in its opinion that all members should be on notice that the offending conduct will not be tolerated.)

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