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Calif. Attorney General Sues Lawyer Over Homeowner Fraud
Since the start of the mortgage meltdown, the Calif. Bar has received almost 1,000 questions and complaints a month about lawyers' work on loan modifications and foreclosures
The Recorder
July 08, 2009
California Attorney General Jerry Brown on Monday sued a Southern California lawyer for allegedly bilking desperate homeowners with troubled mortgages out of thousands of dollars.
Mitchell Roth of Sherman Oaks charged at least 2,000 homeowners substantial fees in exchange for false promises that he would help them escape foreclosure and improve their credit, Brown wrote in a complaint filed with Los Angeles County Superior Court.
Also named in the lawsuit (.pdf) is Paul Noe Jr., president of Nevada-based United First, a corporation that allegedly solicited homeowners facing foreclosure and referred them to Roth's law firm.
"Despite taking thousands of dollars in upfront and monthly fees, defendants provided little or no assistance to consumers, often abandoning claims they promised to bring on their behalf," Brown wrote.
Roth's attorney, Leonard Sharenow of Los Angeles, declined to discuss specific accusations in the lawsuit but said that his client's "role was simply an attorney for these individuals who were referred to him. He believes he acted properly and he intends to defend himself."
Alfredo Jarrin, Noe's attorney, said he had not yet seen the complaint and declined to comment.
The suit accuses Noe and Roth of violating various sections of the state Business and Professions Code and foreclosure consultant laws. Brown is seeking $2 million in civil penalties, restitution for United First's clients and an injunction preventing the two men from ever providing foreclosure consulting services.
The suit is just the latest trouble facing Roth, who filed his resignation from the State Bar in May. Just two months earlier, Bar prosecutors had obtained a court order shutting down Roth's three firm offices, citing his hospitalization for severe depression. In January, U.S. District Judge Manuel Real of Los Angeles declared Roth a vexatious litigant and ordered him to refund fees to nine clients.
Since the start of the mortgage meltdown, the State Bar has received almost 1,000 questions and complaints a month about lawyers' work on loan modifications and foreclosures. The Bar also has been fielding up to two dozen mortgage-related calls a day on its ethics hotline for lawyers.
The surge in complaints led the Bar in March to issue an ethics alert, warning lawyers that the mortgage arena is "fraught with danger," especially when working with foreclosure consultants. On June 24, the State Bar's Board Committee on Operations also called an emergency meeting to endorse two pieces of pending legislation that would curb the practice of requiring advance legal fees for loan modification services.
"We want you to know that the State Bar is continuing to work with other regulatory and law enforcement agencies to deal with attorneys involved in loan foreclosure fraud," State Bar President-elect Howard Miller wrote in a June 25 letter to one of the bill's authors, Assemblyman Pedro Nava, D-Santa Barbara. "We recognize that the State Bar must step up to the plate and deal with this issue."
The complaint filed by Brown alleges that United First lured homeowners with numerous helpful-sounding Web sites, including www.stopforeclosure.com and www.bailoutmyhouse.com. The firm then charged clients $1,500 upfront and at least $1,200 a month with assurances that Roth would take legal action to halt the foreclosure process. Agreements with United First required consumers to pay 50 percent of any mortgage settlement to the firm or, if their debts were eliminated, 80 percent of the home's value, Brown said.
One victim, identified only as "P.J." by the attorney general's office, paid Roth and United First nearly $5,000 in 2008, only to lose his home earlier this year. Roth took no action to protect P.J.'s home, Brown said.
