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Judge OKs $54.7 Million in Claims by Victims of Lawyer's Debt-Relief Scam
Daily Business Review
October 01, 2009
Broward Circuit Judge Ronald Rothschild approved nearly $54.7 million in claims Tuesday by people who were bilked out of their money by disbarred Coral Springs, Fla., attorney Laura Hess in a debt settlement scam.
The claims were by almost 20,000 consumers who turned to Hess and a series of companies she oversaw for help managing credit card and other debts. Hess, who has been disbarred for five years, promised to cancel debts for pennies on the dollar but instead was accused of pocketing the money.
Rothschild upheld the findings by eight special masters who shuffled through almost 7,000 disputed claims. The claims approval puts receiver Daniel Stermer on schedule to pay claims before year's end. Stermer has accumulated about $17 million, which means clients are in line for a recovery of about 27 percent of their losses.
But not all claimants will get money back. Some claims were stricken, and others were excluded because they were late.
During the hearing, two clients whose claims were rejected because of tardiness pleaded with Rothschild via telephone to reconsider.
Darla Hawley of Middleport, Ohio, said her debts mounted after her husband, Randall, suffered a series of heart attacks and lung disease. To pay off their debts, they sold their house and furniture, and lived in a camper for more than a year. She said she sent Hess $28,000.
"We trusted in Hess Kennedy," Hawley told Rothschild. "I paid off, and called and called and called."
She said she didn't learn about the claims process until after a Chase Bank representative tracked them down. She recounted telling a bill collector that Hess Kennedy was taking care of their debts. The collector said the company didn't exist anymore.
"I got sick" and immediately filed a claim, Hawley told Rothschild. That was in April. She said if she knew about the claims process, she would have "jumped right on it." She contended the post office struggled with forwarding the family's mail.
"This doesn't seem fair," Hawley told the court. "We tried to do what's right."
She said she is being sued for nearly $20,000 in overdue bills. If filed on time, her claim would be worth almost $16,000.
New Yorker Victorien Assi told the judge he didn't receive anything in the mail until it was too late. He submitted a claim 11 days after the Jan. 2 deadline.
He said he believed the letter about the claims process was sent without his apartment number.
"That is not my mistake. I should not be punished," Assi said, demanding the return of $5,000. "My kids did not receive any Christmas gifts because of that."
Rothschild reluctantly denied both claims.
"I agree with both of you it's not fair, but I have to weigh the individual interest against thousands of other claimants," he said.
The judge said he was swayed by Hawley's pleas, but it was too difficult a burden for her to prove all of her mail problems, and a delay for her would hold up the entire claims process. Hawley said she could not come to Fort Lauderdale for an evidentiary hearing.
Before hanging up, Hawley said the legal system failed her.
"I believe them when they said they sent it. They should believe me that I didn't receive it." Hawley said.
Rothschild will hear a final pair of objections Thursday.
