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Calif. Bar Crackdown on Loan Modification Misconduct Claims 5 More Attorneys
The National Law Journal
November 12, 2009
The State Bar of California's crackdown on attorneys for alleged loan modification misconduct has claimed five more lawyers in Southern California, three of whom have resigned.
Since the State Bar of California launched its Loan Modification Task Force in April, 14 attorneys have resigned or been placed on involuntary inactive status. About 250 lawyers are under investigation.
On Nov. 2, Timothy Thurman of Trinity Law Group in Los Angeles resigned with charges pending after the FBI arrested him in October. He was charged with forging the signature of a federal judge on a fake court order that he gave to his clients so that they could avoid eviction. His law firm, launched earlier this year, provided litigation and loan modification services. Thurman, listed at the Law Office of Timothy D. Thurman in South Pasadena, Calif., did not return a call for comment.
On Nov. 4, two other lawyers resigned with unspecified charges pending: Gary Davidson of Costa Mesa, Calif., and Eric Douglas Johnson of Culver City, Calif. Davidson did not return a call for comment, and a phone number to Johnson's law office is no longer in service.
Also on Nov. 4, Paul Lucas of Lucas Law Center in Aliso Viejo, Calif., was put on involuntary inactive status for allegedly becoming a threat to the public. Among the accusations are that he lied about his firm's refund policy and its relationship with Future Financial Services, which he has described as the marketing arm of his law office. According to the Bar, 45 complaints were made to the Bar about his law firm and Future Financial Services. Among other things, the Bar claims he advised his clients to stop making mortgage payments, failed to perform services, failed to refund fees and failed to respond to client inquiries.
In July, the Federal Trade Commission filed a complaint against Lucas, the Lucas Law Center and Future Financial Services. In August, the FTC obtained a stipulated federal court order banning Lucas Law Center and its principals from misrepresenting their services and charging upfront fees. The order implemented an asset freeze and names a permanent receiver for the corporate defendants.
Lucas denied the allegations. He said he was the subject of fewer than 10 complaints to the Bar from among 2,200 clients until the FTC shut down his business, taking $1.3 million of his assets. He said his firm has saved more than 540 homes from going into foreclosure in the past 13 months and that banks had required some homeowners to become delinquent on their mortgages in order to modify their loans.
"All I did was pass on the information that I'd gotten from people that were told this by the banks," he said.
"At the end of the day, what we're trying to do is keep our clients in their homes and to keep their homes a performing asset for the banks," he said. "But the banks didn't want attorneys to be representing these people. They just wanted these people to come to them. What we got for our clients is far superior to what they got on their own."
On Friday, Sean Rutledge of United Law Group in Irvine, Calif., was placed on inactive status for taking money from his clients, not performing services and failing to refund fees in 14 client matters. "In fact, due to their loss of money and time, many of respondent's clients ended up in a worse position than they were in when they originally turned to respondent for help," said State Bar Court Judge Richard Honn, in his order.
Rutledge could not be reached for comment, and his lawyer, Edward O. Lear of the Century Law Group in Los Angeles, did not return a call for comment. Two months ago, Rutledge told The National Law Journal that the Bar's charging complaint "is completely misleading in the way it states we didn't provide services."
