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California Attorney General Jerry Brown has sued three lawyers accused of helping to file predatory lender lawsuits for homeowners struggling to make their mortgage payments. Brown seeks to recover $60 million in civil penalties in the action he filed on Wednesday in Sacramento County, Calif., Superior Court against five individuals, including the three owners of two companies, U.S. Loan Auditors and My U.S. Legal Services Inc., and two outside attorneys. He also seeks to shut down the two companies. The attorneys are Sharon Lapin of the Law Office of Sharon L. Lapin in Greenbrae, Calif., and Jonathan Stein of the Law Offices of Jonathan G. Stein in Elk Grove, Calif. The third attorney, James Sandison, is also a real estate broker. On Tuesday, the State Bar of California filed disciplinary charges against him for allegedly stealing more than $35,000 from various bank accounts that had been set up for one of his clients, Comcast Corp. He also is charged with using his name to help an attorney practice law who had been suspended from doing so in California. Sandison, who served as general corporate counsel for My U.S. Legal Services, was admitted to practice in California in 1990 and had no prior public record of discipline. He did not return a call for comment. According to Brown’s complaint, since early 2009 the companies sold “forensic loan audits” — computerized reviews purporting to show homeowners how their mortgage lenders had violated the law. The audits encouraged homeowners to pay thousands of dollars in up-front fees, instead of paying their mortgages, to bring lawsuits against those lenders. In one case, according to the complaint, a homeowner paid $56,000 for a forensic audit and legal fees. When clients called about their cases, representatives from My U.S. Legal Services failed to respond. “These defendants dangled the term ‘forensic loan audit’ as a sure-fire remedy for the mortgage problems of homeowners in distress,” Brown said in a prepared statement. “In fact, it was no remedy at all, and hundreds of desperate California homeowners took the bait and lost their money — and sometimes their homes.” My U.S. Legal Services, which is not a law firm but recruited outside lawyers to serve as attorneys of record, “has littered both state and federal courts with hundreds of lawsuits that have little or no chance of affording consumers any meaningful relief,” Brown said in his complaint. Both Lapin and Stein, who served as attorneys of record, have been sanctioned in court for failing to appear for hearings on motions or orders to show cause, according to the complaint. Lapin and Stein were paid $250 per month per case and signed contracts prohibiting them from interfering with My U.S. Legal Services and its clients, according to the complaint. Lapin, who was admitted to practice in California in 1993, was suspended from the practice of law in 2006 for one year but received a stay and was placed on probation for two years for 15 counts of misconduct. In a stipulation, she admitted that she failed to do work for an elderly woman’s family in an estate matter; did not respond to more than 40 voicemail messages from another client seeking incorporation; and failed to pursue a case against a veterinary clinic for a third client, according to the state bar. According to Brown’s complaint, she received more than 130 referrals from U.S. Legal Services. Stein was admitted to practice in California in 2003 and has no public record of discipline. He received at least 40 cases from U.S. Legal Services, according to Brown’s complaint. Lapin did not return an email seeking comment. Stein’s lawyer, Betsy Kimball, name partner of Boyd & Kimball in Sacramento, said in a statement: “John Stein has been in private practice here in Sacramento for several years. He is not in any fashion an employee of any of the entity defendants and he is confident that when the true facts become known to the Attorney General’s office he will be fully exonerated.” U.S. Legal Services used at least two unnamed former California attorneys who weren’t eligible to practice law, one of whom was convicted of grand theft in connection with his representation of clients in 2008, according to the complaint.

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