Home > 2011 > Mortgages

Fake Lawsuit Scam Allegedly Netted Millions From Hurting Homeowners

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Three California-based law firms allegedly swindled millions of dollars from distressed homeowners by making false promises that they could get relief on their mortgages by suing the lenders, according to a lawsuit filed Thursday by California Attorney General Kamala Harris.

The lawyers sent at least two million pieces of direct mail to homeowners in 17 states, according to a press release from Harris’s office. The mailers offered homeowners a chance to enter “mass joinder” lawsuits, similar to class actions, in which hundreds or thousands of people sue together as a group.

One problem in many such lawsuits, however, is that each homeowner and each mortgage is different. Since the homeowners have little in common, they usually have no basis on which to join together as plaintiffs.

“It’s just a scam,” Todd Allen, the Florida lawyer who made headlines by foreclosing on a Bank of America branch, told us in June.

[Related article: Keeping Banks Honest: Protect Yourselves During Foreclosure]

Attorney General Harris agrees. She ordered three law firms named in her suit to shut down immediately and discontinue their direct mail marketing operations. Some of the letters mailed to homeowners were designed to look like official government documents, as if the cases were being brought by state regulators, according to Harris’s office. Others looked like notices of settlements, as if the suit had already been tried and won, and all the homeowners had to do was call to get their share of the settlement money.

Of course, no settlements had been reached. When consumers did as they were instructed and called the attorneys, they reached salesmen, not lawyers, who gave deceptive legal advice about the “likely” benefits of joining a lawsuit.

Thousands of victims paid up to $10,000 apiece to join the lawsuits, but the suits were never actually filed, Harris alleges.

“The defendants in this case fraudulently promised to win prompt mortgage relief for millions of vulnerable homeowners across the country,” said Attorney General Harris. “Innocent people, already battered by the housing crisis, were targeted for fraud in their moment of distress.”

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Harris is based in California; Todd Allen in Florida. There’s a reason why attorneys on both coasts are warning people about mass joinder lawsuit scams: Such schemes are happening everywhere, says William Herbert, president of the California Bar Association.

“The number of lawyers who have tried to take advantage of distressed homeowners in these tough economic times is nothing short of shocking,” Herbert said in a prepared statement.

The state is suing attorney Philip Kramer, the Law Offices of Kramer & Kaslow, two other law firms, and 17 other people alleged to have been involved in such schemes. For information about the case, victims can contact the California State Bar at 415-538-2000, or online at http://www.calbar.ca.gov/.

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  • Andrew

    The fake lawsuit scammers are back at it but now they go by Residential Litigation Group in Florida. They are charging thousands of dollars upfront and promising results that noone can deliver. Save your money and notify the attorney general. If you already gave them your bank account information, file a complaint and get your money back NOW!!

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