‘Foreclosure mill’ David J. Stern’s firm to close by end of
March

On behalf of The Law Office of Jeffrey A. Klein posted in
Foreclosure Process on Monday, March 7, 2011

 

The man once known as Florida’s “foreclosure
king,” David J. Stern, will be closing his law firm by March 31, according
to an SEC filing by sister-company DJSP Enterprises. The Law Offices of David
J. Stern, which once handled as many as 20 percent of all Florida foreclosures,
fell into disrepute when the Florida Attorney General’s Office announced in
August that it was investigating Stern’s firm and others for possibly illegal
behavior in the foreclosure process.

 

The Attorney General’s investigation, which was followed by
other state and federal investigations into “robo-signing” and several
private class-action lawsuits against Stern’s firm, is probing allegations that
attorneys at the firm submitted false or fraudulent paperwork to Florida courts
as it tried to rush thousands of foreclosures through on behalf of mortgage
lenders.

 

The law firm’s sister company DJSP Enterprises, which Stern
spun off into a separate company in January 2010 in return for a $58.5 million
payment, is also in danger of closing down. The Law Offices of David J. Stern
is the only source of foreclosure referrals for the company, which handles
non-legal aspects of the foreclosure process. It also reported to the SEC that
it cannot meet its obligations to creditors, despite extensions on previous
defaults which expire on April 1.

 

Foreclosure-Gate investigation into the Law Offices of David
J. Stern alleges robo-signing, legally inadequate foreclosure affidavits,
possible fraud

 

In August 2010, the Florida Attorney General’s Office began
investigating so-called “foreclosure mills” — law firms representing
mortgage banks and servicers in the foreclosure process that processed high
volumes of foreclosures. The Law Offices of David J. Stern and six others
allegedly questionable tactics that may have resulted in thousands of invalid
or wrongful foreclosures.

 

Stern’s law firm and DJSP once boasted more than 1,200
employees and handled the lion’s share of foreclosures in the state. After the
AG’s investigation was announced, both the firm and DJSP started shedding
employees — laying off more than 750 workers and sparking a class action
lawsuit against the firm under the federal WARN Act. By November 2010, Fannie
Mae, Freddie Mac and Citigroup had pulled their business from the firm.
According to the South Florida Sun Sentinel, the firm had about 50 clients last
month.

 

In testimony to Attorney General investigators last year,
Stern’s former office manager Cheryl Samons said she routinely signed an
average of 1,000 foreclosure affidavits every day without reviewing their
contents, as is required by law. Paralegals were also authorized to sign
foreclosure affidavits in her name.

 

As a result of that activity, which the AG suspects may
constitute fraud, foreclosure defense attorneys have filed at least one class
action lawsuit on behalf of homeowners who may have suffered wrongful
foreclosures.

 

Stern has stepped down as the chairman of DJSP and has been
recently forced to sell more than $40 million in personal assets, as we
reported last month. DJSP stock has dropped in value from a high of $14 per
share to 13 cents per share today. It has been de-listed from the Nasdaq
exchange and is now considered a penny stock. Investors have filed a securities
fraud lawsuit against Stern, accusing him of intentionally misleading him about
the company’s value.

 

Source: South Florida Sun Sentinel, “David Stern
foreclosure firm closing at end of month,” Peter Franceschina, March 7,
2011

 

Tags: DJSP Enterprises, Defenses to Foreclosure, Florida,
Florida Attorney General’s Office, Foreclosure Mills, Foreclosure Process,
Foreclosure-Gate, Law Offices of David J. Stern, Robo-Signing, Wrongful
Foreclosure

 

Comments: Leave a comment