As we mentioned last week, just days after City of Miami assistant fire chief Veldora Arthur was convicted for various types of fraud in federal court, lawyers on her behalf (as well as several others) filed suit against J.P. Morgan Chase for of all things, FRAUD! From the Daily Business Review article...
Boca lawyer goes on offensive against ChaseAdolfo Pesquera
Most lawyers who represent homeowners in foreclosures use defensive strategies in their efforts to hold off the lender, but not W. Jeffrey Barnes.
The Boca Raton lawyer has launched an offensive against JPMorgan Chase using state racketeering law.
Barnes filed a state civil RICO action in Palm Beach Circuit Court against Chase claiming the lender engaged in a national pattern of "fraudulent foreclosure proceedings based on false and fraudulent misrepresentations."
It may not be the preferred legal strategy in challenging Florida foreclosures, but that doesn't necessarily mean it's a bad idea, prominent foreclosure defense attorney Thomas Ice said.
"We've looked at all sorts of plaintiff-side actions, particularly the class-action type lawsuit," said Ice, managing partner of Ice Legal in Palm Beach Gardens. But ultimately we decided they aren't suited for our client base. We'll continue to use defensive strategies rather than offensive strategies."
Going down the beaten path has not been Barnes' method. The founder of the Newport Beach, California-based Foreclosure Defense Nationwide website and blog has built a national network of 39 law firms, allowing him to defend against foreclosures in 26 states. The latest lawsuit, Linda Zimmerman et al v. J.P. Morgan Chase and Chase Home Finance, represents his alliance with the Washington Mutual Homeowners Support Group, a grassroots organization of former WaMu mortgage customers.
The lawsuit is not intended to save anyone's home, Barnes explained. It is a counter-punch intended to hurt the bank by exposing its alleged fraud.
"This was never intended to be arm-twisting to get the bank to do loan modifications," he said. "These are damages claims."
Foreclosure RightsThe alliance had its genesis in how Chase claimed the right to foreclose on the defunct WaMu's home loans.
When WaMu failed in 2008, the Federal Deposit Insurance Corp. sold certain assets to Chase. But in filings submitted in Deutsche Bank v. FDIC and Chase, Chase said it "did not become WaMu's successor in interest," Barnes cited in the lawsuit.
Despite that admission, Barnes said Chase — through its servicer Chase Home Finance — instituted foreclosure proceedings nationally on WaMu mortgages, listing itself as successor in interest to carry forward WaMu's ownership interests.
The lawsuit claims Chase and Chase Home used the electronic clearinghouse Mortgage Electronic Registration Systems and bogus assignments to improperly pursue foreclosures. The bank also allegedly ignored state laws, such as required certifications in New Jersey and mandatory good faith pre-foreclosure resolution efforts in California.
"This pattern of filing false declarations ... and failure to provide proof of legal ownership in Florida and other jurisdictions is consistent with Chase's pattern of falsely misrepresenting the legal scope of the FDIC affidavit," Barnes said.
Chase has received a 30-day filing extension, delaying its answer to the Palm Beach Circuit lawsuit, Barnes said.
Chase representatives did not respond to calls for comment by deadline.
The lawsuit seeks an injunction to stop to all Chase foreclosure activity in eight states: California, Florida, Massachusetts, New Jersey, New York, Tennessee, Washington and Wisconsin. They are home to the 32 homeowners suing Chase individually, not as a class.
"We expect that there are going to be more," Barnes said.
One of the reasons the suit was filed in Florida is the operations of the servicer, Chase Home Finance, he said.
"I termed it nationalized mail fraud in the lawsuit because of the generation of documents out of (Chase Home's) nerve center in Jacksonville," he said.
Legal OptionsZimmerman, a Boca Raton legal researcher, claims she was suckered into a negatively amortized loan, something she didn't realize until after the closing in 2008. Her $1,800-a-month mortgage quickly turned into a $3,425-a-month payment, and she fell into default in February 2009. Her house today is worth a third of its original value.
Relying on her professional training, Zimmerman became a resource for the WaMu Support Group. She said the assignment document used against her listed a receptionist as a bank vice president.
"It's a person who was not an official of the bank," Zimmerman said. "Their fraud became very evident."
She and the Support Group approached Barnes about using the Florida Civil Remedies for Criminal Practices Act, the state RICO law, against Chase.
"I had considered different options, class action lawsuits," Zimmerman said. "The only ones that seemed to benefit from class actions were the lawyers."
She noted the example of an acquaintance in California who was in a class action against Bank of America. His portion of the settlement came to $3,009. She did not think that was a solution.
Document FightLenders and servicers have been successful in avoiding having questionable documents used against them in Florida courts by dismissing foreclosure actions when homeowners allege fraud, Barnes said.
"In other Chase litigation, I have to fight to get documents. Routinely, they object to almost everything. They fight you on the discovery. That's probably why we've had so many cases dismissed for discovery violations. Once there's an order compelling discovery, the banks just don't respond or they ask for open-ended extensions or they file incomplete responses. The judge files a dismissal without prejudice with the refiling conditioned on providing discovery, and they just don't do it," he said.
A nationwide RICO action broadens the possibilities for discovery. Barnes pointed to a case in Las Vegas.
Troy Fox, an associate at Crosby & Associates in Las Vegas, handled a case accusing Wells Fargo of using a fraudulent notary stamp on a deed of trust assignment. This surfaced during the third loan modification mediation.
"They again denied the client for a modification. We asked about the stamp. They said, 'We don't think it's an issue.' We did," Fox said.
Fox is asking for an evidentiary hearing on the fraud claim and sanctions sufficient to bring the mortgage down to the current market value.
"Nevada is a nonjudicial state," Fox said. "They cannot rescind the notice of default unless we agree."
While Ice, who has been at the forefront of probes into the robo-signing scandal, has opted not to pursue RICO claims, he applauds attorneys who try different approaches. Any method that exposes more fraud can only help other attorneys, he said.
"It becomes much easier for you to get your own information because you already have a road map of where you want to go," Ice said.
While I agree that the practices engaged by the banks recently in these foreclosure proceedings are just as egregious as the frauds that the borrowers engaged in when they borrowed the money, at the end of the day what you can't get around is the fact that these people ARE NOT PAYING THEIR DAMN MORTGAGES! Regardless, why aren't these banks punished in the same manner as the people who submitted fraudulent paperwork on their loans? Why the double standard? Over the course of our blog, we've seen several instances where people where convicted and sentenced to prison for simply misstating their incomes on loan applications or by submitting some fake paperwork in order to get approved for a home mortgage, so why the double standard? Why aren't these banks held accountable just like the average citizen?
Regardless, here's the lawsuit for your reading pleasure. The first eleven pages consist of legal maneuvering by Chase's attorneys to get the case removed from circuit court and into the proper federal venue, enjoy...
Veldora Arthur Sues Chase for Fraud
A bit of advice to the attorney who filed this suit, Mr. W. Jeffrey Barnes, perhaps next time you may want to vet your clients a little better and make sure that they weren't just federally convicted for FRAUD before you file suit on their behalf!