VAN NUYS, Calif. (CN) – California’s attorney general claims the Kramer and Kaslow law office is running a foreclosure scam that has suckered “thousands of California homeowners.” The state claims the law office and a long list of other defendants “prey on desperate consumer homeowners facing foreclosure” by selling participation in bogus “mass joinder” lawsuits and “litigation settlement(s),” but “No settlements exist and in some cases no lawsuit has even been filed.”
The state claims the defendants send bogus mailers announcing “Litigation Settlements,” telling homeowners they can join a “national litigation settlement” with their lender, but “No settlements exist and in some cases no lawsuit has even been filed.”
Attorney General Kamala Harris claims: “Thousands of California homeowners have fallen for defendants’ scam, and defendants have exported their mass joinder scheme nationwide.”
Lead defendant Kramer & Kaslow is run by Philip Allen Kramer, its president, CEO and director, the state says. It claims that Kramer, “acting alone or in concert with others, has formulated, directed, controlled, authorized, or participated in the acts and practices set forth in this complaint. Kramer is a resident of Los Angeles County.”
The complaint states: “Defendants prey on desperate consumer homeowners facing foreclosure and the loss of their homes by selling participation in so-called ‘mass joinder’ lawsuits against their mortgage lenders. Veterans of the loan modification industry, defendants use deceptive advertising and telemarketing to recruit consumers to join these lawsuits, at a cost of thousands of dollars each. Consumers are led to believe that joining these lawsuits will stay foreclosures, reduce their loan balances, entitle them to monetary benefits and potentially get them their homes free and clear of their mortgage.
Defendants often initiate the scheme by sending misleading mailers, including ‘Litigation Settlement Notification’ mailers to homeowners notifying them that they are potential plaintiffs in a ‘national litigation settlement’ with their lender. No settlements exist and in some cases no lawsuit has even been filed. Defendants’ mailers nevertheless state that homeowners may receive their homes free and clear of a mortgage, stop foreclosures, and receive thousands of dollars in compensation for damages. The mailer states it is a ‘final notice’ and that a phone in response is required, luring homeowners into contacting defendants.
Once homeowners call the telephone numbers, defendants engage them with additional false and misleading claims. Defendants’ telemarketers, who are not attorneys, provide misleading advice to homeowners regarding legal procedures and the likely results and benefits of joining the mass joinder lawsuits. Defendants tell consumers that judges have already ruled that the banks were practicing predatory lending and that consumers have already received the promised results. Defendants make false and misleading claims the mass joinder lawyers have achieved substantial victories against the bank lenders, including obtaining homes free and clear, stopping foreclosures, and obtaining orders rescinding notices of default. Defendants claim that the attorneys handling the mass joinder lawsuits have tried thousands of cases, and only take on qualified clients likely to be helped by the lawsuit.
“Homeowners are told that a settlement could happen at any moment and only those who have joined the lawsuit will receive the promised benefits. Defendants repeatedly make false or misleading statements to homeowners to get them to sign a retainer agreement and pay them thousands of dollars. Once homeowners sign a contract to join a ‘mass joinder’ lawsuit and defendants take their money, as much as $10,000, from their bank accounts, homeowners find they are unable to speak with an attorney with knowledge of the lawsuit. Basic questions such as whether the homeowner has been added to the lawsuit go unanswered. Some homeowners pay defendants thousands of dollars only to lose their homes shortly thereafter to foreclosure.
“Thousands of California homeowners have fallen for defendants’ scam, and defendants have exported their mass joinder scheme nationwide. In this action, plaintiff seeks an order permanently enjoining Defendants from engaging in their unlawful business practices, granting restitution for affected consumers, imposing civil penalties, and granting all other relief available under California law. By the filing this lawsuit, Plaintiff does not seek to interfere with any consumer lawsuits or opine on the validity of any legal theories used to challenge alleged fraud by mortgage lenders or servicers. However, defendants should not be allowed to violate California law by recruiting consumers into joining even potentially legitimate lawsuits by means of false and deceptive advertising.”
The state claims the defendants also engage in illegal “running” or “capping” to recruit participants in their alleged lawsuits.
It seeks injunctions and $2,500 in penalties for each violation of the state business code, including untrue or misleading representations and unfair competition, “but not less than $5 million.”
Here are the defendants: The Law Offices of Kramer and Kaslow dba K2 Law, Mass Litigation Alliance and Consolidated Litigation Group; Philip Allen Kramer; Mitchell J. Stein & Associates, Inc.; Mitchell J. Stein; Christopher Van Son; Mesa Law Group Corp.; Paul Warren Petersen; Attorneys Processing Center, LLC; Data Management, LLC; Gary Digirolamo; Bill Merrill Stephenson; Mitigation Professionals, LLC; Glen Reneau; Pate, Marier and Associates, Inc.; James Eric Pate; Ryan William Marier; Home Retention Division; Michael Anthony Tapia dba Customer Solutions Group and Home Retention Division; Lewis Marketing Corp; Clarence John Butt; and Thomas David Phanco.