LOS ANGELES (CN) – Hundreds of homeowners claim several California attorneys used fraudulent advertising “unrivaled in its falsity and brazenness,” promising fictitious class-action settlements against major banks, and misused the name of the homeowners’ attorney, Mitchell Stein, to dupe them into paying thousands of dollars.
Stein was one of a long list of defendants sued by California Attorney General Kamala Harris in August. That complaint accused the Kramer and Kaslow law office, and others, of running a foreclosure scam that suckered “thousands of California homeowners.” The state claimed the 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.”
Stein and his clients then countersued Attorney General Harris, claiming she was “doing Bank of America’s bidding” by seizing legal files from Stein, denying his clients the right to the legal counsel of their choice. Similar countersuits were filed in Miami and New York.
In the latest barrage, in L.A. Superior Court, Stein and his clients continue their crusade against the law firms that, they say, prey on distressed homeowners under the guise of protecting them from fraud.
“Included among the conspiracy by all defendants, acting in concert, was utilizing the false advertising to adversely impact the rights of millions of home owners across the United States and to defraud their elected representatives for reasons amounting to nothing but pure ‘profit,'” according to the complaint.
The plaintiffs include more than 300 homeowners from several states who hired Stein to represent them in lawsuits against Bank of America and other major lenders.
Stein and his clients claim the defendants made more than $10 million from their scheme.
Named as defendants are Brookstone Law, its owner Vito Torchia Jr., his associate Damian Kutzner, California law firm SML, SML partners Kenin Spivak, Theodore Maloney and Edwin Lasman, and Apex Legal Group and its employees Christopher Tomaszewski and Bridget Jones.
Stein filed his opening shot against a major bank, Ronald v. Bank of America, in March 2009, alleging that Bank of America had committed mortgage fraud and was illegally foreclosing on his clients’ homes.
His clients claim that Stein succeeded in stopping foreclosures against their homes and expanded the lawsuit against the bank.
According to the complaint, Stein represented many California homeowners for no charge.
The plaintiffs say that in 2010, Stein enlisted defendant Spivak’s help as co-counsel in the expanded litigation against Bank of America, despite Spivak’s lack of experience in representing homeowners against banks.
“Unknown to attorney Stein or any of the plaintiffs in the Ronald case – most of whom are plaintiffs here – Spivak had ulterior motives for wanting to be part of the Ronald case,” the complaint states. “His motives were one of fraud, deceit and profit, which he failed to disclose to anybody upon his association into the case by Mr. Stein in March 2010. Within three months of being associated into the case, defendant Spivak began asking anybody he could find – including Stein and at least half of the plaintiffs herein – for money or agreements to pay money.”
Stein and his clients claim that Spivak infiltrated Maloney into Stein’s practice to learn about the banking industry, gather information on Stein’s cases against the banks and “poach” contacts to be used in the defendants’ fraudulent marketing campaigns.
A few months later, they say, “Spivak would utilize the information both he and Maloney were able to ‘poach’ from Mr. Stein to ultimately form law firms and relationships to initiate massive marketing campaigns (a) selling themselves as experts in the field of bank litigation and (b) lying to home owners with false mailers and advertisements in order to induce them to send money for the benefit of Spivak and Maloney …”
The defendants defrauded more than 1,000 homeowners nationwide by sending a false mailer using Stein’s business name and logo, falsely stating that Stein was involved in their marketing campaigns, according to the complaint.
Stein started using the moniker of a Doberman dog next to his trade name after a 1991 article in Premiere Magazine labeled him “the Doberman” in connection with a high profile case.
Stein’s clients say the defendants also tried to remove Stein from the Ronald litigation because he had refused to participate in advertising campaigns.
“Based upon the conspiracy, the Maloney Group – lacking any standing under law given that they were not ‘real parties in interest’ to any case against any bank in the United States – made a motion in the Ronald case to ‘remove Mr. Stein as lead counsel’ in such case,” the complaint states. “Notwithstanding that the motion was unsuccessful, the Maloney Group sent out hundreds of mailers that made representations to the opposite: that the motion was successful and that clients should choose them as their lawyers.”
Stein and his clients say the defendants failed to disclose that “from December 2010 through March 29, 2011 and even thereafter – the Maloney Group and [its affiliate] United Law Group were using the name and likeness of Mitchell J. Stein and his ‘trade dress’ to induce homeowners to pay them money. For example, lead plaintiff Todd Legaspi – a highly regarded member of our United States military – paid money to the Maloney Group and the Brookstone Group and United Law Group (and has been asked to pay more money) based upon the representation by Vito Torchia (through his staff and individually) that ‘The Doberman’ (Mitchell J. Stein) is currently representing Mr. Legaspi. That representation made by Vito Torchia in conspiracy with all defendants herein, was at all times false and none of the defendants had any belief that such a statement was authorized by Mr. Stein or was truthful.” (Parentheses in complaint).
The plaintiffs say the mailer “was a part of the conspiracy to the great damage of all plaintiffs herein. Illegal mailers and advertisements, and trickery and intrinsic fraud to courts, in the middle of a crisis such as this one, hinder and delay the efforts of legitimate persons and lawyers wishing to bring the actual and ultimate wrongdoers to justice.”
They add: “To top it off, as the defendants were completing the first phase of their fraud and deceit on unsuspecting American homeowners, they produced infomercials … to follow up on the marketing blitz to profit off of the illegal mailer. … During this time, bank servicers increased foreclosure efforts based upon the unique California non-judicial foreclosure laws and plaintiffs were harmed extensively by foreclosures, invasions of their privacy, and other actions taken by bank servicers during the deceptions practiced by the defendants and at a time when defendants were their lawyers. In truth and in fact, the defendants (with the exception of defendant Lasman) had never obtained a restraining order, an injunction or a stipulation against a bank, or even brought an application for one, over the course of their entire careers before meeting Mr. Stein. Nonetheless, they have produced and distributed infomercials coupled with illegal mailers that induced home owners across the United States to believe that the banks in the United States have agreed to pay up to $75,000 to them by banks who have ‘settled’ matters labeled as ‘class settlements.'” (Parentheses in complaint.)
Stein and his clients claim that Kutzner was previously involved in illegal marketing schemes, and violated a Federal Trade Commission order enjoining him from marketing activities for 10 years.
And they say that the defendants instigated Attorney General Harris to take legal action against Stein.
In her Aug. 15 complaint against Stein and other law firms, Attorney General Harris asked the California Bar to take over their practices, accusing them of defrauding distressed homeowners through false advertising.
Stein and his clients say: “If not for Mr. Torchia’s misrepresentations – done at the behest of the Maloney Group and with the assistance, aid and comfort of Kutzner, all for pecuniary gain – the plaintiffs herein would not have paid the defendants any money and would have sought other counsel who (a) were actually experienced in the kind of banking business at issue in foreclosure litigation and (b) would have otherwise legitimately protected their legal rights.”
The homeowners seek compensatory and punitive damages for fraud, legal malpractice, concealment and deceit.
Stein wants the defendants enjoined from using his name and identity and more than $100 million in damages for appropriation of name and likeness.
They are represented by Erikson Davis and Mitchell Stein.