DALLAS (CN) - A Dallas law firm won fraudulent judgments against thousands of victims by submitting false affidavits to judges, a class action claims.
The Texas Association of Fraudulent Judgment Victims sued Hosto & Buchan PLLC, of Dallas, and attorney Melvin Thathiah, of Plano on March 19 in Dallas County Court.
It claims that a Texas Attorney General investigation exposed the law firm's scheme of defrauding the court "on a massive scale."
The association sued as assignee of Norma Glazier, Alice Perkins and others similarly situated. It claims that the defendants sued them on behalf of Midland Funding in 2007 and 2008.
"The lawsuit is the result of public disclosures by the Texas Attorney General that Midland Funding LLC, Midland Credit Management Inc., Encore Capital Group Inc. and its attorneys engaged in 'fraud on a massive scale' by using false affidavits to deceive Texas courts into invoking its jurisdiction and signing 'thousands' of false and 'fraudulent judgments' against Texas residents," the lawsuit states.
Texas charged California-based Encore and its subsidiaries in 2011 with defrauding the Texas judicial system and violating debt collection laws.
The association claims that Glazier and Perkins et al. did not learn of the Texas attorney general's consumer fraud investigation that exposed the deception until May 2014.
"Prior to that time, Norma L. Glazier and Alice Perkins did not know, or have a reasonable basis for knowing, that Midland Funding and its attorneys had deceived courts into rendering void and fraudulent judgments against them," the complaint states.
The putative class, estimated in the thousands, wants all judgments obtained by fraud on the court voided, appointment of a Master in Chancery, attorney's fees, and sanctions "to punish conduct which abuses the judicial process."
"The determination by the Texas Attorney General that Midland Funding and its attorneys have committed 'fraud on the court on a massive scale' involving the use of 'thousands' of false affidavits against Texas residents (90% of whom were determined to be financially unable to retain counsel in the lawsuits that result in judgments against them) is sufficient for this court to find that this lawsuit is an 'exceptional case' and that 'good cause' exists for the appointment of a Master in Chancery," the class claims.
The plaintiffs are represented by Ross Teter of Dallas.
Mark Stout, a Fort Worth attorney representing Hosto & Buchan, told Courthouse News that the claims are without merit and that the law firm will "vigorously" defend the lawsuit.
He called the lawsuit "frivolous."
"(O)n at least four different occasions in the last thirty days, Mr. Teter and/or his clients have had lawsuits dismissed and/or been sanctioned under Chapter 27 of the Texas Civil Practice and Remedies Code by district courts for alleging similar claims," Stout said.