By RAY SANCHEZ
Oct. 12, 2010—
A former paralegal with Florida's largest foreclosure l-
aw practice has told state investigators that the firm
routinely signed court paperwork without reading it,
misdated records, forged signatures and passed
around notary stamps in the rush to foreclose on
homes.
"This is just the beginning really," the paralegal,
Tammie Lou Kapusta, told ABCNews.com. "It's the tip
of an extreme iceberg."
The allegations are the latest leveled against the firm
of multimillionaire attorney David J. Stern, who has
amassed a fortune foreclosing on the homes of
struggling families on behalf of lenders. The 50-
year-old Stern even considered naming his $20-
million yacht "Su Casa Es Mi Casa "Your House
is My House," an acquaintance told the New York
Times. After his wife and others reportedly cautioned
against it, Stern settled on Misunderstood. He denied
to the newspaper that he considered "Su Casa Es Mi
Casa."
"From David Stern's perspective, he's a lawyer given
defaulted mortgages to foreclose in a court
proceeding," said his lawyer, Jeffrey Tew. "So it's
really wrong to vilify him. Let's put it this way, there is
a well-organized defense bar who is making a lot of
money keeping people in their homes."
But it's the booming mortgage-servicing industry
that is under legal scrutiny. Some 40 state attorneys
general are expected to announce this week a joint
investigation into the industry in hopes of pressuring
financial institutions to rewrite a sea of troubled
loans.
Across the nation, mortgage-servicers, which
include units of major banks such as Bank of America
Corp., have been accused of submitting fraudulent
documents in thousands of foreclosure proceedings.
In Florida, Stern is foreclosure king, operating the
large law firm plus a foreclosure processing company a
nd other support businesses that he recently sold
inancial services in actions against tens of
thousands of delinquent borrowers.
"It's really unfair to make the foreclosure lawyer ...
somehow a villain," Tew said. "With the increase in
volume, there's no question that David firm's
revenues have grown dramatically but there's nothing
wrong with that. He's not gouging."
Tew said Stern's firm makes about $1,400 per
foreclosure, totaling about $98 million last year.
Still, the rising foreclosure tide also meant shortcuts
and sloppy legal work, according to Kapusta's sworn
statement to the state attorney general.
The paralegal, who worked for Stern a little more
than a year, described an office where signatures on
notarized documents were regularly forged, legal
papers were outsourced to Guam and the Philippines,
and shouting matches erupted when cases stalled.
The accusations, in a sworn statement taken late last
month by the Florida attorney general, coincide with
mounting nationwide criticism of the practices used
to take homes from families.
Kapusta, who claims she was fired by the firm in July
2009 after refusing to falsify documents, said Stern's
business jumped from about 200 employees to 1,100
in one year as foreclosures skyrocketed and staff
struggled to keep up.
Notary stamps were always available, and employees
such as Kapusta, who were not notaries, routinely
used them on official documents, she said. Those
who could best fake the signature of the person who
verified foreclosure affidavits were allegedly sought
out to forge her name.
"If you focus on the way these businesses operate,
it's, at best, sloppy and, at worst, fraudulent," Fisher
said of the firms that have become known as
foreclosure mills. "The whole system was broken
down."
Tew dismissed Kapusta's allegations as simply
untrue, the rants of a disgruntled former employee.
"You can see she has a real vindictiveness against the
firm," he said. Stern's lawyer denied any wrongdoing
in the foreclosure process.
"There is no question that there is a necessity to
make these foreclosures correct and appropriate,"
Tew said. "We do not admit that there was any
intentional cutting of corners. There may have been
some human error on a very small percentage but
there was no intentional cutting of corners."
ho are losing their houses and getting rich off of it,"
he said. "You could say the same thing about a
neurosurgeon that makes millions of dollars a year
from people who sustained terrible head injuries."
His Plantation, Fla., firm, which filed 70,382
foreclosure cases last year, is the largest of three
under investigation by state Attorney General Bill
McCollum for allegedly filing improper documents
with courts to hasten the overloaded foreclosure
process.
To detractors, the 50-year-old Stern has become
emblematic of the foreclosure crisis, the architect of
what they call a giant assembly line that has
undermined struggling homeowners at a time of
record foreclosures. Nationwide, there were 2.8
million foreclosures in 2009. Florida leads the nation
in foreclosures with more than 400,000 filings this
year alone.
"He is notorious in Florida and, in the rest of the
country, we pay some attention to Florida because the
worst behavior often emanates from there," said Linda
Fisher, a professor and mortgage-fraud expert at
Seton Hall University's law school. She said she had
no direct knowledge of the Stern's practices. "I've
heard some pretty bad stories about Stern for at least
the last couple of years or so."
To defenders, Stern is a hard worker who has legally
reaped enormous profits representing banks and
n the past month, GMAC, JPMorgan Chase and Bank
of America have halted or slowed foreclosure
procedures, after bank employees and affiliates
admitted to signing thousands of documents without
knowing the details of the cases.
"The problems with these firms and they're
very sloppy practices is that they unacceptably
cut legal corners and put the burden on borrowers to
basically pay whatever these folks have them pay,"
said Jeffrey Golant, an attorney in Pompano Beach.
"They're loading down with junk fees and illegitimate
charges, basically putting people who are already
struggling, maybe possibly in most cases legitimately
behind on their mortgages, but loading up with such
abusive fees that people will never get out of
foreclosure."
Still, the crisis has been good for Stern and the rest
of the mortgage-servicing industry. Stern and his wife
Jeanine have brought nearly $60 million in real estate
in recent years, mostly in Florida, according to
property records.
His 16,000-square-foot mansion, valued at more
than $15 million, occupies a corner lot in a private
island community on the Atlantic Intracoastal
Waterway in Fort Lauderdale, according to the New
York Times and Mother Jones magazine.
The mansion is featured on a water-taxi tour of the
area's grandest estates, including the homes of Jay
Leno and billionaire Blockbuster founder Wayne
Huizenga, and the former residence of Desi Arnaz and
Lucille Ball. In addition to the 130-foot yacht, Stern
reportedly has an automobile collection that includes
a 2008 Bugatti and multiple Ferraris, Porsches and
Mercedes. But Tew declined to discuss his client's
assets. "All that does is feed into this scenario that
somehow they're taking advantage of poor people.
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