Friday, October 08, 2010

Bloomberg/Business Week: Paralegal Blows Whistle on Florida Foreclosure Mill; Florida Attorney General Investigting

Florida Foreclosure Firm Fudged Forms, Ex-Paralegal Claims

October 08, 2010, 5:04 PM EDTBy Phil Milford and Denise Pellegrini

Oct. 8 (Bloomberg) -- Workers at a Florida law firm that processed foreclosures misdated documents, signed paperwork without reading it and skirted rules set up to protect military personnel, a former paralegal told state investigators.

Tammie Lou Kapusta, who said she spent more than a year at the Law Offices of David J. Stern PA, made the accusations in a Sept. 22 interview with lawyers for Florida Attorney General Bill McCollum. In August, McCollum announced a probe of three law firms to see whether improper documents were created and filed with state courts to hasten the foreclosure process.

Jeffery Tew, a lawyer for the Stern firm, denied Kapusta’s claims.

Kapusta, who spoke under oath, said the Stern firm ballooned from 225 employees when she started in March 2008, to more than 1,100 when she was fired in July 2009. She described a disorganized workplace where documents got lost and mortgages were misfiled. The training process was “stupid and ridiculous,” she said.

“There were a lot of young kids working up there who really didn’t pay attention to what they were doing,” she said, according to a transcript. “We had a lot of people that were hired in the firm that were just hired as warm bodies.”

Kapusta’s statements were reported yesterday in the Tampa Tribune. Tew, of Tew Cardenas LLP in Miami, said he wasn’t aware of the interview until it was released to the public.

“We didn’t get a chance to cross-examine her,” he said. “It was a one-sided statement by a disgruntled employee. There was a lot of animus and personal references, and she seeks to besmirch people’s reputation. The law firm denies there’s any accuracy in the charges.”

Jurisdiction Challenged

There’s a court hearing set for Oct. 12 to determine whether McCollum’s office has jurisdiction over the firm’s conduct, Tew said.

“This is a civil investigation, and the attorney general hasn’t made any conclusions,” Tew said.

David J. Stern and officials of his Plantation, Florida- based mortgage-processing company, DJSP Enterprises Inc., didn’t respond to a request for comment. DJSP shares the same Plantation, Florida, address and phone number as the law firm.

“It is our office’s policy not to comment on open investigations,” McCollum’s spokeswoman, Ryan Wiggins, said in an e-mail.

Kapusta’s phone number isn’t listed in South Florida directories and members of a Kapusta family in Deerfield Beach, Florida, didn’t answer the telephone.

Kapusta’s Counsel

“I am not at liberty to say anything” about the investigation, Harold Regan of Tallahassee, a lawyer who was listed as appearing via telephone on Kapusta’s behalf at the September interview, said in a phone interview.

Doug Lyons and Marsha Lyons, also listed as appearing on behalf of Kapusta at the interview, didn’t return calls or voice-mail messages seeking comment.

In the first half of 2009, of the top 25 U.S. metropolitan areas by foreclosure, 10 were in Florida, including Cape Coral- Fort Myers, which had the second-highest foreclosure rate, according to Irvine, California-based RealtyTrac Inc., a seller of default data.

Kapusta, who said her team was responsible for 12,000 files, said the firm outsourced paperwork to services in Guam and the Philippines, let process servers bill for unnecessary work, improperly notarized documents and let employees sign a supervisor’s name on affidavits.

Dates were changed to appear consistent, even if a document was handled by different parties months apart, she said. Employees were pressured to meet quotas and screamed at if they questioned procedures.

‘Very Unaware’

“Everything was about getting the judgment entered because we have to report to the banks,” she said. “We had to do chronological things that were sent to them that were also obviously changed and fudged because the banks, some of them, are very unaware of what the process is, believe it or not.”

Stern’s firm would knowingly use the wrong Social Security number to search military records for people who couldn’t be located or identified, Kapusta said. Under federal law, a lender must show that a service member’s ability to repay a debt wasn’t affected by military obligations, according to the U.S. Housing and Urban Development Department.

Kapusta said she was fired about two weeks “after I refused to do the military documents.”

“If I thought something was wrong, I would question it,” she said. “They don’t like that.”

--With assistance from Thom Weidlich in New York. Editors: Andrew Dunn, Michael Hytha

To contact the reporters on this story: Phil Milford in Wilmington, Delaware, at pmilford@bloomberg.net; Denise Pellegrini in New York at dpellegrini@bloomberg.net.

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.

No comments: