Thursday, November 12, 2009
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State Bar Task Force Shuts Down More Lawyers’ Practices
By STEVEN M. ELLIS, Staff Writer
The State Bar of California said yesterday that it has taken action against five more attorneys from Los Angeles and Orange counties for alleged loan modification misconduct.
The group announced that three attorneys had resigned with charges pending, while another was ordered involuntarily inactive for posing “a substantial threat of harm” to clients or the public and a fifth was enrolled as an inactive member for similar reasons.
South Pasadena attorney Timothy Thurman submitted his resignation Nov. 2 following his arrest by FBI agents last month, while Costa Mesa attorney Gary Davidson and Culver City attorney Eric D. Johnson both submitted their resignations Nov. 4.
Aliso Viejo attorney Paul Lucas was ordered involuntarily inactive Nov. 4 for posing a substantial threat of harm under Business and Professions Code Sec. 6007, and Irvine attorney Sean Rutledge was enrolled as an inactive member under the statute Nov. 6.
According to the State Bar, the actions bring to 14 the number of attorneys who have resigned or been placed on involuntary inactive enrollment since creation of the group’s Loan Modification Task Force in April.
Interim Chief Trial Counsel Russell Weiner said he was “very pleased” and that the task force’s results exceeded his expectations.
“Our office has been aggressively investigating and prosecuting attorneys alleged to have committed loan modification misconduct,” he said. “Any attorney thinking that he or she can commit loan modification misconduct and get away with it for a significant period of time should think again.”
Thurman, 37, resigned with charges pending following his arrest at his Altadena home. He was charged with knowingly creating and using a court order containing the forged signature of a federal judge.
Thurman, who could not be reached for comment, allegedly gave the document to clients who sought his help to avoid eviction, telling them to give it to the sheriff, who became suspicious and contacted the judge. His practice—Trinity Law Group in Los Angeles, which he started earlier this year—was performing lender litigation and loan modification.
State Bar investigators worked with the FBI in the investigation.
Thurman was admitted to the State Bar in 2001 and the group’s website shows no prior record of discipline.
Davidson, 75, and Johnson, 55, also could not be reached for comment, and the State Bar did not release details on the charges they faced prior to submitting their resignations.
Davidson was admitted in 1962 and had no prior record of discipline. Johnson was admitted in 2003. He was privately reproved in 2005 and suspended July 1 for failing to pay membership fees and comply with mandatory continuing legal education obligations.
Lucas, 48, was ordered involuntarily inactive by State Bar Court Judge Lucy Armendariz under Sec. 6007 pending disciplinary proceedings against him.
Armendariz said Lucas inaccurately described the refund policy of his firm, the Lucas Law Center, and its business relationship with Future Financial Services, and that he aided in the unauthorized practice of law by partnering with a nonlawyer in violation of State Bar rules.
She said Lucas—through staff, agents and advertisements—misrepresented the scope of his service to clients, collected advance fees under false pretenses, recklessly advised clients to stop making mortgage payments, failed to perform services, failed to promptly refund unearned fees and repeatedly failed to respond to client inquiries.
Armendariz noted that the Lucas Law Center, Future Financial and others had generated 45 State Bar complaints and 89 Better Business Bureau complaints, and that the Federal Trade Commission obtained an injunction against them in August from the U.S. District Court for the Central District of California.
Lucas was unavailable for comment, but he told the MetNews last month that the accusations against him were “politically motivated.”
He said they arose because banks with which he was attempting to negotiate loan modifications “lied” to his clients that they had never heard of his firm. He also claimed the Federal Trade Commission had shut down his firm on the basis of only seven complaints.
Lucas was admitted in 1992 and was suspended once in 2007 for failing to pay dues.
Rutledge, 34, was enrolled as an inactive member under Sec. 6007 pending further order for an alleged pattern of client neglect involving failing to perform, failing to communicate, and/or failing to refund unearned fees in 14 matters.
Admitted to the State Bar last year, he started United Law Group in August 2008.
According to the State Bar, State Bar Court Judge Richard Honn wrote in an order of inactive enrollment that Rutledge “promised to help troubled homeowners—many of whom were in arrears or on the brink of foreclosure—modify their home loans and maintain financial stability.”
Instead, Honn wrote, Rutledge “took their money and time and offered little or nothing in return. In fact, due to their loss of money and time, many of respondent’s clients ended up in a worse position than they were in when they originally turned to respondent for help.”
The State Bar said its task force has received more than 1,250 complaints and is investigating almost 250 lawyers. Each task force investigator oversees about 135 cases, and almost 20,000 attorney files have been removed from the offices of attorneys whose loan modification practices have been shut down or abandoned. State Bar investigations are up 69 percent over 2008.
The group has been working with local law enforcement as well as the state Attorney General’s Office and the FBI to address the problem of businesses and law firms preying on people about to lose their homes through foreclosure.
Last month, a new law, SB94 by Sen. Ron Calderon, D-Montebello, took effect that prohibits attorneys and any others involved in mortgage relief from taking upfront fees for loan modification work. Weiner said the new law should reduce the number of lawyers committing loan modification misconduct.
Copyright 2009, Metropolitan News Company