SAN FRANCISCO, Calif.—An extensive mortgage-fraud ring led by the law firm Kramer and Kaslow has been stopped in its tracks, and the firm now faces national scrutiny following a lawsuit filed by the California Department of Justice (DOJ) and the State Bar of California. Kramer and Kaslow is headquartered in Calabasa, Calif., and has an office in San Francisco.
California Attorney General Kamala Harris announced on Thursday that her office had filed suit on Monday against the Law Offices of Kramer and Kaslow, as well as two other law firms, four attorneys and 14 other defendants including loan modification marketers, for their role in scamming at least 2,500 distressed homeowners in California by convincing them to add their names to a phony, “Mass Joinder” lawsuit. A Mass Joinder Lawsuit is a lawsuit with hundreds of individually named plaintiffs. According to the Attorney General’s office, Kramer and Kaslow and their partners made false promises to homeowners who agreed to join the lawsuit, claiming they would help them with their mortgage troubles, specifically on home loans being lended by Bank of America.
According to Harris, 2.2 million pieces of mail were sent to homeowners in 17 states, including California. The letters informed “at-risk” homeowners -- those in danger of being foreclosed on -- that they qualified as “a potential plaintiff in the Ronald vs. Bank of America case.”
The mailings were followed up by phone calls from people who had no expertise in law, said Harris. “[The homeowners] had a mill of individuals, not lawyers, talking to them. Lawyers were paying non-lawyers to do outreach,” she said.
A job description for one of these outreach positions, posted on Craigslist on Aug. 4, reads:
“Seeking a TOP Sales Representatives from Loan Modification from Loan Modification, Debt Settlement, Lender Litigation, and Mortgage to take Inbound calls. Make $1000+ per sale with EXCELLENT leads from our targeted mail drops and webinars.”
The company is described on Craigslist as “a TOP National Law Firm that is suing the lenders.”
“Help Homeowners and Make $$$$$$ with Lender Litigation and Short Sale Assistance Programs,” the description continues.
The “help” homeowners were promised, however, turned out to be quite costly.
In exchange for a fee ranging from $4,000 to $10,000 paid to Kramer and Kaslow, homeowners were told they would receive “immediate immunity from foreclosure, a principal reduction and… legal representation,” according to Harris.
“One woman from North Hollywood borrowed $10,000 to pay them because she had two homes under water” said Harris. “But she called and called, and they never called her back.”
“This is and was designed to be a noble profession, but instead these lawyers are preying on victims in CA and profiting from them,” she said.
According to Bill Hebert, president of the California State Bar, the Loan Modification Task Force has already disbarred 20 lawyers for their involvement in loan modification scams, since 2009.
“If you think you can take advantage of clients, you can’t,” he said.
Homeowners were advised to call the toll-free HUD help hotline: 1-800-995-HOPE or visit the HUD website, if they believe they have been victimized or have information about loan modification scams.
The proliferation of scam artists is a national problem, said Harris, but is especially critical in California where last year 2.2 million homes “were under water.”
Of the top 10 most foreclosed-on cities in the country, five are in California.
And since 2008, nearly 1.2 million Californians have lost their homes to foreclosure.
Ethnic minority homeowners are thought to have been the most targeted in this particular scam, said Harris. She noted that up to 50 percent of the affected California homeowners in this case are Latino and African American, whereas they make up only 20 percent of homeowners in the state.
And according to research by the Berkeley, Calif. based Greenlining Institute, Latinos have 66 percent of their wealth tied up in their homes, while African Americans invest 63 percent, compared to about 38 percent for whites.
While the Attorney General estimates there were approximately 2,500 homeowners in California taken advantage of by Kramer and Kaslow, she suspects there may be many others who have not yet been identified.
“This is the reason we’re releasing this (lawsuit),” she said, “to inform others who also have been duped.”
But she stressed that this is the first of many anticipated mortgage scam cases to be pursued to the fullest degree by the Mortgage Fraud Strike Force, launched last May to bring “justice to many targeted homeowners in California.”
The strike-force “has been working around the clock one these cases,” sad Harris.
According to the Attorney General’s press release, the defendants in the lawsuit had their assets seized and were enjoined from continuing their operations. 16 bank accounts were seized on Wednesday.
“This case means fines, penalties, and restitution,” said Harris, adding that it would translate to "tens of millions of dollars.”
“California deserves to made whole,” she said.
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