Florida Bar President Tod Aronovitz read the reprimand aloud before the board of governors on Oct. 25, 2002:
“Your firm represents lenders in foreclosure proceedings. In most situations, the defendants are unable to afford competent legal counsel to raise any defenses to the foreclosure proceedings. In the interest of expediency and to maximize your own profits, you provided title insurance services in house, and represented in affidavits, filed in multiple courts throughout the state, that these services were out-of-pocket costs – when, in fact, the services were being provided by personnel paid by your law firm. Your manner of operation and these affidavits were misleading to the defendants and the courts and constituted conduct prejudicial to the administration of justice.”
South Florida Business Journal – by Paul Brinkmann
David J. Stern, an attorney who is the target of a state civil investigation for mortgage fraud complaints, was previously disciplined by the Florida Bar for deceiving the courts and clients about his web of businesses that do legal support work.
The Bar also confirmed Aug. 16 that it is also investigating Stern for numerous allegations of violating attorney regulations, including whether his running of DJSP Enterprises, a publicly traded company, is in compliance.
Stern represents banks that are attempting to foreclose on residential mortgages. Stern, his law firm and DJSP Enterprises are exemplary of the wave of attorneys who have benefitted from the flood of foreclosures that gripped the nation over the last three years.
Stern received a public reprimand in 2002 for billing practices that made it appear he was paying other companies for work on title insurance, when he was actually using in-house staff.
Stern settled the 2002 Bar complaint by consenting to the reprimand before the Bar’s board of governors. In the reprimand, Bar President Tod Aronovitz said Stern’s practices were “misleading” to the courts and foreclosure defendants.
This summer, Stern is facing allegations that he has been similarly misleading to the courts. On Aug. 10, Florida Attorney General Bill McCollum said he was investigating Stern and two other law firms for allegations of unfair and deceptive actions in their handling of foreclosure cases.
Fabrications in the name of speed
It is alleged that the firms, in representing lenders, may have fabricated mortgage assignments in order to speed up the foreclosure process.
Stern’s attorney, Jeffrey Tew, has brushed off McCollum’s announcement by saying that Stern handled 100,000 cases in the last few years, and a few mistakes were inevitable.
Tew said this week that resolving the 2002 Bar complaint also involved Stern agreeing to have all staff who perform title insurance work to be on the payroll of a separate title company.
Tew, of Miami-based Tew Cardenas LLP, said any alleged deception from the 2002 complaint “was inadvertent on David’s part,” and “there hasn’t been any Bar discipline since 2002.”
Tew said Stern employs 1,200 paralegals in Plantation, and may have turned to using staff in Manila, Philippines, partly due to a lack of space.
“The Bar has approved the use of paralegals in other countries,” Tew said. “DJSP has a group of paralegals in Manila. He doesn’t necessarily have room for more here, and it may be partly related to pay scales also.”
As for Stern’s running of a public company, Tew says that is a settled matter and should not be controversial.
“The non-lawyer component of his law firm was spun off into a separate company,” Tew said. “The public company has fully disclosed that arrangement, and there’s nothing secret about it.”