ORLANDO, Fla. - Since Florida's mortgage crisis began about six years ago, banks have agreed to pay millions of dollars to settle allegations that they wrongfully foreclosed on thousands of homeowners. Prosecutors have charged loan servicers with filing fraudulent documents on behalf of banks.
But the law firms and lawyers that homeowners and judges contend took part in those same practices? Some critics are accusing Attorney General Pam Bondi and the Florida Bar of not going after them hard enough.
More than two years after wrongdoing by lawyers caused banks to stop foreclosures temporarily, these lawyers and their firms, which handled hundreds of thousands of foreclosures, have been accused of falsifying documents through fake signatures and backdating records and not giving homeowners proper notice that they faced foreclosure. Yet they continue to practice without facing any type of discipline, either from the criminal justice system or the Bar.
Bondi says her attorneys' hands were tied after an appellate court blocked an investigative subpoena from her office, saying it lacked authority under the state's unfair trade practices law. Because of the court decision, she said any discipline would have to come from the Bar, which so far has initiated disciplinary proceedings against two attorneys out of more than 330 cases it has investigated.
Attorneys for homeowners say there are other ways Bondi could go after firms that engaged in fraudulent practices other than using the unfair trade practices act. State prosecutors could have gone after subsidiaries of the law firms or pursued criminal investigative subpoenas.
"The door was left wide open and the AG did nothing," said attorney Tom Ice, who has represented homeowners who say they were cheated.
Added attorney Matt Weidner, "You have an attorney general shrugging her shoulders and walking away. How is this allowed to occur?"
Bondi said she would do more if she could.
"I'm all about prosecuting bad lawyers, believe me," she said.
A bill that would have overturned the court decision and subjected law firms to Florida's deceptive and unfair trade practices act went nowhere this legislative session.
Meanwhile, the Florida House has passed a separate bill would speed up the foreclosure process, which many already consider too complicated and rushed for most homeowners - even those with a solid claim to stay in their homes. Among other provisions, the bill reduces the amount of time for banks to go after foreclosure homeowners on deficiency judgments from five years to one year.
The Senate has until Friday to pass the measure.
The proposal and a related debate among lawyers, judges and politicians over how to inject more accountability into the system, illustrate the troubles still facing Florida as it slowly emerges from years of housing woes.
It also leaves questions about whether homeowners are any safer from some of the practices that have made matters worse. Florida had the nation's highest foreclosure rate last year, with one in every 32 housing units receiving a foreclosure filing, and homeowners and their lawyers say some of the questionable practices still go on. Those practices include failing to do proper research to make sure a house deserves to be foreclosed on, not giving proper notice to homeowners that their property faces a foreclosure and moving forward with a foreclosure proceeding against a homeowner at the same the homeowner is trying to negotiate an agreement with the bank.
Documents provided in response to a records request by The Associated Press show that Bondi's office has received more than 200 foreclosure-related complaints from homeowners regarding eight law firms since mid-2011 through the end of 2012. Of those, almost 90 were filed in the year since the appellate court ruling forced Bondi's office to drop its probes.
A handful of Florida firms that have handled hundreds of thousands of foreclosures have been accused by homeowners, judges, other lawyers and former employees of, among other things, attesting to the accuracy of affidavits where the signer hadn't read a word, and of holding mass signings of documents by "robo-signers," workers who sometimes faked signatures.
In one complaint filed with both Bondi's office and the Bar, Bryan and Ileana Russell said they received eviction notices last year from the law firm Shapiro, Fishman & Gache, even though they have bank records proving they have never missed a mortgage payment. Without their knowledge, two firms were hired to put their house on the market and notify utilities to turn off their electricity and water. The firms also posted notices demanding that the Russells leave their suburban Tampa home.
The Russells' attorney discovered that a mistake had been made and that the bank pursuing the foreclosure had no standing to file the lawsuit. The Russells eventually got the power company to transfer the account back to their names and persuaded a judge to grant them "quiet title," an action establishing that the property belongs to them and "quiets" any future claims.
If the Shapiro attorney who was working at the bank's behest had done any research on the property, she would have discovered the same thing, said Bryan Russell, a reserve lieutenant colonel in the Air Force. The Florida Supreme Court ordered in 2010 that all foreclosure complaints must be investigated to make sure the allegations are true.
"It was absolutely insane. It was constant harassment," Ileana Russell said.
Shapiro attorneys didn't respond to multiple emails and phone calls.
In another example, a former employee of Fort Lauderdale lawyer David Stern testified that misconduct was rampant at Stern's firm, which handled more than 140,000 foreclosure cases around the state. Kelly Scott said in a 2010 deposition to state investigators that key documents that had been missing would mysteriously reappear just in time; that workers would backdate documents; and hide problem cases from their clients, including lending giants Fannie Mae and Freddie Mac.
In late January, a month after inquiries from the AP, the Florida Bar found probable cause for 17 counts against Stern. The alleged violations include misconduct and failure to supervise non-lawyers properly. Some of the complaints were more than two years old and two even came from judges.
A formal complaint was sent this month to the Florida Supreme Court, which will ultimately decide whether Stern committed the violations and determine any punishment, which could include a public reprimand or disbarment.
Stern's attorney Jeffrey Tew said in a recent telephone interview that Stern never did anything unethical.
"I don't think the Bar is going to be able to prove that David did anything to merit sanctions or punishment," Tew said.
Marshall Watson, the other attorney with a pending disciplinary action, could face a 91-day suspension from practicing law. He entered a conditional guilty plea to the Bar complaint last December.
The Bar asserted that Watson, whose firm was handling over 66,000 cases by the end of 2009, had failed to supervise properly his employees and failed to maintain acceptable operating policies. The Bar said Watson's firm failed to timely cancel foreclosure sales, missed case management conferences and filed unverified foreclosure complaints.
Watson didn't respond to an email and phone call from The Associated Press seeking comment.
Ken Marvin, the head of lawyer regulation for the Florida Bar, said the cases his group reviewed usually lacked evidence of wrongdoing. Senior attorneys at three of the firms say the most recent complaints are without merit.
Former Florida Bar president Mayanne Downs says the group takes swift action if there is immediate harm to the public. It is meticulous in its investigations, which have a six-year limit, and "speed is not the No. 1 concern," she added.
"I don't know how much the foreclosure problems were caused by ethical breaches as opposed to negligence, and I don't know where those fault lines are," Downs said. "But I can tell you this ... Those wheels may grind more slowly than all of us would hope in a perfect world. But they get their man or woman, if they should be gotten."
Copyright 2013 by The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.