Consumer Law

Calif. AG Sues 2 Companies, 3 Attorneys & Others for $60M, Says Homeowners Duped Into Suing Banks

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Updated: Saying that consumers got little or nothing for hefty upfront fees and put their homes at greater risk of foreclosure by listening to purported home-rescue schemes marketed by two California-based companies that promoted dubious litigation, the state attorney general has a filed a $60 million lawsuit.

It names as defendants the companies, My U.S. Legal Services and U.S. Loan Auditors Inc., two of their attorneys, Sharon Lapin and Jonathan Stein, and three owners, among whom James Sandison is also an attorney and faces disciplinary charges. A press release from the attorney general’s office explains the case, linking copies of the Sacramento Superior Court complaint (PDF) filed yesterday and attachments (PDF).

Disciplinary charges filed this week against Sandison by the state bar allege misappropriation of client funds and that he aided the unauthorized practice of law, the release states.

The alleged scheme by the two companies focused on computer-generated “forensic loan audits” that formed the basis of “predatory lending” lawsuits brought by My US Legal Services, the release says. Instead of paying their mortgages, clients were urged to send money to fund the litigation, putting their homes at greater risk. One allegedly paid $55,000.

“My US Legal Services bilks clients for months, filing cookie-cutter complaints with little or no merit, billing unjustified monthly fees, and then dodging clients’ phone calls or stringing them along with false assurances that a settlement is in progress,” the press release contends.

Articles published by the Associated Press, CBS13 and the the Sacramento Business Journal provide further details.

None contain any comment from the defendants.

However, a subsequent National Law Journal article provides additional details about the case and says that Sandison and Lapin did not respond to requests for comment.

Name partner Betsy Kimball of Boyd & Kimball in Sacramento represents Stein and said in a written statement that the longtime practitioner “is not in any fashion an employee of any of the entity defendants and he is confident that when the true facts become known to the attorney general’s office he will be fully exonerated.”

Updated on Oct. 8 to include information from subsequent National Law Journal article.

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