Matt Weidner – Fighting For The American People

Posts Tagged ‘Securities and Exchange Commission’

4ClosureFraud posted an entry which cheered Florida’s AG Pam Bondi for finally taking some action on the fraudclosure front.  Two newspapers picked up the story and I did a post on it.  We all thought the Petition meant something…but it doesn’t. The law is well settled…and it’s very, very bad law…..lawyers and law firms are immune from prosecution for unfair and deceptive practices.  Asking the question posed to the Supreme Court at best is going to receive a very swift, “Lawyers Are Exempt” response.  A response such as this is going to be very much like a hot poker shoved in the eye of the citizens who are suffering as part of this mess.

Now maybe the Supreme Court will take the position of Captain Obvious and tell the Attorney General…you’ve got a whole lotta other targets you could be going after.  Like LPS…they’ve been in the news lately or David J. Stern Enterprises, they have not been in the news lately but should be.  DJSP was a bad deal from the outset, and the evidence is laying all around.  It’s in federal court cases. It’s in documents filed with the Securities and Exchange Commission. It’s in depositions filed right there with the Florida Attorney General’s Office.

And so now that I’ve had a day to think about Bondi’s Motion, I feel suckered.  The Motion itself lacks any substance and is not supported by the case law and examples that are necessary to make it a compelling legal document.  I’m afraid it’s going to elicit a wet towel response from the Supreme Court and that’s only going to make citizens even angrier with lawyers than they already are.  I don’t want that. I want lawyers and courts and my profession screaming, “DAMN THE TORPEDOES, WE’RE GONNA SOLVE THIS!” In the midst of this crisis I want to general public to see lawyers as the defenders of their rights and the defenders of the Rule of Law, stepping into the mess that the banksters created and shoving some justice and integrity down their monstorous throats….

That’s what Florida’s lawyers should be doing….not filing tepid motions that will lead nowhere.

So there’s a little ole group of 50 Attorney Generals with fancy offices all across this country.  Now in the olden days, the AG’s were the advocates For The People. After they get elected, by The People, they were handed a badge, given a big swift horse and a gun then they were given free reign to go take down bad guys and girls and even put one or two in jail.

But then came campaign finance, abject corruption and a political system that is owned and operated not by The People, but by The Corporations which are run primarily by the very bad guys and girls that the AG’s were supposed to be investigating.  So now there ain’t so much investigating and very little imprisonating….it’s more like, well, it’s kinda like Matt Taibbi describes how things go over at the Securities and Exchange Commission, which is to say the foxes just own the henhouse….(they in fact turned the henhouse into a condo complex, then sold off the debt, then securitized the debt while at the same time trading derivatives and credit default swaps on the back end, but that’s a whole other story.)

Anywhoo, well the banksters are all pushing for a sweetheart deal that will allow them to moonwalk away for all their mortgage and fraudclosure-related crimes, and while many of the AGs seem content to ink some kind of sweetheart deal with their bankster benefactors (some even yammering on about how any help for consumers will result in some kind of apocalyptic moral hazard) one or two AGs from across the country seem to think that, well, I don’t know…that maybe that ain’t quite right and that maybe they should be holding out for a real deal for consumers….but such heresy cannot be tolerated in this country.

We cannot possibly enforce any penalty against the ruling criminal oligarchy in this country…after all, Wall Street is our Main Street, Right?  Well when New York’s Attorney General Eric Schneiderman started speaking out, his reward is getting kicked out of the AG’s club…..

So sticking up for the Rule of Law is dangerous even for the top law enforcement officer in one of this country’s most important states.  Kinda scary, huh?  But read the Bloomberg report below:

New York Attorney General Eric Schneiderman was removed from a state group working on a nationwide foreclosure settlement with U.S. banks because his office “actively worked to undermine” its efforts, the Iowa official leading the talks for the states said.

Schneiderman, who doesn’t want a settlement to block state investigations, was removed from the executive committee of state officials working on the deal, Iowa Attorney General Tom Miller said today in a statement.

“New York has actively worked to undermine the very same multistate group that it had spent the previous nine months working very closely with,” Miller said. For a member of the executive committee, that “simply doesn’t make sense, is unprecedented and is unacceptable,” Miller said.  (Same Miller that is taking bajillions in campaign contributions from the banksters.) Full Story Here

Bloomberg

The “Law Offices of David J. Stern” is perhaps the biggest, by volume, Foreclosure Mill in the State of Florida. The general consensus in the legal community and my personal opinion is that the pleading and legal work that bears the identification of the Law Offices of David J. Stern is sloppy and unsophisticated at best and merely word processed non-legal form documents spit out by a computer that no lawyer could possibly sign his bar number to at worst.

I’m particularly offended by the “signatures” that are found on the legal documents submitted by the Law Offices of David J. Stern.  When an attorney signs a document, it’s supposed to be an affirmation and an oath and a professional responsibility.  But take a look at the arrogant, sloppy mess of a mark that appear on Stern pleadings.  Those non-signature sloppy marks are an offense to me and to the court.  I don’t think they should qualify as a signature under the rules of civil procedure and even if they might meet the technical definition, if I were a judge, I would strike the pleading just because I find them so arrogant and offensive….I would also be questioning the lawyer who supposedly signed the pleading to determine if that lawyer that allegedly signed them wants to take credit for the “signature”

And now comes the revelations contained within the prospectus filed with the Securities and Exchange Commission for an entity known as  DJSP Enterprises….read on…

DJSP Enterprises, Inc. (“DJSP”, “we,” “us” or “our”) is a holding company whose primary business operations are
conducted through three wholly owned subsidiaries, DJS Processing, LLC (“DJS LLC”), Professional Title and Abstract Company of
Florida, LLC (“PTA LLC”), and Default Servicing, LLC (“DSI LLC”) of DAL Group LLC (“DAL”), a company in which DJSP holds
a controlling interest. DAL, through its operating subsidiaries, provides non-legal services supporting residential real estate foreclosure, other related legal actions and lender owned real estate (“REO”) services, primarily in Florida.

Now what exactly are those “non-legal services supporting residential real estate foreclosure”?  Is this the legal pleadings and real work involved in a Stern foreclosure case?  Where is the line between the legal work and non-legal services?

What role does the “Chardan 2008 China Acquisition Corp.”, the “blank check company which has its principal business and/or material operations in China.” have in the prosecution of foreclosure cases in front of Circuit Court Judges throughout Florida?

What exactly were the “non-legal business and assets” that David J. Stern and the Law Offices of David J. Stern (“DJS”) transferred to the DAL Group  for:

“(i) $58,500,080 in cash; (ii) $52,469,000 in a promissory note issued by DAL to DJS (the “Stern Deferral Note”); (iii) 1,200,00 DAL Common Units; (iv) 1,666,667 DAL Series A Preferred Units; (v) 3,133,333 DAL Series B Preferred Units; and (vi) the right to receive $35 million in post-closing cash.”

As a result of the Transaction, DAL acquired membership interests in the three limited liability companies (DJS LLC, PTA
LLC and DSI LLC) that together constitute a provider of non-legal residential mortgage foreclosure processing and other services,
principally in the state of Florida.

During the three months ended March 31, 2010, the Company’s revenues from mortgage foreclosure related services, net of revenue from client reimbursements, decreased by $0.6 million, or 2%, to $27.6 million, compared to $28.1 million for the same period lastyear. (What exactly are the kind of mortgage foreclosure related services that a non-lawyer can provide that would generate $27.6 million dollars in three months?)

Our REO liquidation business has a sole customer
through which we generated $3.3 million in revenue for the first quarter of 2010 compared to $1.9 million in the same period last
year, primarily due to an increase in the number of REO liquidation files which grew to 1,728 files in the first quarter of 2010, an
increase of 56%, from 1,111 files in the first quarter of 2009. (Who exactly is this undisclosed sole customer that made this much money off the backs of consumers and shouldn’t the judges granting foreclosure be concerned about who this is?)

Mr. Stern may encounter
conflicts of interest in the execution of his duties on behalf of us. These conflicts may not be resolved in a manner favorable to us. For
example, he may be precluded by his ethical obligations as an attorney or may otherwise be reluctant to take actions on behalf of us
that are in its best interests but are not in the best interests of DJS, his law firm, or its clients. Further, as a licensed attorney, he may
be obligated to take actions on behalf of DJS or its clients that are not in our best interests.

DJS LLC has one law firm customer in Florida, DJS. Each foreclosure, bankruptcy, eviction, litigation, and other mortgage
default related case file referred to DJS will typically have a fixed fee associated with it that is based on a schedule established by
government sponsored entities, such as Freddie Mac and Fannie Mae. DJS LLC will be paid a fixed fee by DJS for the services it
renders to DJS.

Regulation of the legal profession may constrain DJS LLC’s, PTA LLC’s and DSI LLC’s s operations, and numerous issues
arising out of that regulation, its interpretation or evolution could impair our ability to provide professional services to
customers and reduce revenues and profitability.

Each state has laws, regulations and codes of professional responsibility that govern the conduct and obligations of attorneys
to their clients and the courts. Adherence to those codes of professional responsibility are a requirement to retaining a license to
practice law in the licensing jurisdiction. The boundaries of the “practice of law,” however, can be indistinct, vary from one state to
another and are the product of complex interactions among state law, bar association standards and constitutional law as formulated
by the U.S. Supreme Court. Many states define the practice of law to include the giving of advice and opinions regarding another
person’s legal rights, the preparation of legal documents or the preparation of court documents for another person. Although we are
not aware of any ruling or interpretation of laws, regulations or other applicable standards that would result in the operations that DJS
LLC will perform being considered the practice of law, we cannot say with certainty that no existing law, regulation or standard will
be interpreted to produce that result, or that a new law, regulation or standard leading to that result will not be adopted in the future.
In addition, all states and the American Bar Association prohibit attorneys from sharing fees for legal services with non-attorneys, so
that if any aspect of our business is deemed to constitute the practice of law, it would not be possible for DJS LLC, PTA LLC or DSI
LLC to perform those services.

The Law Offices of David Stern is probably the single busiest foreclosure mill operating in the State of Florida.  The information quoted below comes directly from documents filed with the Securities and Exchange Commission.  I encourage everyone who practices in foreclosure or who cares one bit about the impact foreclosures are having on our state and our courts to read the document very carefully and consider the implications of each of the statements.

• We were incorporated in the British Virgin Islands on February 19, 2008 under the name “Chardan 2008 China Acquisition Corp.” as a blank check company for the purpose of acquiring, engaging in a merger or share exchange with, purchasing all or substantially all of the assets of, or engaging in a contractual control arrangement or any other similar transaction with an unidentified operating business which has its principal business and/or material operations in China. When the global financial crisis occurred soon after the completion of Chardan 2008’s initial public offering in August 2008, Chardan 2008’s management believed that US equity markets would be less receptive to a transaction with a Chinese company.

• Revenue from foreclosure fees increased by 9% to $19.6 million during the three month period ended March 31, 2010 as compared to $17.9 million for the same period in 2009.  This increase is primarily due to an increase in the per file fee we receive for providing such services that became effective as of the beginning of 2010.  Revenue from closing services increased to $2.6 million during the first quarter of 2010 from $1.7 million during the first quarter of 2009, representing an increase of 55.5%.

• During the three months ended March 31, 2010, our REO liquidation services business became an increasingly significant source of revenue, generating approximately 5% of our total revenue during that period.  Our REO liquidation business has a sole customer through which we generated $3.3 million in revenue for the first quarter of 2010 compared to $1.9 million in the same period last year, primarily due to an increase in the number of REO liquidation files which grew to 1,728 files in the first quarter of 2010, an increase of 56%, from 1,111 files in the first quarter of 2009.

• Net income decreased by $5.4 million, or 40.6%, to $7.9 million in the three months ended March 31, 2010, as compared to $13.3 million in the same period of 2009.  Adjusted net income, which is a non-GAAP financial measure discussed in more detail below, decreased by $2.2 million to $8.7 million or 21% in the three months ended March 31, 2010 as compared to $11.0 million in the three months ended March 31, 2009.

• From 2006 to 2009, our foreclosure case load increased from 15,332 to 70,382.

• Beginning in April, one of DJS’ largest bank clients for which we provide mortgage foreclosure services initiated a previously undisclosed foreclosure system conversion that has resulted in a marked decrease in the number of foreclosure files emanating from it nationwide.  We have been advised by the bank that the system conversion is quite extensive and affects most loan types other than those associated with certain government sponsored entities.  While DJS is still receiving new foreclosure files from the bank for loan types that are not affected by the conversion, the bank has advised DJS that it does not expect to generate new foreclosure files for the affected loan types until the conversion is complete. Due to this conversion, we experienced a decline of approximately 1,500 new foreclosure files in each of April and May, 2010 from this client.

• During calendar years 2007, 2008 and 2009, DJS referred to us case files totaling 61,480, 96,509 and 98,259, respectively.

• The majority of file referrals to DJS come from fewer than a dozen lenders and loan servicing firms. If DJS were to lose any of these sources of business, in whole or in part, it would adversely affect our financial performance.

• In 2008, the top ten clients for DJS, on an aggregate basis, accounted for 94% of its case files referred to DJS for mortgage default and other processing services; and its largest single customer, accounted for 21% of DJS’ total foreclosure file volumes for the same period.