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.I wish that every judge and every overworked judicial assistant and clerk of court and struggling homeowner and reporter and concerned citizen would read this post and the attached prospectus very carefully. I don’t know what a “Blank Check Company” is, but I don’t like the sounds of it. I don’t like a company incorporated in the British Virgin Islands being responsible for taking the homes of hundreds of thousands of my neighbors. I especially don’t like the thought of the profits derived from taking the homes of hundreds of thousands of my neighbors having anything to do with,
“an unidentified operating business which has its principal business and/or material operations in China.”
And now below are statements taken directly from the prospectus….read slowly, read carefully, pray that someone in the press or regulatory agencies or someone in power might wake up and pay attention to all of this:
- The Supreme Court of Florida has recently taken steps to insure that proper documentation is filed in foreclosure actions, and if DJS does not comply with the new rules and procedures the foreclosure actions on which they are working may be dismissed, which may result in DJS receiving fewer referrals, and, since they are our primary client, reduced revenues for us. However, DJS may not be successful in complying with these new rules.
- Mr. Stern received a significant amount of cash consideration in connection with the Transaction, which may reduce his incentive to devote his full efforts to continue to develop and expand the business of DJS and our business. Under the terms of the Acquisition Agreement, Mr. Stern and his affiliates received approximately $58.5 million in Initial Cash in exchange for contributing their business to DAL, plus another approximately $88 million in the Stern Note and Post-Closing Cash.
- 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.
- 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.
- 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.
- State or local bar associations, state or local prosecutors or other persons may claim that some portion of the services that DJS LLC provides constitute the unauthorized practice of law. Any such challenge could have a disruptive effect on our operations, including the diversion of significant time and attention of our senior management in order to respond. DJS LLC, PTA LLC, DSI LLC or DAL may also incur significant expenses in connection with such a challenge, including substantial fees for attorneys and other professional advisors. If a challenge to the legitimacy of DJS LLC’s or another operating subsidiary’s operations were successful, the service operations may need to be modified in a manner that could adversely affect our business and DAL’s revenues and profitability, DJS LLC, PTA LLC, DSI LLC, and DAL could be subject to a range of penalties and suffer damage to our reputation.
- The Services Agreement to which DJS LLC is a party could be deemed to be unenforceable, in whole or in part, if a court were to determine that such agreements constitute an impermissible fee sharing arrangement between the law firm customer and DJS LLC.
- We may, from time to time, be subject to or be named as a party in legal proceedings in the ordinary course of our mortgage default processing business. It could incur significant legal expenses and management’s attention may be diverted from operations in defending against and resolving lawsuits or claims. An adverse resolution of any future lawsuits or claims against us could result in a negative perception of our business and cause the market price of our ordinary shares to decline or otherwise have an adverse effect on our operating results and growth prospects.
- If ” judicial” foreclosure states adopted ” non-judicial” procedures for filing foreclosures, mortgage foreclosure processing firms operating in ” judicial” states would be materially and adversely affected. ” Judicial” foreclosure states require foreclosures to follow a set of rules, compliance with which is overseen by a judge in a court of law. The level of processing fees associated with a foreclosure in a judicial state is significantly greater than would be expected in a non-judicial state. Should Florida (or another judicial state in which we choose to operate) choose to adopt a non-judicial mortgage foreclosure process in order to expedite the processing of foreclosures, it would result in a substantial reduction in the revenues derived from that jurisdiction, with an accompanying reduction in profits.
- Because the average cycle time on a foreclosure file, except cases that are fully litigated, ranges from 220 to 240 days, with approximately half of the revenue earned within the first month after the referral, and the remainder near the end of the process, the number of current referrals is an indicator of revenue levels for the following year, with high levels of file referrals indicative of strong revenues.
- Revenues increased by $61.1 million, or 30.7%, for 2009, as compared to 2008 primarily due to revenues from client-reimbursed costs increasing by $46.8 million to $139.1 million in 2009, as compared to $92.3 million in 2008 and, to a lesser extent and as discussed further below, as a result of the increase in mortgage foreclosures related activities in our principal market, Florida, and as a result of the expansion of our REO business.
- For 2009, we received 70,382 foreclosure files, compared to 70,328 foreclosure files received in 2008.
- During 2009, DSI LLC’s REO liquidation business became an increasingly significant source of revenue, generating approximately 9.4% of our total revenue excluding client costs during that period, and it was a leading cause of the increase in revenues during that period. In 2009, we produced revenues of $11.2 million compared to revenue of $4.1 million for 2008, representing a 175% growth from the previous period.
- During 2009, we generated positive operating cash flows of $48.3 million.
THAT ENDS THE QUOTED SECTION….QUESTIONS ANYONE? JUDGES? REGULATORS? ELECTED OFFICIALS? THE FLORIDA BAR?
From the SEC:
https://www.sec.gov/answers/blankcheck.htm
Blank Check Company
A blank check company is a development stage company that has no specific business plan or purpose or has indicated its business plan is to engage in a merger or acquisition with an unidentified company or companies, other entity, or person. These very small companies typically involve speculative investments and often fall within the SEC’s definition of “penny stocks” or are considered “microcap stocks.”
Because of the nature of blank check companies, the SEC does not allow them to use some of the exemptions from the registration requirements when selling their securities. For more information about these exemptions, read our brochure, Q&A: Small Business & the SEC.
https://www.sec.gov/answers/blankcheck.htm
https://www.sec.gov/images/oieadisclaimer.gif
Nice digging there, Attorney Weidner…
By any chance, have you ever run an officer/registered agent search on ” Stern David J ” through SunBiz.org ? Busy, busy man.
Seems to be SOP for foreclosure mills to own title companies, auction houses and any other aspect of the industry possible. I’d say that it was probably a generally suggested practice floated through the UFSN but Mr Stern does not appear to hold membership in the organization.
I wonder at what point holdings such as these become a conflict of interest…
Do a public records search of the Judge who foreclosed on you. Did he have THE ORDER from the State of Florida to hear you case? Was it originally assigned to another Judge? Watch the dates.
The only difference between judicial states & non-judicial states, is that the state benefits in judicial states. At least someone other than the bank benefits….. cuz we all know that the homeowner rarely does! The banks are makin’ money hand over fist, while millions of people lose their homes. Bank CEO’s are pocketing the bailout money, and nobody does anything to stop it. Its all fluffed up!
Matt, this is truly astounding… over at 4CF they say someone high up in the Obama White House has logged on to the blog… post this over there and let hem get a good picture of what is going on..
How can this person sleep at night one and how can anyone in the judiciary not be offended by this “business” venture… unless they are share holders in DS’s various companies… that is.
I noticed on a video of foreclosure fraud on Foreclosure Hamlet that David Stern had an address of 900 s. Pine Island rd. The plaintiff suing me is Liquidation Properties & the servicer is SN Servicing Corp. I went to sunbiz.org & pulled them both up their registering agent on their corporation files is CT Corporation Systems @ 1200 S Pine Island Rd.
DAVID STERN AND THE PINE ISLAND ADDRESS WERE ON EACH OF MY FORCLOSED PROPERTIES. WHEN ALL WAS OVER WITH, THE PROPERTY WENT TO THE BANK, AND SUBSEQUENTLY TO FANNIE MAE FOR $1.OO FANNIE SOLD THE PROPERTY FOR SIGNIFICANTLY LESS THAN WHAT i OWED, DESPITE MY BRINGING OFFERS MUCH HIGHER THAN THE FINAL SALES PRICE, THE BANK SAT ON ALL OFFERS REGIONS AND B OF A. REGIONS ACTUALLY CAME BACK TO ME FOR LOAN DEFICICIENCY, WHEN THEY GAVE A LETTER ACKNOWLEDGING A SHORT SALE. i CURRENTLY SIT ON A PROPERTY THAT HAS TAKEN OVER 5 YEARS, AND STILL IS NOT COMPLETELY FORECLOSED.B OF A’S ATTORNEYS IN TAMPA BAY, DITCHED THEM.. I THINK I WILL APPROACH THE COURT TO DISMISS THE CASE FOR LACK OF PROSECUTION.
The Acquisition Agreement from https://www.sec.gov/Archives/edgar/data/1436612/000114420409066579/v169712_ex99-1.htm#tDM
“On December 10, 2009, Chardan 2008, DAL, David J. Stern (“Stern”), Professional Title and Abstract Company of Florida, Inc. (“PTA”), Default Servicing, Inc. (“DSI”), the Law Offices of David J. Stern, P.A. (“DJS,” which together with Stern, PTA and DSI are referred to collectively as the “Stern Contributors”), along with DJS LLC, DSI LLC and PTA LLC, Raj K. Gupta (“Gupta”), Jeffrey A. Valenty (“Valenty”), FlatWorld DAL LLC (“FlatWorld”), and Fortuna Capital Partners LP (“Fortuna” and collectively with FlatWorld, the “Existing Members”) entered into that certain Master Acquisition Agreement (the “Acquisition Agreement”) which governs Chardan 2008’s acquisition of a controlling membership interest in DAL in exchange for its contribution of capital to DAL.”
Isn’t “Raj K. Gupta” the same one who was accused of “insider trading”: “Rajat Gupta: How The Puppet Met His Billionaire Master (This story appears in the July 15, 2013 issue of Forbes): Insider trading netted Raj Rajaratnam and his Galleon Management $90 million in illicit profits and 11 years in jail. The case ensnared 29 defendants, but one–Goldman Sachs board member Rajat Gupta–truly shocked the corporate world…”
Is Wells Fargo in on this somehow? Bloomberg News – Goldman-Backed Essent Adds Wells Fargo as IPO Underwriter (By Zachary Tracer October 04, 2013):
“Essent Group Ltd. (ESNT:US), the mortgage insurer backed by Goldman Sachs Group Inc. and billionaire George Soros, added Wells Fargo & Co., its largest customer, to the group of underwriters for an initial public offering. Wells Fargo, the biggest U.S. home lender, accounted for 17 percent of Essent’s sales in the first six months of this year, according to a regulatory filing today from the Bermuda-based insurer. The firm also added Bank of America Corp. (BAC:US), the third-largest mortgage originator, as an underwriter…”
I wonder if Wells Fargo and BOA are going to merge (I read somewhere that they already merged thier accounting systems)
I agree. It is terrible what he did. However, I am happy to hear that he was disbarred. We can only be hopeful that those who suffered from his wrongdoing will reap the rewards of Justice. Maybe it is possible that the Florida Supreme Court will dismiss those cases permanently that are in their system and give the people title to their homes. God knows, they suffered enough with the illegal, negative credit reporting.