About Me
“ Craig D. Robins, Esq., has been a practicing Long Island bankruptcy attorney for over twenty-four years ”
Creditors Engaging in Abusive Bankruptcy Practices
Written by Craig D. Robins, Esq.This morning I reviewed a proof of claim filed in one of our Chapter 13 bankruptcy cases. It was filed by American General Financial Services, LLC for a $7,000 debt that was incurred two years ago for an in-ground swimming pool. The local merchant was Island Recreational. They filed the claim as “secured.”
Here’s the problem: The proof of claim contained an attachment that consisted of the one-page quicky credit application my clients filled out at the time they purchased the pool and applied for financing.
Attaching this document was not the problem; the creditor’s failure to remove or redact my clients’ Social Security numbers was.
Social Security Numbers Are Sacred and Confidential in Bankruptcy Proceedings
With identify theft becoming a significant concern this past decade, the bankruptcy courts adopted a new privacy rule that was made part of the official Bankruptcy Rules.
Bankruptcy Rule 9037 requires any party filing a document to ensure that any references to Social Security numbers and other sensitive data are deleted or redacted.
I previously wrote about this: Maintaining Privacy in Bankruptcy Court Filings .
Getting the Creditor to Immediately Rectify the Situation
I immediately e-mailed the creditor’s “Bankruptcy Specialist” who had prepared the proof of claim and advised her that not only did she violate the law, but she was exposing my client to the possibility of identity theft.
Technically the creditor was in contempt of court for violating Rule 9037.
I also considered bringing a motion seeking sanctions against the creditor. However, doing some quick research, I learned that some courts have refused to award sanctions in such instances, stating that Rule 9037 does not provide a private cause of action to do so.
Rebecca Rose, a law student on the St. John’s Law Review, recently wrote a summary of of the Matthys case which held that Disclosure of Social Security Number Does Not Give Debtors a Private Right of Action.
Meanwhile, other courts have stated that sanctions are necessary to deter this type of conduct and have indeed awarded them. I found a great article in the ABI Journal about this — Rule 9037: Consequences of Failure to Redact “Personal Data Identifiers” However, the link is only available to ABI members.
However, since the Second Circuit did not have any case law on the subject, I decided it would probably not be worthwhile to test the waters on this.
In any event, I tend to be a pragmatist, and I was mostly concerned about achieving a quick resolution and an appropriate disposition of the problem for my clients.
The Offensive Proof of Claim was Removed and Amended
The creditor’s Bankruptcy Specialist, within minutes of receiving my e-mail, contacted me and agreed to resolve the problem — and she did so in a very pleasant and apologetic manner.
Within an hour, she had gotten the Bankruptcy Court Clerk to permanently remove the offensive document from the court’s records.
This was fortunate because some bankruptcy courts in other jurisdictions handle such matters differently — they will only block the offensive material temporarily while requiring counsel to bring a motion for a protective order, a significant amount of work.
She then filed an amended proof of claim, now treating the debt as unsecured, rather than secured. This will save us a little time later when we need to reconcile the filed claims in preparation for proceeding towards confirmation of the Chapter 13 plan.
Sure, I could have been meaner and more aggressive. I could have fought for some sanctions or attorney’s fees. However, I resolved the problem rather quickly, and the creditor made my life a little easier by amending the proof of claim. I think I did OK for my client.
Had the creditor’s Bankruptcy Specialist been nasty or unresponsive or not conciliatory, I would have handled the matter most differently.
Of course there was a possibility that someone paid the government an ECF fee to view the proof of claim, but I think the possibility that a person with illicit intent did so within a relatively-short period is exceptionally unlikely.
What will become of Steven J. Baum -- the reviled King of Foreclosures in New York
Written by Craig D. Robins, Esq.
Will Steven J. Baum, King of New York Foreclosures, Lose His Crown?
Foreclosure entrepreneur Steven J. Baum is somewhat of a curiosity here in New York.
I, for one, have my own fascination of the man and his law firm, as evidenced by having written three lengthy blog posts about his escapades, dealings and bungling in the New York court system.
Why? For starters, Baum has filed more foreclosure proceedings against New York homeowners than any other attorney in our state’s history. See my detailed post on him – Has Steven J. Baum, P.C. Served You with Foreclosure Papers?
As a foreclosure defense attorney, I regularly defend clients who were served with foreclosure pleadings that his firm prepared.
Secondly, Baum has developed a reputation for not being a good king, but rather, a wicked king. To me, taking illegal shortcuts to evict people from their homes is truly heinous.
Constantly criticized by the courts for sloppy and shoddy foreclosure practices, he does not enjoy a stellar reputation. He has been sanctioned, criticized and lambasted by the courts. A Long Island judge recently described his conduct as “out of the Twilight Zone.”
But if Baum is King of Foreclosure here in New York, he should take heed of the fate of David J. Stern, the King of Foreclosure of Florida, who is currently in a viscous free fall from grace, and in the process of losing his crown in the Sunshine State.
Before addressing Baum, lets look at his brethren King in Florida.
Florida King of Foreclosure – David J. Stern – Loses His Kingdom
David J. Stern, for a time, seemed to have it all. In 2009, his Florida firm handled an incredible 70,000 foreclosures – about five times more than Baum here in New York. The Stern firm brought in $260 million in revenue that year.
The firm had 1,200 employees which enabled Stern to enjoy a lifestyle that included grand mansions, flashy sports cars and a yacht named Misunderstood. Money was flowing big-time. It was reported that one of his 13 or so exotic luxury cars is a $1.85 million 2008 Bugatti Veyron.
Stern owns a $15 million mansion on an island in Fort Lauderdale, a $6 million beachfront condominium in the city, and another $6 million home.
But here’s some news most people did not know, as reported in this week’s New York Times. Stern actually took his foreclosure mill public by selling his foreclosure operations to a newly-formed, publicly-traded corporation, set up by investors just to securitize Stern’s business of providing foreclosure services. The company is listed on NASDAQ.
Stern pocketed about $60 million from this transaction and still retains a large percentage of stock in the newly-formed company, known as DJSP Enterprises. Stern became chairman of the new company and still receives a handsome salary. The company even has a fancy website: http://www.djspenterprises.com/.
Here’s the Working Relationship Between the Public Corporation, DJSP, and Stern’s Foreclosure Law Firm
The corporation now owns the law firm’s “back office operations.” The corporation then sells these services back to the law firm. The law firm’s clients, consisting of big banks with large mortgage portfolios, then pay fees to the law firm to bring foreclosure proceedings. Finally, the law firm shares these fees with the corporation. Investors who have invested in the corporation receive dividends on their stock, and the value of the stock can rise or fall.
If that sounds weird, it should. Imagine if I took my law firm’s paralegals, sold them to a company for a profit, and then bought back their services, this time from the company. What kind of investors would be foolish enough to fall for something like that, especially when one can argue that such an unconventional arrangement constitutes an illegal splitting of legal fees?
Incidentally, DJSP states that it out-sources a large part of its paperwork and document preparation services to the Philippines. So, many of those who were foreclosed upon in Florida were served with foreclosure pleadings that were prepared in Manilla.
Stern must feel that there’s nothing like enlisting help from foreigners abroad to assist in evicting our own citizens.
The Kingdom Comes Crashing Down
We are all aware that our country’s mortgage meltdown mess was created by the securitization of mortgages that were sold and traded like stocks on the secondary mortgage market. Now we have one of the country’s largest mortgage foreclosure law firms going public by securitizing itself into publicly-traded stock.
However, in the past few months, there have been revelations that the Stern foreclosure mill had engaged in what appeared to be a massive, wholesale robo-signing foreclosure enterprise involving documents that were falsified to speed up the foreclosure process. Not exactly good news for the corporate investors or Stern. The business is now under major scrutiny.
The Florida Attorney General began an investigation into possible mortgage foreclosure fraud. Numerous homeowners began asserting various fraud and robo-signing defenses. Several foreclosure defense attorneys brought class actions against the firm. Embarrassing videos of depositions of foreclosure mill employees admitting to robo-signing went viral on Youtube.
To add to Stern’s woes, here’s some recent happenings:
● The Stern firm lost its biggest clients – Citibank and Fannie Mae
● Many of the firms’s executives left
● The firm laid off 80% of its employees (that’s 800 people)
● Shares in the company went from $14 to 50 cents
● The company is facing lawsuits from its investors alleging they were defrauded and misled
● Employees who were laid off have sued, arguing the company broke federal laws
● There may be issues as to whether the scheme to sell the company is really an illegal scheme to split profits, which attorneys are prohibited from doing
● It has been revealed that some of the ”consultants” and investment bankers who developed this deal have a history of run-ins with regulators and the S.E.C., and previously settled charges of engaging in fraudulent transactions in other deals.
● Many of the firms’s executives left
● The firm laid off 80% of its employees (that’s 800 people)
● Shares in the company went from $14 to 50 cents
● The company is facing lawsuits from its investors alleging they were defrauded and misled
● Employees who were laid off have sued, arguing the company broke federal laws
● There may be issues as to whether the scheme to sell the company is really an illegal scheme to split profits, which attorneys are prohibited from doing
● It has been revealed that some of the ”consultants” and investment bankers who developed this deal have a history of run-ins with regulators and the S.E.C., and previously settled charges of engaging in fraudulent transactions in other deals.
Will Baum Lose His Crown Too? How Much Is At Stake?
First, let’s put a value on Baum. If Stern received $60 million for his law firm and still retained a substantial interest, not to mention an impressive salary, and also knowing that he made many, many millions before that time, then by my most unscientific measure, Steven J. Baum has got to be worth at least $50 million or more – money that he made by evicting New Yorkers from their homes.
Now, let’s ponder if Baum could be headed into similar trouble.
Baum, too, has a production-line foreclosure mill, more similar to a factory than a law firm.
The Baum Firm Has Placed Some of Its Back-Office Operations into a Separate Legal Entity – Pillar Processing, LLC
Like Stern, Baum, too, appears to have turned a large part of his back-office operation into a separate, but private company – Pillar Processing, LLC. However, no one seems to know how many millions of dollars Baum received for selling it.
Since Pillar Processing is not a publicly-traded corporation, there is little info about this company. What we do know is who purchased it – Manhattan heavy-hitter private-equity firm Tailwind Capital LLC. This is an independant private equity firm, which, according to its website, is focused on controled investments in middle-market healthcare, media/communications, and business services companies.
The firm, which was founded in 2003, manages about $2 billion.
As a bicycle racer, I’ve heard of the firm before. A former partner of Tailwind Capital, Thomas Weisel, started Tailwind Sports, which was one of the sponsors of the United States Postal Service Bicycle Team – the world-famous team of Lance Armstrong who won the Tour de France seven times, several of which he was wearing a jersey that listed Tailwind Sports as one of the sponsors.
Like Stern’s corporation, DJSP Enterprises, Pillar Processing has its own website – http://www.pillarproc.com/. The website states: Pillar Processing LLC is a leading provider of business process outsourcing services to the default management sector of the residential mortgage industry.
Also, doing a quick WHOIS internet domain search reveals that Pillar Processing is the registrant of the Baum Law Firm website.
The Baum relationship with Tailwind is not necessarily good for homeowners, as it means that there is now $2 billion of muscle behind the drive to evict New York homeowners from their homes.
Baum, Pillar Processing and Chase Mortgage Get in Trouble
In a 2007 bankruptcy case pending in New York City (SDNY) before Judge Cecelia G. Morris, Baum’s firm brought a motion for relief from the stay. After the court raised some issues with the mortgage and scheduled an evidentiary hearing, Pillar Processing filed a letter with the court advising the court that the lift-stay motion “has been withdrawn.”
Judge Morris was understandably quite upset as Pillar Processing was a total stranger to the court. The letter did not identify or explain its relationship with the Baum firm, nor was it a part of any court record for any case. The letter was filed by a Baum attorney.
Judge Morris refused to recognize the letter and instead denied the pending lift-stay motion. She also issued a decision as a warning that the conduct here amounted to an abuse of process and she sanctioned the mortgagee (Chase) for the debtor’s actual expenses incurred in response to the motion. (In re: Schuessler, SDNY 07-35608).
What Will Be the Fate of the Baum Firm and Pillar Processing?
Will Baum suffer the same fate as the fiendish Florida Foreclosure King?
Stay tuned. At the rate his firm is going, with class action suits, ongoing criticisms from the courts, new revelations about possible robo-signing conduct, and more, the answer is possibly yes.
Read More About the Steven J. Baum and his Foreclosure Mill
I discussed many of these issues in my prior post: Has Steven J. Baum, P.C. Served You with Foreclosure Papers?
In that post I discussed the numbers of foreclosure cases he filed, the concept that his firm is really a factory, and some of the questionable conduct that he has engaged in including filing botched papers and failing to divulge information.
Also see my continuation of this article — Steven J. Baum Foreclosure Firm Pursued with Same Laws Used to Go After Organized Crime.
In this other post, I reviewed many of the court decisions that have criticized Baum’s practices including the now famous Judge Schack Twilight Zone case.
Written by Craig D. Robins, Esq.The Executive Office of the United States Trustee issued a news release this week stating that the U.S. Trustee just entered into a settlement agreement with Capital One to resolve allegations that the bank attempted to collect on debts that had previously been discharged.
Apparently, a number of consumers across the country filed for bankruptcy years ago, and in the process, discharged their debts to Capital One. When these consumers later filed a subsequent Chapter 13 bankruptcy, Capital One filed a proof of claim in the new bankruptcy case, but on the old debt, even though that debt had been discharged.
Once a debt is discharged, a creditor is forever barred from collecting it, even if the debtor later files another bankruptcy case involving a Chapter 13 payment plan.
The investigation revealed that Capital One filed 15,500 claims totaling approximately $24.7 million on debts that were previously discharged in bankruptcy, and that they received payment of approximately $2.35 million.
The reason for the erroneous claims simply boils down to some very sloppy business practices. Here, Captial One neglected to identify which customers had previously filed for bankruptcy protection — something they should have and could have easily done.
All creditors have an obligation to maintain adequate procedures to ensure that they do not violate the discharge protections that bankruptcy offers. Here, one of the country’s largest banks failed in that regard.
Capital One will refund each consumer or bankruptcy estate with the amount that was improperly collected as a result of the erroneous claim. Consumers and bankruptcy trustees need not take any further action.
In addition, Capital One will also be paying the attorney’s fees of those bankruptcy attorneys who objected to the erroneous claims.
The case that the U.S. Trustee raised this issue in was the In re: Galley Case out of Massachusetts, going back to 2008 (United States Trustee v. Capital One Bank (USA) N.A., Adversary Proceeding No. 08-01272 (Bankr. D. Mass.).
Written by Craig D. Robins, Esq.The Rosicki Law Firm is another foreclosure law factory and becoming quite a giant here in New York
Rosicki, Rosicki and Associates is another “Foreclosure Factory” on Long Island that brings foreclosure law suits against many thousands of homeowners each year.
I recently wrote about New York’s largest foreclosure law firm, Steven J. Baum, P.C. that brought an incredible 12,000 foreclosure lawsuits last year. I will now talk about the firm that is number two: Rosicki, Rosicki and Associates. They are located in Plainview, which is fairly close to my Woodbury bankruptcy law office.
I know them fairly well, having dealt with them regularly in the course of my consumer bankruptcy practice and also in various matters where my firm engages in foreclosure defense. I also regularly see their attorneys in court and at continuing legal education seminars.
I don’t have the actual filing figures for the Rosicki Law Firm, but they claim to be the leading mortgage banking law firm in New York. They also claim to be the largest single law firm in New York State in the combined areas of foreclosure, bankruptcy, evictions, closings and outsourcing.
Is Rosicki, Rosicki and Associates a Reputable Foreclosure Law Firm?
A major part of my detailed review of the Steven J. Baum law firm was the fact that there were a multitude of complaints against them and that this law firm did not seem to enjoy the best reputation.
However, my opinion of the Rosicki Law Firm is much different. Although from my perspective — which is to protect consumers and homeowners — they are considered the “evil bad guys,” because they bring foreclosure proceedings — the fact remains that someone has to do the job of representing mortgagees in foreclosure suits, and I think they do a fairly respectable job of that.
Many other foreclosure firms seem shrouded in a cloud of negative publicity, and there are a great many foreclosure firms that have been sanctioned for engaging in frivolous or improper litigation. However, there appears to be a dearth of negative information and cases about the Rosicki firm. For that reason, and based on my personal dealings on my firm’s cases with their firm’s attorneys, I can only conclude that they are a respectable and reputable foreclosure law office.
My Biggest Victory Against a Mortgagee for Frivolous Litigation Was Against a Mortgagee Represented by the Rosicki Firm
Several years ago the Rosicki Firm represented a mortgagee, Bayview Financial, whose prior counsel filed a grossly improper motion for relief from the stay in a Chapter 13 Bankruptcy case in which I represented the debtor.
That motion for relief indicated that the debtor had failed to pay his real estate taxes, which was not true. After I brought a counter-motion for sanctions, Rosicki immediately withdrew the motion for relief. Thereafter I negotiated a settlement in which Rosicki’s client, Bayview Financial, paid an award to my client worth in excess of $30,000. I reported this situation at length in my post: Litigating Against Abusive Mortgagees. Your Columnist Scores Big Win Against Mortgagee Who Filed Frivolous Motion .
I should note that the Rosicki firm was not the firm that filed the frivolous motion, but that they took over representing the mortgagee after prior counsel filed it. I litigated this case for a number of months with several attorneys in the Rosicki firm and found all of them to be very courteous, civil and professional
Rosicki Firm Gets Into Trouble Over Wells Fargo Mortgage Foreclosure Brought Without Standing
In 2008, the Rosicki firm brought a typical mortgage foreclosure action against a Brooklyn homeowner who had a Wells Fargo mortgage (Wells Fargo Bank, N.A. v. John Reyes).
In that case, Kings County Supreme Court Judge Arthur M. Schack conducted his own search of New York City real estate records (ACRIS) and discovered that Wells Fargo never owned the mortgage.
Here’s the law: If a mortgagee does not officially own the mortgage, then they do not have standing to bring a foreclosure proceeding. Lack of standing is a major mortgage foreclosure defense that I frequently use in my Long Island foreclosure defense practice. For more info see: Mortgage Companies Entitlement to Bring Foreclosure Proceedings: Prove It or Lose It .
Consequently, Judge Schack, in what can be considered a blistering opinion, denied the foreclosure and even set a hearing as to why Rosicki attorney Mary McLoughlin shouldn’t be sanctioned for filing a frivolous foreclosure case.
History of Rosicki, Rosicki & AssociatesThe Rosicki firm is driven by the husband and wife team of Cynthia Rosicki and Thomas Rosicki who, to me, do not seem to be your typical foreclosure lawyers. They are a very ambitious “power house” couple extremely involved in public service. They are also vintners who own a Long Island winery.
What is unusual about the Rosickis is their zealous dedication to be so active in community-based public service and participate in many community organizations, fund-raisers and not-for-profit organizations. They seem to regularly win service awards and be honored for their humanitarian efforts.
The Rosickis met at a debutante ball in 1987. Tom proposed to Cynthia just two months later.
At the time, Cynthia had a small Brooklyn practice and Tom was not even an attorney. That led him to enroll in Yeshiva University’s Benjamin Cardozo School of Law, although he subsequently transferred to Touro University School of Law.
The firm initially emphasized mortgagee representation and apparently grew and grew to point where the firm now has about 500 employees.
The Rosickis make it a policy to employ those with handicaps and disabilities and approximately 10 percent of their law firm employees are disabled.
The Rosicki Firm has Five Partners
In addition to Cynthia and Tom Rosicki, there is Kelly Ann Poole, Cynthia Nierer and Craig Wolfson.
Rosicki Law Firm Contact Information
The firm’s main office is at 51 East Bethpage Road, Plainview, NY 11803. Phone (516) 741-2585. They also have additional offices in Fishkill and Batavia New York.
Some Interesting Info About the People Who Are Suing You: Bio of Tom Rosicki
Tom is a graduate of Chaminade High School, here in Mineola; Duke University, where he majored in management science and accounting; and Touro Law School. Right after college, Tom owned a fast-food Chick-Fil-A store in Cherry Hill, New Jersey.
Then, from 1982 to 1989, he became an FBI special agent concentrating in their organized crime division. Mayor Koch noticed his investigation of corruption at the South Street Seaport and then offered him a job as Deputy Commissioner of the New York City Taxi and Limosine Commission.
From there he took a position as vice president director of security for Macy’s where he was in charge of security for 59 stores as well as the Thanksgiving Day Parade.
Tom has been president of the Board of the Association for the Help of Retarded Children for a number of years. He is also involved in a number of other community-minded charitable organizations.
The Other Half: Cynthia Rosicki
Cynthia attended Adelphi University, graduating in 1982 with a degree in drama and political science (maiden name — Cythia Senko). There she acted as a theatre manager in the Calderon Theatre and acted in performances as well.
Cynthia Rosicki then went on to New York Law School, graduating in 1986.
In the late 1980s, Cynthis Rosicki got her start with mortgage law working for a mortgage foreclosure firm. She then went out on her own, opening a small law office in Williamsburg, Brooklyn, in the front office of her parent’s funeral home.
Cynthia is on the Board of Directors of the Kosciuszko Foundation and the Association for the Help of Retarded Children (AHRC). She is also active in the organization’s “Gift of Life” and “Help the Homeless.”
The Rosickis reside in Nassau County in Muttontown.
Political Affiliation
One can wonder if they are Republican or Democrat. Cynthia was previously named New York State Businesswoman of the Year by the National Republican Congressional Committee. Tom was hired by the very Democratic Mayor Koch.
I previously wrote a column about how creditors and mortgagees tend to be pro-Republican, and those in favor of bankruptcy and consumer rights tend to be Democrat: Being Haunted by the Vampire Bankruptcy Bill: It’s Just Politics .
Are You Getting Drunk by the People Who Are Trying to Foreclose Your Home?
The Rosickis have done very well financially, enabling them to purchase an 12 acre summer home and vineyard in Southold, Long Island. With a vineyard in the backyard, they founded Sparkling Pointe Winery in 2003. They have since tripled its size.
What kind of wine do these foreclosing attorneys make? Champagne, of course. Technically, Champagne is the sparkling wine made in the Champagne region of France. In New York and elsewhere it is called sparkling wine.
The wine actually won a top honors award. Their 2000 Brut Seduction received top prize in its category at the world-class 2009 San Francisco Chronicle Wine Competition.
One can only wonder if Tom and Cynthia break open a bottle of the bubbly and toast each successful foreclosure. Perhaps they should send a bottle of bubbly to the poor, foreclosed-upon homeowner as a consolation.
What Can You Do If You Are In Foreclosure?
In assisting clients with Long Island mortgage foreclosure defense, we routinely come across situations where the paperwork submitted by the foreclosing bank is not in order.
However homeowners have rights afforded by the law. A bank cannot foreclose unless they do it the right way and all of their papers were prepared properly. If they are not, then the homeowner has a meritorious defense to the foreclosure action.
Even if the bank eventually corrects the problems, a homeowner can usually add many additional months or years to the time that they can stay in their home. It therefore pays to meet with an experienced Long Island foreclosure defense attorney.
Dozens of Articles About Foreclosure Defense Are On This Blog
I have written many, many articles and posts about foreclosure defense on my blog.
Just click here Information About Foreclosure Defense to see them. For example, Many New York Foreclosure Suits Are Dismissed Because They Are Defective .
Written by Craig D. Robins, Esq.Steven J. Baum, P.C. is a foreclosure Factory. It is Long Island’s largest foreclosing law firm.
If you live in New York, and you are in foreclosure, then there is a very high chance that the foreclosure law firm suing you is Steven J. Baum, P.C., located in Buffalo, New York.
Over the past several years, the Baum law firm has become one of the largest foreclosure factories in the country, representing dozens of banks in foreclosure cases.
Last year they filed a staggering 12,551 foreclosure lawsuits, which comes out to about 50 a day. Many of the foreclosure cases we defend for our Long Island clients were brought by Steven J. Baum, P.C.
More Foreclosure Cases Mean More Complaints
It seems that as foreclosure firms expand and become literal foreclosure factories, they tend to do sloppy work and make frequent mistakes.
There have been a multitude of complaints against the Baum law firm. Here are some complaints as revealed in a recent New York Post article:
Failing to Divulge Mortgage Payments
Blanca Garcia filed for bankruptcy In the White Plains Bankruptcy Court. Baum’s firm filed papers claiming Garcia was in arrears. However, Garcia demonstrated that she actually made payments and showed the court her receipts which had not been credited to her account. Even though Garcia’s bankruptcy attorney provided this proof of payment, Baum’s firm still ignored the receipts and sent an attorney to bankruptcy court to argue that the mortgage was in arrears.
Creating Questionable Assignments
Over the past several years, the Baum law firm has become one of the largest foreclosure factories in the country, representing dozens of banks in foreclosure cases.
Last year they filed a staggering 12,551 foreclosure lawsuits, which comes out to about 50 a day. Many of the foreclosure cases we defend for our Long Island clients were brought by Steven J. Baum, P.C.
More Foreclosure Cases Mean More Complaints
It seems that as foreclosure firms expand and become literal foreclosure factories, they tend to do sloppy work and make frequent mistakes.
There have been a multitude of complaints against the Baum law firm. Here are some complaints as revealed in a recent New York Post article:
Failing to Divulge Mortgage Payments
Blanca Garcia filed for bankruptcy In the White Plains Bankruptcy Court. Baum’s firm filed papers claiming Garcia was in arrears. However, Garcia demonstrated that she actually made payments and showed the court her receipts which had not been credited to her account. Even though Garcia’s bankruptcy attorney provided this proof of payment, Baum’s firm still ignored the receipts and sent an attorney to bankruptcy court to argue that the mortgage was in arrears.
Creating Questionable Assignments
I’ve written extensively about mortgage companies that bring foreclosure proceedings when then they do not have proper legal standing to do so. See Many New York Foreclosure Suits Are Dismissed Because They Are Defective. Here, the Baum firm has brought numerous actions when their mortgage clients failed to have proper legal standing. See also: Mortgage Companies Entitlement to Bring Foreclosure Proceedings: Prove It or Lose It .
Judge Jeffrey Arlen Spinner, sitting in Suffolk County judge took it upon himself to investigate a filing by Baum’s firm when it attempted to foreclose on the home of Gloria E. Marsh. “A careful review,” the judge wrote in a four-page order, “reveals a number of glaring discrepancies and unexplained issues of substance.”
Judge Spinner determined that the Baum law firm filed the action before the date it claimed its client took ownership of the mortgage To see a copy of the decision, click: GMAC Mortgage v. Marsh — Decision of Judge Spinner Denying Order of Reference.
Judge Jeffrey Arlen Spinner, sitting in Suffolk County judge took it upon himself to investigate a filing by Baum’s firm when it attempted to foreclose on the home of Gloria E. Marsh. “A careful review,” the judge wrote in a four-page order, “reveals a number of glaring discrepancies and unexplained issues of substance.”
Judge Spinner determined that the Baum law firm filed the action before the date it claimed its client took ownership of the mortgage To see a copy of the decision, click: GMAC Mortgage v. Marsh — Decision of Judge Spinner Denying Order of Reference.
For another highly publicized decision written by Judge Spinner, see: Judge Cancels Mortgage Due to Mortgagee’s Shocking Behavior in Long Island Foreclosure Action.
Filing Botched Assignment Papers
In the bankruptcy of Matthew Austin, Baum’s firm tried to prove that its client owned the mortgage to Austin’s house by filing an assignment of that mortgage from a Florida company signed by an executive of that company — but it was notarized in Buffalo, NY.
“To the extent assignor flew to upstate New York to appear before a notary in the law offices of Steven J. Baum, PC, defies all logic,” the lawyer said in court papers. “Clearly this is a manufactured document intended to defraud the Court.”
Improper Conduct in Bankruptcy Court
Earlier this year, a New York Bankruptcy Court judge said he has “probably cause” to believe that lawyers for the Baum law firm acted inappropriately.
What Can You Do If You Are In Foreclosure?
In assisting clients with Long Island mortgage foreclosure defense, we routinely come across situations where the paperwork submitted by the foreclosing bank is not in order.
However homeowners have rights afforded by the law. A bank cannot foreclose unless they do it the right way and all of their papers were prepared properly. If they are not, then the homeowner has a meritorious defense to the foreclosure action.
Even if the bank eventually corrects the problems, a homeowner can usually add many additional months or years to the time that they can stay in their home. It therefore pays to meet with an experienced Long Island foreclosure defense attorney.
Who Is Steven J. Baum?
Mr. Baum, only 41 years old, took over his father’s sleepy Buffalo law practice several years ago, moved it to Amherst, New York, and then super-sized it with a 500 employees — truly making it into a factory.
He also started his own legal document processing company — Pillar Processing.
Who Are Baum’s Clients?
The list goes on and on. Bank of America, Chase, Wells Fargo, HSBC, US Bank, GMAC Mortgage, Deutsche Bank, Sovereign Bank, Citibank, OneWest, M&T Bank, Bank of New York Mellon, to name just a dozen, according to court records.
Where In New York Are Baum’s Foreclosure Actions Filed?
Steven J. Baum’s law firm filed 12,551 foreclosure actions in the New York area last year.
Long Island
Nassau 2,210
Suffolk 3,083
Nassau 2,210
Suffolk 3,083
New York City Boroughs
Queens 2,231
Brooklyn 1,592
Staten Island 692
Bronx 678
Manhattan 119
Queens 2,231
Brooklyn 1,592
Staten Island 692
Bronx 678
Manhattan 119
Upstate Suburbs
Westchester 796
Rockland 444
Orange 706
Westchester 796
Rockland 444
Orange 706
Totals: 12,551 or 241/week or 48/day
That’s a lot of foreclosures!
Written by Craig D. Robins, Esq.Owner of Long Island Process Serving Company Admits Ripping Off Consumers
Last April I posted an article about a Long Island process serving company that had been charged with engaging in “sewer service.” Long Island Process Serving Company Owner Arrested Today for “Sewer Service” .
Last week the owner of that company, William Singler, pleaded guilty to fraud in Nassau County Supreme Court. He admitted that his company failed to properly served thousands of consumers on Long Island and across New York with collection law suits, and then lied about it with false affidavits of service.
As a result of his actions, many thousands of New York consumers were denied their due process rights, and only learned that they had been sued when their bank accounts were restrained or their wages garnished.
William Singler was the owner of the legal service process serving company, American Legal Process, that had been located on Long Island, in Lynbrook, New York.
Process Server Claimed He Traveled Over 20,000 Miles an Hour!
The New York State Attorney General, Andrew Cuomo, revealed various aspects of the fraudulent scheme which included documents saying that one process server personally served lawsuit papers to someone in Brooklyn at 8:19 a.m. one morning, only to serve a second lawsuit 400 miles away, just one minute later.
That would require traveling over 20,000 miles an hour, and New York highways currently don’t accommodate such speeds.
According to prosecutors, American Legal Process employees routinely made only a cursory attempt to locate debtors, then gave up and submitted false affidavits of service, claiming they had served the debtors with the lawsuit documents.
You can click here to read a copy of the actual complaint alleging fraud against New York process service company .
Pending New York Lawsuit Seeks to Dismiss 100,000 Credit Card Collection Lawsuit Judgments
Attorney General Cuomo is still proceeding with a civil suit to dismiss about 100,000 lawsuits that contain affidavits of service prepared by William Singer’s company, American Legal Process.
The Attorney General accused 35 law firms and two debt collection companies of failing to ensure that servers were following the rules after hiring American Legal Process to serve summonses and complaints. See my post: Bill Collectors Slapped with Class Action Suit .
Jail Time Expected for Process Server Who Admitted to Scheming to Defraud Consumers
William Singler is expected to face some jail time for his fraudulent and illegal conduct. He pleaded guilty to a single count of a Class E felony of scheming to defraud, which is punishable by a year in jail. He is expected to sentenced on March 24, 2010.
In my opinion, a sentence of only a year in jail is hardly just punishment for someone who has defrauded a hundred thousand consumers, many of whom faced great difficulty when they were surprised by frozen bank accounts and garnished wages.
When Singler appeared before Nassau County Supreme Court Justice Alan L. Honorof, he admitted that he had signed phony affidavits of service, swearing that court papers had been served on defendants in debt collection suits even though he knew many of his employees had broken the law.
Many New York Consumers Have Grounds for Contesting Credit Card Judgments and Law Suits
Even though many thousands of credit card collection lawsuits were started improperly, the fact remains that in most cases, the underlying debt is not disputed. Nevertheless, many consumers who were improperly served now have extra leverage to negotiate a low settlement.
Our debt settlement practice has assisted many consumers with resolving such outstanding credit card debts for very beneficial amounts. We have also helped other consumers totally eliminate their credit card bills with bankruptcy.
Many debt collectors are downright evil!
Written by Craig D. Robins, Esq.
Two weeks ago the Government Accounting Office (GAO) issued a scathing report about the illicit practices of bill collectors. Of course, this is a regular complaint that I hear from my Long Island bankruptcy clients.
The GAO has been asked by Congress to examine federal and state consumer protections statutes to see if they were working. They concluded that they were not and reported back to Congress that the Fair Debt Collection Practices Act (FDCPA) should be amended to provide consumers with better protection. Like, tell us something we don’t know!
The report, Credit Cards: Fair Debt Collection Practices Act Could Better Reflect the Evolving Debt Collection Marketplace and Use of Technology, is interesting reading and 66 pages long.
The Federal Trade Commission (FTC) receives more complaints about bill collectors and the debt collection industry than any other industry. Last year they received 79,000 complaints on third-party debt collectors. This is almost 19 percent of all of the complaints it received.
Ongoing abusive practices include trying to collect debt that isn’t owed or is beyond the statute of limitations, making harassing phone calls, threatening to make arrests that the debt collector has no authority to make, and collecting debt discharged in bankruptcy.
I previously wrote about efforts here in New York to deal with the problem of rogue bill collectors: Debt Collectors Shut Down by Attorney General .
Hopefully, Congress will indeed make the debt collection laws stricter to prevent the abuse that we hear so often.
Written by Ian Ribald..
Creditors who ignore a debtor’s bankruptcy rights can be hauled into court and made to answer for their improprieties.
Creditors who ignore a debtor’s bankruptcy rights can be hauled into court and made to answer for their improprieties.
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When a debtor files a bankruptcy petition, the “automatic bankruptcy stay” is triggered. The automatic stay is the very powerful federal bankruptcy law that makes it illegal for creditors to take any further action to collect a debt.
When a debtor files a bankruptcy petition, the “automatic bankruptcy stay” is triggered. The automatic stay is the very powerful federal bankruptcy law that makes it illegal for creditors to take any further action to collect a debt.
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Although most creditors know that violating the stay is a serious violation of federal law, some creditors will nonetheless violate the stay by continuing to make collection calls or attempting to collect in other ways. Creditors do this at their peril as they can be severely punished.
When a creditor violates the automatic bankruptcy stay, a debtor can apply to the bankruptcy court to recover damages.
The debtor must demonstrate two elements:
1. Show that the creditor’s actions were willful
2. Demonstrate that there was actual injury.
The concept of a “willful” violation of the stay means that the creditor was motivated by a specific intent to violate the stay. The bankruptcy courts have interpreted “actual injury” to include a number of different types of injuries. Some actual injuries include repossessing a debtor’s vehicle, filing a lawsuit against the debtor, garnishing wages, and a continuing other kinds of efforts to collect debt.
As a result, when a creditor willfully violates an automatic stay, a debtor who has received actual injury may recover damages, including costs and attorney’s fees.
Can a Debtor Recover Punitive Damages If a Creditor Violates the Stay?
Generally, punitive damages are not collected for a minor violation of a stay. However, if a court finds that the violation was malicious or particularly egregious, punitive damages will likely be awarded.
If a Stay Violation Causes a Debtor to Suffer from Emotional Distress, Can the Debtor Be Compensated for That?
Some courts have been willing to allow a debtor to recover for damages based on emotional distress in egregious situations. If the debtor can show that he or she suffered unusual mental distress as a result of the violation, the bankruptcy court may award extra damages against the creditor.
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Botttom line: violations of the stay are relatively rare. However, if you are the victim of a bankruptcy stay violation, talk with your bankruptcy attorney to determine how to best protect your rights.
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Note: Ian Ribald is a summer intern with our firm. He recently finished his second year of law at Touro Law School.
Written by Craig D. Robins, Esq.The U.S. Trustee is seeking major sanctions against Countrywide, as well as across-the-board system reforms. A bankruptcy court judge determined last week that Countrywide’s system is unreasonable, reckless and sanctionable
I previously wrote several posts about how some of this country’s largest mortgage companies had engaged in abusive and frivolous litigation practices in bankruptcy court proceedings. (see Finally. . . U.S. Trustee getting tough on mortgage lenders ).
Now the United States Trustee is seeking major sanctions against Countrywide Home Loans in a case in Akron, Ohio. Last year I called Countrywide the “Poster Child of Bad-boy Bankruptcy Litigation” because of the extreme level of chronic abusive litigation they were engaged in across the country.
I, myself, sought sanctions against a mortgagee last year for bringing frivolous litigation in the Central Islip Bankruptcy Court and obtained a record sanctions award for my client — Litigating Against Abusive Mortgagees. Your Columnist Scores Big Win Against Mortgagee Who Filed Frivolous Motion .
With this Ohio bankruptcy case, the United States Trustee, which is the federal arm of the U.S. Department of Justice that monitors all bankruptcy proceedings in this country, is seeking to reform a mortgage-servicing system that is riddled with errors.
Last week, the U.S. Trustee sought remedies against Countrywide, which was recently renamed Bank of America Home Loans by owner Bank of America Corp.
Ohio bankruptcy court Judge Marilyn Shea-Stonum determined that Countrywide showed a “disregard for diligence and accuracy” and called for sanctions against Countrywide.
Today, the judge entertained arguments on what sanctions the court should impose in this bankruptcy case.
The facts of the case grew out of the 2007 bankruptcy of Marlynn R. O’Neal, who totally satisfied her mortgage debt in 2005. However, when O’Neal filed for personal Chapter 13 bankruptcy two years later, Countrywide filed papers in bankruptcy court saying she owed $88,000. Such conduct was purely frivolous.
The U.S. Trustee’s office took action against Countrywide for having commenced frivolous and abusive litigation. Countrywide admitted to negligence in demanding payment from the debtor, but they denied that they were reckless.
However, Countrywide didn’t simply overlook one entry on a loan history, the judge noted. Months of phone calls and e-mails establishing that the debtor’s mortgage was satisfied never showed up in the part of Countrywide’s system that produces information for bankruptcy court filings.
The judge determined that “Countrywide’s system is reckless.” The judge wrote, “It appears to me designed to allow each actor in the process to act with indifference to the truth.” Judge Shea-Stonum concluded that Countrywide’s conduct “was not reasonable, was reckless and is sanctionable.”
In even harsher words, the bankruptcy judge stated, “There is no evidence in the record to support that Ms. O’Neal was other than a victim of a predator whose business operations are enabled by and depend upon a mortgage servicing industry that is unconcerned with the accuracy of records and information.”
I will report the results of the bankruptcy sanctions hearing when they become available.
Written by Craig D. Robins, Esq.
While I prepare some future columns on tips for handling the new bankruptcy laws, I will review a fundamental bankruptcy issue: the discharge and protecting your clients from creditors who may abuse it.
The general objective in filing a consumer bankruptcy is to obtain a discharge which will free the debtor from personal liability. The concept of providing the debtor with a fresh new financial start is contained throughout the legislative history of the Bankruptcy Code. The new laws going into effect in October 2005 will not change that. In order to ensure that the slate is wiped clean of the problems of pre-petition debt, the Bankruptcy Code contains provisions to protect the debtor after discharge from creditors who ignore its protections.
What happens when a creditor ignores the discharge and continues to harass a debtor for a pre-petition debt that was discharged? Most abuses can be quickly stopped with a simple letter or phone call. Some recalcitrant creditors will nevertheless ignore the discharge as well as subsequent warnings from debtors’ counsel, and engage in outrageous conduct, requiring court intervention to finally protect the debtor.
When your bankruptcy client’s discharge rights are being violated, it is wise to take some type of protective action. In this column, I will briefly discuss the discharge and what steps a debtor’s attorney can take against creditors who ignore it.
The Bankruptcy Discharge. Bankruptcy Code section 524 (a) (2) provides that a discharge operates as an injunction against the commencement or continuation of an action, the employment of process, or an act to collect, recover or offset any such debt or claim as a personal liability of the Debtor.
The Code very broadly defines “claim” to include any right to payment or right to an equitable remedy if such remedy gives rise to a right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, legal, equitable, secured or unsecured. [Code sec. 101 (5)].
Post Petition Collection Suits. Although the C.P.L.R. provides that a bankruptcy discharge is an affirmative defense which must be pleaded, this is an antiquated argument which has been rendered unnecessary and superseded by Bankruptcy Code sec. 524. About thirty years ago, the legislature, intending to fully effectuate the discharge provisions of the new Bankruptcy Code, decided to make the discharge less subject to abuse by harassing creditors.
The discharge automatically voids any judgment at any time obtained to the extent such judgment is a determination of the personal liability of the debtor on a discharged debt. Thus, should a creditor institute suit in a state court after the discharge, and obtain a judgment against the debtor, the judgment is rendered null and void ab initio, even if no affirmative defense was interposed. The purpose of these provisions is to make it absolutely unnecessary for the debtor to do anything at all in the state court action.
The Uninformed Collection Attorney. Often a creditor will send its file to a collection attorney to commence litigation. However, the creditor does not notify the collection attorney of the bankruptcy, and the collection then commences a suit or obtains a default judgment in an existing suit. If you suspect an uninformed attorney has commenced litigation or taken a judgment, then contacting the other attorney and advising him or her of the bankruptcy should be sufficient to resolve the problem. If a judgment was already obtained, it is the other attorney’s responsibility to vacate it by preparing a stipulation vacating judgment and then filing them in the court.
The Bureaucratic Creditor. Frequently a large credit card company or bank has so many departments, some of which are in different states, that news of the bankruptcy filing does not reach all channels. Thus, it is not uncommon for a debtor to continue to receive collection letters and collection calls long after the petition is filed. It is usually simple to put a quick stop to this kind of activity by merely informing the creditor that a bankruptcy was filed and by providing the creditor with the filing information.
The Ignorant Collection Attorney. Some attorneys simply do not have sufficient knowledge of the Bankruptcy Code and the effects of filing for bankruptcy. They may be unaware of the effects of the automatic stay and discharge. Usually, telephoning these attorneys and diplomatically advising them of the provisions of the bankruptcy Code is sufficient to educate them that their litigation actions are improper.
Remember That Some Debts are Non-Dischargeable. Some debts are excepted from discharge regardless of whether a creditor seeks a determination of dischargeability. These debts include, among others, most taxes and obligations to governmental entities, maintenance and support, student loans, and debts for certain condominium or co-op expenses. Accordingly, the order of discharge will not bar these types of creditors.
Extreme Discharge Violations. There are always some creditors or attorneys who will remain ignorant, stubborn, thick-headed and arrogant, and who will disregard your repeated letters that they are violating the very sanctity of the bankruptcy process by continuing to litigate in violation of the order of discharge. At this point, it may be necessary to haul them into bankruptcy court. Should a creditor violate the provisions of the discharge order, the creditor will also have violated the bankruptcy court injunction against collection efforts. The creditor will thus be subject to citation for contempt in the bankruptcy court upon application of the debtor.
When creditors receive a copy of the order of discharge, they are put on notice that they violate the injunction provisions at their own risk. Such violation is an invitation to contempt proceedings. Violation of the order of discharge is considered contempt of court.
The bankruptcy court has the inherent power to punish for contemptuous conduct. [Code sec. 105 (a) and Rule 9020 (b)]. It is often best to litigate such matters in the bankruptcy court as this forum is most familiar with bankruptcy law and not sympathetic to creditors who choose to ignore it. Case law is replete with references that violations of the discharge injunction are not to be taken lightly and will not be tolerated.
The Contempt Motion. A regular motion brought in the bankruptcy court against the creditor is sufficient to seek contempt. If the debtor’s bankruptcy case was closed, it will also be necessary to seek re-opening of the case pursuant to Code sec. 350 (b). If it is necessary to immediately seek an injunction to stop a creditor from executing on a judgment, an order to show cause can be brought.
Sanctions, Punitive Awards and Attorneys Fees. Bankruptcy case law provides that a debtor may collect costs, reasonable attorneys fees, sanctions, punitive damages, and compensatory damages against creditors and their attorneys who violate the order of discharge.
Courts have held that a collection attorney has a continuing obligation to review and reevaluate his pleadings upon discovery that they may be without merit or in violation of the law. Thus, it is imperative to put the other attorney on notice by certified mail that he is violating the Bankruptcy Code to establish his duty of inquiry.
There are many cases were sanctions and punitive damages have been awarded in the thousands of dollars against creditors and their attorneys for violating the order of discharge.
Therefore, if you are a collection attorney, take heed of the power of the discharge. If you are a debtor’s attorney, you can rely on the bankruptcy forum to protect your client’s rights against creditors who ignore your client’s discharge rights.
About the Author. Long Island Bankruptcy Attorney Craig D. Robins, Esq., is a regular columnist for the Suffolk Lawyer, the official publication of the Suffolk County Bar Association in New York. This article appeared in the June 2005 issue of the Suffolk Lawyer. Mr. Robins is a bankruptcy lawyer who has represented thousands of consumer and business clients during the past twenty years. He has offices in Medford, Commack, Woodbury and Valley Stream. (516) 496-0800. For information about filing bankruptcy on Long Island, please visit his Bankruptcy web site: http://www.BankruptcyCanHelp.com.