About Me
“ Craig D. Robins, Esq., has been a practicing Long Island bankruptcy attorney for over twenty-four years ”
Current Events
Written by Craig D. Robins, Esq.The Honorable Joel Asarch, a very personable Nassau County attorney who had been serving as a Nassau County Supreme Court justice, died of a heart attack this morning at South Nassau Communities Hospital in Oceanside. He was 60 years old.
The funeral will be held Monday, March 4, 2013 at 1:00 p.m. at Gutterman’s Funeral Home, 175 North Long Beach Road, Rockville Centre.
I personally knew Judge Asarch since 1984 when I met him at the Nassau County Bar Association. At the time he was working for his father’s law firm in Lynbrook — Asarch and Asarch — and he had become an expert in New York state civil procedure issues and the C.P.L.R. As such, his practice at the time was heavily devoted to civil litigation.He often volunteered to teach seminars at the Bar Association and for years, while I was a young attorney, he was my go-to person for questions about issues involving the C.P.L.R. He was always especially helpful and took pride in assisting newer members of the bar. Once I specialized in bankruptcy law, it was his turn to ask me questions about bankruptcy issues.
For many years, Judge Asarch wrote a monthly column about civil procedure and C.P.L.R. issues for the Nassau County Lawyer.He eventually went on to serve as Dean of the Nassau Academy of Law.
He was also a keen film buff and hosted a number of seminars about law in the cinema, which were most entertaining.
Judge Asarch attended the University of Pennsylvania, graduating in 1975, and obtained his law degree from New York University in 1978. He was admitted to the Bar in 1979.
He was elected to the Nassau County District Court in 2001 and to the Nassau County Supreme Court in 2007. His political affiliation was Democrat. He was also an adjunct professor of law at Touro Law School.
Judge Asarch was a long-time Long Beach resident. He is survived by son Steven Asarch, a student at Baruch College in Manhattan; daughter Michelle Asarch, a student at Binghamton University; mother Helen Asarch, of Long Beach; and sisters Sharon Asarch, of Los Angeles, and Ilene Asarch, of Needham, Mass.
Written by Craig D. Robins, Esq.
After a wave of foreclosure proceedings hit Long Island during the past several years, a many members of the Suffolk County Bar Association took advantage of learning about advanced foreclosure defense issues by attending a two-part Suffolk Academy of Law seminar entitled “Behind the Curtain: Advanced Standing Issues in Securitized Mortgage Foreclosure.”
The seminars were held on November 19, 2012 and January 14, 2013. At the first session, attendees learned about the intricacies behind mortgage transfers and assignments. The second session highlighted various defenses attorneys can assert on behalf of their homeowner-clients.
Pictured above during the January session (from left to right) are Hon. Peter Mayer, Hon. C. Randall Hinrichs, Charles Wallshein, Hon. Jeffrey A. Spinner and Richard L. Stern, who moderated both sessions. Hon. Dana Winslow and Hon Arthur Schack were additional panelists for the November session.
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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 March 2013 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 Mastic, Patchogue, Commack, West Babylon, Coram, Woodbury and Valley Stream. Call (516) 496-0800 . For information about filing bankruptcy on Long Island, please visit his Bankruptcy web site: http://www.BankruptcyCanHelp.com.
Written by Craig D. Robins, Esq.Lindsay has been getting into one mess after another and the drama continues this week for the young actress following her crash this past Friday on the Pacific Coast Highway.
One can’t help but wonder what liabilities she is getting into and how she will resolve them.
As a bankruptcy attorney, I thought it would be an interesting exercise to ponder the issues and obligations that have arisen from her recent foibles and see how she would resolve them in a Chapter 7 bankruptcy filing.
Lindsay Just Crashed her Porsche
On Friday Lindsay crashed her sports car on the Pacific Coast Highway, on her way to the set where she is filming the Elizabeth Taylor biography. Although no one was hurt, this became major news within hours.
The liability is damage to her expensive car, damage to the truck she collided with, and possible fines.
So far, the matter is being investigated. News just released today could mean Lindsay is in for more trouble as she initially told officers that she was a passenger, but today it was revealed that her assistant claimed that Lindsay was driving.
If is determined that alcohol was involved, her insurance carrier will likely deny coverage to her. She would also be fined. Fines are a type of debt that cannot be discharged in bankruptcy.
Also, any debt she incurs as a result of driving while intoxicated constitutes one of the more unusual exceptions to discharge. Thus, if she was drunk, any financial liability she incurs from the accident would be non-dischargeable. However, any creditor seeking a determination that the debt is nondischargeable will have to bring an adversary proceeding.
If Lindsay incurred any financial liability, and the car crash was accidental, and she was not drunk, then she would be able to discharge these obligations. That would include any balance due on the car loan or lease.
Lying to the Police About Who Was Driving
This twist will certainly be interesting to follow. It also reminds us of the importance of being truthful in bankruptcy proceedings. Lying to a bankruptcy court is a serious offense punishable as a felony under federal law, meaning the potential of more than a year in jail.
This twist will certainly be interesting to follow. It also reminds us of the importance of being truthful in bankruptcy proceedings. Lying to a bankruptcy court is a serious offense punishable as a felony under federal law, meaning the potential of more than a year in jail.
The Stolen Necklace
Lindsay is currently on probation for having shoplifted a necklace. Any debts from this caper cannot be eliminated in bankruptcy. Criminal fines are non-dischargeble. So is restitution.
The Two DUI Incidents from 2007
As indicated above, any traffic fines and restitution obligations are non-dischargeable.
Credit Card Debts
Lindsay surely built up a bunch of debt from being out of work, having stints in jail, and attending rehab. She also lost some movie deals. Several years ago, people said she was broke, owed over half a million dollars and also owed money to her landlord.
In general, credit card debts and other personal obligations are fully dischargeable in bankruptcy, even if bad behavior led to getting into debt. Thus, if Lindsay filed bankruptcy, she would be able to eliminate her credit card debts.
The Playboy Shoot Enables Lindsay to Avoid Bankruptcy
Some commentators have suggested that Lindsay avoided bankruptcy by posing for Playboy last year.
Doing so gave her a quick cash infusion of up to a million bucks that enabled her to resolve her debts for the time being.
Consumers can avoid a bankruptcy filing if they can come up with some cash resources that would enable them to negotiate their debts. We help consumers negotiate credit card debt on Long Island, which is a viable alternative to bankruptcy.
What Bankruptcy Court Would Lindsay File In?
Lindsay used to live here on Long Island, where my bankruptcy practice is, and where her mother still resides. If she had to file, she would probably want to do it where she could be comforted by her mother.
However, she would be required to file where she has regularly resided for the greater portion of the prior 180 days, which would be Los Angeles.
My Bankruptcy Firm’s (Indirect) Connection to Lindsay Lohan
As a Long Island bankruptcy lawyer, I previously represented one of the many ex-girlfriends of Lindsay’s father, Michael Lohan, with the filing of her bankruptcy. As a matter of fact, Michael Lohan paid the girlfriend’s legal fee and came to our office to do so.
As a Long Island bankruptcy lawyer, I previously represented one of the many ex-girlfriends of Lindsay’s father, Michael Lohan, with the filing of her bankruptcy. As a matter of fact, Michael Lohan paid the girlfriend’s legal fee and came to our office to do so.
However, a few weeks later, they broke up and he contacted us, demanding that we return the legal fee! Of course, we did not. We then filed the ex-girlfriends bankruptcy and she received her discharge.
Steven J. Baum Foreclosure Firm Being Pursued with Same Laws Used to Go After Organized Crime
Posted on
Steven J. Baum is in the Fire
Written by Craig D. Robins, Esq.
In March 2010, I wrote a rather detailed review of the Baum law firm as they had gained a significant amount of notoriety for not only being the largest foreclosure firm in New York but also the one most plagued by allegations of foreclosure misconduct. See Has Steven J. Baum, P.C. Served You with Foreclosure Papers?
I then provided an update with my second post about Baum in which I compared Baum, as the Foreclosure King of New York, with David J. Stern, a former foreclosure king in Florida who tumbled from grace amid robo-signing scandal. See: Is Steven J. Baum, the Foreclosure King of New York, Worth $50 Million?
Update on the Baum Firm — Foreclosure Mill Extraordinaire
In this post I will now provide you with an additional update on some of the ongoing trials and tribulations of the Steven J. Baum foreclosure mill.
If you have been served by Baum in a foreclosure case, are in the process of litigating against that firm, or are simply intrigued, as I am, about this monster of a foreclosure factory, then read on.
In a nutshell, the firm has preserved its reputation for engaging in shoddy and improper foreclosure litigation as indicated in a host of court opinions, lawsuits and investigations.
Since my prior post about the Steven J. Baum firm, Baum has been hit with two federal class action suits, he has been sanctioned, and a Long Island judge described his conduct as “out of the Twilight Zone.”
I Succeed In Getting Baum Foreclosure Dismissed — and Case is Discussed in New York Times Cover StoryI was also successful in having the Suffolk County Supreme Court toss out a foreclosure case that Baum had brought against one of my clients and this was just reported in the New York Times: Craig Robins Mentioned in New York Times Cover Story About Sloppy Foreclosure Lawyers Who Represent Lenders.
In that case, Baum represented mortgagee Wells Fargo, who it turned out failed to have standing to bring the case in the first place.
The Campbell v. Baum Class Action Suit
In August, a federal class action suit was filed against the Baum firm alleging that tens of thousands of New York State homeowners were victims of foreclosure fraud orchestrated by the Baum law firm.
The case, Connie Campbell v. Steven Baum, MERSCORP, Inc., et. al., is pending here in the Eastern District of New York. The case alleges that the Baum firm engaged in a bevy of improprieties worthy of being sued under RICO, which is the federal criminal statute designed to permit the authorities to punish members engaged in organized criminal enterprises.
The RICO statute also permits victims of organized crime to seek redress in a civil suit for acts that are orchestrated as part of a criminal enterprise. This class action involves that type of civil suit. RICO’s original intended use was to prosecute the Mafia.
MERS Allegations Are a Chief Component of the Campbell Class Action Suit
In the suit, Ms. Campbell, who lost her Brooklyn home in a foreclosure proceeding that the Baum firm had brought, alleged that the foreclosure filings were false.
She claimed that Baum sued her, claiming that HSBC was the owner of the mortgage. Yet, Ms. Campbell asserts that the loan was never assigned to HSBC, but instead, was assigned to MERS.
MERS is a very controversial, privately-held electronic registry that does not really own a mortgage, but tracks servicing rights and ownership.
I previously wrote about special defenses that a homeowner can assert to defend a foreclosure action involving a MERS mortgage. See: A New Powerful Mortgage Foreclosure Defense — Compliments of MERS.
In essence, Ms. Campbell alleged that any MERS mortgagee does not have standing to sue, and the Baum firm was complicit in bringing improper foreclosure suits.
She also alleged that the Baum firm was in cahoots with MERS with the robo-signing of various foreclosure documents.
Current Status of the Campbell v. Baum Class Action Suit
Since New York City attorney Susan Chana Lask commenced the suit in August, 2010, she amended it twice. You can see a copy of the Second Amended Campbell v. Baum Class Action Complaint. The case is Campbell v. Baum, 10-cv-3800.
Since the class action started half a year ago the parties have been bitterly bickering about exchanging documents and information in the discovery phase of the suit. This has resulted in Ms. Lask having to make a number of applications seeking to have the court determine that Baum’s discovery requests were unreasonably burdensome.
In other words, she has claimed that Baum is papering her to death — a grossly unfair tactic that is used to abusively smother and sidetrack an opponent while draining their resources by serving an excess of papers and demands, thereby creating unnecessary legal work. But looking at Baum’s less-than-stellar history, perhaps that could have been expected.
Baum also engaged in what many believe to be the dirtiest of dirty pool — he counter-sued Ms. Lask, claiming he defamed her by discussing the suit. Yet, in interviews that she gave to the press, she insisted that everything she said was true, based on various court decisions against Baum.
Another Baum Class Action Suit: Menashe v. Baum
More than one attorney believes Baum has violated the rights of many. Baum must now defend against another class action suit that is now pending in the Central Islip Courthouse of the U.S. District Court for the Eastern District of New York.
In November 2010, Jacob Manashe filed a class action against the Baum firm, alleging that Baum was illegally charging homeowners for attending settlement conferences.
This case is Menashe v. Steven J. Baum P.C., 10-cv-5155. The attorney for that case is New York City attorney Randall S. Newman.
Mr. Newman sent me a copy of the complaint which you can view for yourselves. Click Menashe v. Baum federal class action complaint.
Baum Fined and Sanctioned in Nassau County Case Containing 50% Falsities
It seems that New York courts regularly criticize the Baum firm for shoddy, sloppy and problematic foreclosure practices. Last year, Baum’s firm foreclosed on a Garden City home owned by Pal Raia.
After Baum succeeded in conducting a foreclosure sale, he sought to evict the homeowner. However, Baum neglected to properly identify the mortgagee owner that took over the property.
Nassau County District Court Judge Scott Fairgrieve dismissed the proceeding in November 2010, stating, “Falsities were contained in five paragraphs out of only ten paragraphs in the entire petition.”
In this case, Baum’s firm was ordered to pay about $15,000 in legal fees and costs, on top of a $5,000 fine.
Baum Investigated for Overcharging
I’ve read reports that the Baum firm is being investigated by New York’s Attorney General for overcharging, filing false documents and representing parties on both sides of a mortgage transfer.
The Judge Schack Attack Against Baum — Not Only in the Twilight ZoneArthur M. Schack, a New York State Supreme Court Judge sitting in Brooklyn, has been especially vocal with his criticisms of the Baum firm.
In one case he called the firm’s explanations “so incredible, outrageous, ludicrous and disingenuous that they should have been authored by the late Rod Serling,” referring of course to the old, black & white classic TV show, theTwilight Zone (which I have recently been watching on the Syfy channel) about science fiction and the supernatural.
That case involved another improper mortgage assignment. Judge Shack stated, “Steven J. Baum PC appears to be operating in a parallel mortgage universe, unrelated to the real universe.”
Judge Schack, writing in a manner that makes reading his decisions a fun and enjoyable exercise, continues, “Rod Serling’s opening narration, to episodes in the 1961 – 1962 season of The Twilight Zone, could have been an introduction to the arguments presented in support of the instant motion by plaintiff’s counsel, Steven J. Baum, P.C. – ‘You are traveling through another dimension, a dimension not only of sight and sound but of mind. A journey into a wondrous land of imagination. Next stop, the Twilight Zone.'”
Read Judge Schack’s Twilight Zone case for yourself: HSBC Bank USA, N.A. v. Yeasmin, 2010 NY Slip Op 50927(U).
In Another Case, Judge Schack Accuses Baum of Engaging in a Conflict of InterestIn a foreclosure case last year pending in the Kings County Supreme Court, Judge Schack admonished Baum for representing two parties in the same action, which is a conflict of interest.
In the case, Lasalle Bank, N.A. v. Smith, Judge Schack denied the mortgagee’s motion for a judgment of foreclosure that the Baum firm had brought on the ground that they failed to provide an affidavit of facts executed by an officer of the mortgagee who had knowledge of the facts.
However, Schack also criticized the Baum firm for simultaneously representing both first and second mortgagees in violation of 22 NYCRR 1200.24 of the Disciplinary Rules of the Code of Professional Conduct since Baum was unable to demonstrate that his clients consented to such representation after full disclosure of the risks involved. The slip opinion was rendered on March 22, 2010.
Baum in Litigated Divorce Proceeding with Spouse
Upon searching for various Baum foreclosure cases, one other interesting case turned up: Baum v. Baum.
It appears that Baum is involved in a heavily litigated divorce case pending in upstate New York before Judge John O’Donnell who recently ordered Baum to pay pendente lite support.
More About Baum to Come
I’ve also prepared a rather lengthy and detailed list of various decisions that New York judges have issued in various Baum foreclosure cases, most of which have highlighted various irregularities and sloppy conduct on the part of the Baum firm.
I am hoping to assemble that for a future blog post.
This Post About Steven J. Baum Is Merely a Follow-Up — See My Prior Posts for Lots More on Baum’s Bumbling
If you think the above is something, you must see my first Baum Post from 2010 About the Stephen J. Baum Foreclosure Mill.
Also see my second Baum post: Is Steven J. Baum, the Foreclosure King of New York, Worth $50 Million? .
Written by Craig D. Robins, Esq.Losing money in a Ponzi Scheme is bad enough. Being forced to file for bankruptcy relief because of these losses is even worse. But how about getting your bankruptcy discharge, and then being sued by the bankruptcy trustee overseeing the failed Ponzi business?
That’s exactly what happened to one of our clients last month.
Agape World, Inc. Lands in Bankruptcy Because of Ponzi Fraud
In February 2009, several creditors forced Agape World into an involuntary Chapter 7 bankruptcy in the Central Islip Bankruptcy Court, here on Long Island in the Eastern District of New York.
I previously wrote that Ken Silverman was Appointed Chapter 7 Trustee in Agape World Case . Around that time, it was discovered that Agape president Nicholas Cosmo perpetrated a Ponzi scheme involving several hundred million dollars.
Many Long Island consumers lost their life savings after falling victim to his scheme. As a result, many of them filed bankruptcy cases themselves.
We recently represented one of them and filed his Chapter 7 bankruptcy petition last year. The unfortunate debtor lost hundreds of thousands of dollars. Our client’s bankruptcy case itself was unremarkable and was routinely processed and closed as a no-asset case. The client got his discharge last month.
Out of the blue, Ken Silverman, the Agape World trustee, brought an adversary proceeding in the Agape World bankruptcy case against our client. He alleged that our client had received some distributions from Agape shortly before Agape was put into an involuntary bankruptcy, and that these payments now had to be returned to the Agape bankruptcy estate under several different legal theories.
We had not even scheduled Agape as a creditor in our client’s bankruptcy as we had no idea that there was any potential liability to them.
Trustee Recognizes Bankruptcy Discharge
In response to the adversary proceeding, we contacted an attorney in the trustee’s office and explained the circumstances of our client’s bankruptcy filing. It appeared that the trustee was totally unaware of our client’s prior bankruptcy as we had not included Agape or its trustee as a potential creditor.
We were concerned that the trustee would nevertheless seek to go forward with the adversary proceeding because the debtor had not listed Agape in the schedule of creditors.
However, we advised the trustee that failure to schedule a creditor in a no-asset Chapter 7 case does not, in and by itself, prevent the debtor from discharging that debt. I previously wrote about Inadvertently-Omitted Creditors in Chapter 7 Bankruptcy Cases.
Much to the trustee’s credit, he acknowledged that any possible liability of our client to Agape was discharged by virtue of the prior bankruptcy, and within 24 hours of advising his office of our client’s bankruptcy discharge, he withdrew the adversary proceeding.
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.
This is what shredded mortgage files look like
Written by Craig D. Robins, Esq.
In the news this week was an interesting convergence between the need to investigate mortgage fraud and the desire to maximize the distribution to creditors of a defunct mortgagee.
I first wrote about American Home Loan Mortgage Company in 2007, which was based on Long Island. At the time they were one of the country’s largest mortgage lenders and they quickly and utterly collapsed as one of the earliest victims of the sub-prime mortgage meltdown. (see: The Sub-Prime Mortgage Meltdown ).
In 2009, I wrote how the CEO of the company had engaged in fraud — Ex-CEO Of American Home Mortgage Settles SEC Fraud Charges .
Now we have an issue of what will happen to the many thousands of sub-prime mortgage files sitting in a storage room of the now-abandoned company’s Melville, Long Island headquarters — a five-minute drive from my Woodbury office.
What Happens to Mortgage Files When a Mortgagee Goes Out of Business?
American Home Loan, which hasn’t operated since it collapsed in 2007, has been in a Chapter 7 bankruptcy liquidation proceeding for several years now. Earlier this week, the operating trustee asked the bankruptcy court for permission to destroy 4,100 boxes of loan documents.
The trustee is arguing that the local fire marshal wants the boxes of mortgage files removed as it is posing a fire hazard. The trustee is also complaining that it will cost too much to move them and that they should instead be destroyed.
Paying to remove the file boxes to a storage facility costs money — money that would have gone to the creditors of American Home Mortgage who filed claims in the bankruptcy proceeding. The cost of having maintained storage of the files was approximately $15,000 a month.
Two years ago, the trustee had made a similar request which was approved, and several thousand boxes were destroyed at that time after banks and other loan servicers had been given a chance to pick up the files but neglected to do so.
Now there are 4,100 boxes left. My guess is that each box contains 20 files, meaning that the boxes contain the records of nearly 80,000 sub-prime mortgages.
Is Evidence of Mortgage Fraud Being Destroyed by Destroying the Mortgage Files?
Since the earlier batch of files was destroyed, the subject of mortgage fraud has risen to become major headline news.
The robo-signing scandal only became national news this past October when it was revealed that incredible numbers of original mortgage documents were missing and new documents were created for the purpose of bringing foreclosure proceedings. See: New Forelosure Law in New York Requires Attorneys to Verify Foreclosure Papers .
That led the attorneys general in all 50 states to immediately begin investigations into foreclosure procedures, improper mortgage assignments, and all sorts of other mortgage document deficiencies.
Also in the past few months, we have seen massive amounts of evidence turning up all around the country showing that original mortgage loan documents were never transferred as required when the mortgages were securitized and sold to investors.
Now, these ever-so important mortgage files are about to be destroyed. Yesterday the Delaware Bankruptcy Court approved the trustee’s document destruction request.
However, a Legal Aid Society attorney, who also appeared in the proceeding, was successful in requiring the trustee to set aside several hundred of the storage boxes which may contain records still relevant to some pending foreclosures.
She argued that many low income homeowners were victims of deception about how much their mortgage loans would cost, and that the original mortgage files could contain evidence that they had been defrauded. This is another concept I previously wrote about in The Sub-Prime Mortgage Meltdown .
Who Benefits When Mortgage Files Are Destroyed?
As I mentioned, the creditors of the defunct mortgage company stand to receive a (very slightly) larger distribution.
But what about the hapless homeowners who are defending foreclosure proceedings? Perhaps this could be good news for them. Judges are becoming more and more willing to toss out foreclosure suits when the mortgagee is unable to produce various original mortgage documents.
The defense du jour is “show me the note!” A series of recent decisions in foreclosure cases emphasizes the importance of producing original loan documents, holding that they are essential for investors to prove ownership of the mortgages and that the have the right, known as “standing'” to pursue foreclosure. This is something I wrote about a year ago: Mortgage Companies Entitlement to Bring Foreclosure Proceedings: Prove It or Lose It .
If a mortgage which was originated by American Home Mortgage is foreclosed upon (and many tens of thousands are in the foreclosure process now), then it may become easier for the homeowner to defend if the current mortgagee is unable to adequately produce sufficient paperwork.
On the other hand, such document destruction can be the equivalent of a get-out-of-jail card for those business executives in the mortgage industry who took illegal shortcuts. Destroying thousands of files means that valuable evidence that can be used in criminal investigations will be forever gone.
The wholesale destruction of mortgage files has become big news in several other areas of the country this week. A Bankruptcy Judge temporarily blocked the trustee of sub-prime lender Mortgage Lenders Network USA from destroying 18,000 boxes of original loan files after federal prosecutors pleaded that they may be needed as evidence in more than 50 criminal investigations.
New York Bankruptcy Exemptions Suddenly Increased – This Is the Biggest Bankruptcy News in Years!
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Written by Craig D. Robins, Esq.For New Yorkers considering bankruptcy, the biggest bankruptcy news in five years dropped like a bombshell this afternoon when Governor Patterson unexpectedly signed legislation greatly increasing exemptions for consumers.
Exemptions are those statutes that permit consumer debtors in bankruptcy to keep and protect assets.
New York Residents Seeking Bankruptcy Relief in 2011 Will Be Able to Protect More Assets than Ever Before
This will certainly cause an explosion in the number of consumer bankruptcy cases we will see next year as more financially burdened consumers will be able to eliminate their debts while keeping and protecting all of their assets.
Homestead Exemption Increasing to $150,000 per Person for those on Long Island
Right now each homeowner can protect only $50,000 worth of equity in a house. However, for those on Long Island who live in Nassau and Suffolk Counties, that amount will triple to $150,000.
Since a husband and wife can pool their exemption, that means that a couple will be able to protect a whopping $300,000 worth of equity in their home.
This will enable almost any typical Long Island middle class family to file bankruptcy to eliminate their credit card debts while protecting their home.
In my Long Island bankruptcy practice, I am regularly meeting with homeowners who are forced to file for Chapter 13 bankruptcy instead of Chapter 7 because they have too much equity in their homes. Now, almost everyone will be able to seek Chapter 7 bankruptcy relief and keep and protect their homes.
Incidentally, the amount of the new homestead exemption will be based on what county the debtor’s home is in. For most upstate counties, the homestead exemption will only be $75,000 per person.
More than half of the states previously had more generous homestead exemptions than New York; now it will have one of the best.
Amounts for Almost All Other Exemptions Categories Are Being Increased and New Categories Are Being Added
The new bill also increases the exemptions for a great deal of other assets like cars, and adds some new categories like home computers and vehicles for the handicapped.
Many of the exemption amounts that are being increased had not changed in decades.
I am in the process of reviewing each of the various changes to the exemption laws, and I will discuss and outline them in a post tomorrow.
Proposed Legislation to Expand New York’s Exemptions Has Been Periodically Submitted in Albany for Years
For years, legislation was proposed each and every year in Albany that sought to increase exemption amounts. This legislation never received any publicity because it was periodically struck down and nobody ever expected it to pass.
In years past, when I would discuss this with some of my colleagues, they were surprised to hear that there was pending legislation considering that it wasn’t publicized at all.
Despite reaching various stages in Albany each year for the past decade, such legislation has never found its way into law except once, when the homestead exemption was increased in September 2005. That year it was increased five-fold from $10,000 per person to $50,000 per person. Here’s the article that I wrote about that: Surprise Law Enactment – Homestead Exemption Increased .
The Governor’s Signing of the Bankruptcy Legislation Today Was Totally Unexpected
In July of this year we seemed to get closer than ever before to seeing a change in New York’s woefully inadequate exemption laws.
At that time, both houses of the New York State Legislature passed legislation to increase bankruptcy exemptions in New York State. However, the banking industry, which has an extremely large presence in New York, vigorously lobbied Governor Patterson to veto the bill.
Very few people thought there was any chance that Governor Patterson would sign the legislation into law. For that reason, no one was holding their breath about its passage because nobody expected it to happen.
The Bankers carry a lot of power, even with Democrats. They argued that many consumers owe taxes to New York State, and with the bill’s added protections for debtors, both in and outside of bankruptcy, New York State’s tax collections would suffer.
New York City officials also opposed the legislation, arguing that it would impair the City’s ability to tow and auction cars for outstanding parking violations.
For months, the bankruptcy legislation, which was signed by both houses, just sat on the Governor’s desk, and we all assumed it would die there.
Yet, Gov. Patterson, who is leaving office in just one week, signed the bill today – his very last — with no advance notice and no fanfare of any kind, catching me, as well as all other bankruptcy practitioners, by surprise. And a very nice surprise at that!
Perhaps the Governor, who apparently does not see public service in his future, was upset at the damage wrought by the financial sector which drove the economy into a recession, and used this opportunity to give something back to his constituents.
Governor Patterson Issues Press Release Discussing Why He Signed New Exemption Law
Along with the new law came a press release. In it the Governor said:
“During this time of economic crisis, it is our responsibility as public servants to protect those who are struggling the most.
“A reconsideration of the current exemptions, which in some cases have not been changed in decades, is particularly warranted when an increasing number of individuals find themselves in dire financial condition. Though this is not a perfect bill, the benefits far outweigh its concerns.”
The press release also stated: This bill would provide a much-needed update to the exemptions law in New York as many provisions of State’s exemptions law are antiquated or have not been amended since the 1980’s. The purpose of such exemptions is to permit debtors in bankruptcy to retain a modest amount of personal property and equity in their homes so that they can continue to maintain their lives, and to protect them from becoming homeless, unemployed, or otherwise dependent on the State.
The New and Increased Exemptions Will Help Future Bankruptcy Debtors in Many Ways
Not only will more consumers be able to file for Chapter 7 bankruptcy, but many of those who seek Chapter 13 protection instead will end up paying substantially less through their monthly Chapter 13 plan.
Also, many existing Chapter 13 debtors may be able to convert there cases to one under Chapter 7 and eliminate all further monthly payments.
The bankruptcy attorneys in my office and I will be quite busy reviewing all of our cases over the next few weeks to ascertain how to best take advantage of the new exemptions amounts.
To see a number of post that I’ve written about bankruptcy exemptions, see the articles under this category: Bankruptcy Exemptions.
Written by Craig D. Robins, Esq.We’ve all seen the news inundated with stories these past two weeks about the widespread problems with the foreclosure process, not only here in New York, but across the country.
Now, New York’s Chief Judge, Jonathan Lippman, essentially said “enough is enough” with the sloppy and often incorrect papers that many foreclosure attorneys are filing on behalf of their mortgage and banking industry clients.
This week he imposed a new court rule directing attorneys for mortgage lenders to take certain steps to make sure the papers they file are accurate. Effective immediately, foreclosure attorneys must engage in due diligence to verify the information contained in the documents that they file in foreclosure cases in New York.
This new verification requirement is a court rule as opposed to a law promulgated by the legislature, and lawyers can be severely sanctioned for non-compliance.
The National Crisis of Robo-Signed Foreclosure Papers Has Led to New Court Rule
Apparently Judge Lippman has become appalled at the number of banks who have employees signing thousands of mortgage foreclosure documents a day — a feat that is physically impossible to do without reviewing them for accuracy.
Articles about the robo-signers have been front-page news lately as we have learned that a great number of homeowners have lost their homes because the banks submitted incorrect, backdated, or downright fraudulent documents to the courts.
New Foreclosure Verification Law May Have Profound Impact On Foreclosure Process
For years, many foreclosure attorneys and their mortgagee clients have been playing fast and loose with foreclosure paperwork. In my Long Island foreclosure defense practice, we have routinely come across backdated assignments and related mortgage documents. In the past, when we brought these irregularities to the attention of the court as a foreclosure defense, the court would, at most, dismiss the case.
Now, however, under this new law, bank attorneys will be much more hesitant to submit clearly erroneous or improper papers as they will now face serious sanctions for being a party to a fraud.
What Does the New Foreclosure Verification Rule Mean to the Homeowner Facing Foreclosure?
The new law will force foreclosure attorneys to think twice before blindly submitting foreclosure documents to the court. As a result, the entire foreclosure process in New York will be slowed down until the bank’s attorneys become more equipped to fulfill their due diligence requirements.
This will be a win for the homeowner in several respects:
1. The new law will delay the inevitable foreclosure proceeding by a period that could be weeks or months, giving homeowners in foreclosure more time before they have to eventually leave their homes.
2. Innocent homeowners will be safeguarded, at least to a certain degree, from banks who previously abused the foreclosure system by taking illegal shortcuts.
3. Foreclosure defense attorneys such as myself, may have an easier time resolving some contested issues with bank’s attorneys as the new law will give us leverage in personally calling the bank’s attorneys to task when irregularities are found. This is because the foreclosure verification requirement imposes a continuing duty on counsel. Thus, if they later learn that a previously-submitted document is false or inaccurate, they must then immediately take corrective action.
4. Thousands of homeowners who are in default will be in a better position to have their rights safeguarded, now that the court is looking after their interests as well.
It’s About Time Steps Are Imposed Against Mortgage Banks and Their Attorneys for Playing Fast and Loose
I personally think it’s about time the court system imposed some reasonable standards on attorneys for banks and lenders.
The practice of robo-signing documents is certainly unfair to homeowners. Now bank attorneys will not be able to so easily submit robo-signed documents to the court, as they will be required to verify the information they contain.
Homeowners In Foreclosure Will Not Be Protected Automatically
Consumers who have defaulted on their mortgages and find themselves in foreclosure should not assume for one minute that the this rule, by itself, will stop the foreclosure or enable them to assert their rights.
Homeowners should continue to consult with a foreclosure defense attorney to discuss their rights and learn about steps that can be taken to protect their home. Click here to see a number of other posts on my blog about New York foreclosure defense information.
Brooklyn Bankruptcy Judge Milton E. Milton will be interred in St. Patricks Cemetery in Huntington. I took this image of my son, Max, there, several years ago.
Written by Craig D. Robins, Esq.
Judge Milton Funeral Information
The following is the latest information about the funeral service and visitation arrangements for the Honorable Judge Dennis E. Milton who passed away on May 31, 2010.
Obituary: Please see: Brooklyn Bankruptcy Judge Dennis E. Milton Passes Away
Home: Greenlawn, NY
Date of Death: May 31, 2010
Age: 59
Birthdate: March 15, 1951
Place of Birth: Staten Island, NY
Service Information: Saturday, June 19, 2010; St. Patricks Church, Huntington, NY
Visitation: M. A. Connell Funeral Home Inc., Huntington Station, NY
Thursday, June 17, 2010 7-9
Friday, June 18, 2010 7-9
Interment: St. Patricks Cemetery, Huntington, NY