It's bad enough when people are dealing with their underwater properties, but to then have attorneys tell them to join these "mass action" lawsuits like it's a silver bullet to stop the foreclosure sale is egregious. Apparently, the Attorney General thought so too and she sued them and the law firms have been placed into receivership.
The California State bar has seized the practices and attorney accounts of the attorney defendants:
The Law Offices of Kramer & Kaslow; Philip Kramer, Esq; Mitchell J. Stein & Associates; Mitchell Stein, Esq. (aka "the Doberman" or "Dobie"); Christopher Van Son, Esq.; Mesa Law Group Corp.; and Paul Petersen, Esq.
According to the AG's press release:
...defendants preyed on desperate homeowners facing foreclosure by selling them participation as plaintiffs in mass joinder lawsuits against mortgage lenders. Defendants deceptively led homeowners to believe that by joining these lawsuits, they would stop pending foreclosures, reduce their loan balances or interest rates, obtain money damages, and even receive title to their homes free and clear of their existing mortgage. Defendants charged homeowners retainer fees of up to $10,000 to join as plaintiffs to a mass joinder lawsuit against their lender or loan servicer.
What's illegal about what these lawyers were doing? According to the Complaint and Temporary Restraining Order:
-False advertising, in violation of section 17500 of the Business and Professions Code
-Unfair, fraudulent and unlawful business practices, in violation of section 17200 of the Business and Professions Code
-Unlawful running and capping, in violation of section 6152, subdivision (a) of the Business and Professions Code (i.e., a lawyer unlawfully paying a non-lawyer to solicit or procure business)
-Improper fee splitting (defendants unlawfully splitting legal fees with non-attorneys)
-Failing to register with the Department of Justice as a telephonic seller.