Loan modification fraud victims to get small compensation

By Laura Ernde
Staff Writer

Four years after the Attorney General’s Office and the State Bar shut down an operation that used false advertising to lure distressed homeowners into suing their mortgage lenders, victims are getting some of their money back.

Attorney General Kamala Harris and then-State Bar President Bill Hebert announce their actions against mass joinder fraud in 2011.

A receiver appointed by Los Angeles County Superior Court has recommended distributing $350 to each of the 1,700 people who were taken in by the mass joinder fraud. The restitution money came from seized bank accounts of the attorneys and marketing firms involved in the fraud.

Unfortunately for those who were victimized, the checks that were to be mailed last month won’t cover all the losses. However, the State Bar’s Client Security Fund, funded by lawyer licensing fees, may be able to make up the difference for those who qualify.

Client Security Fund Director Lori Meloch cautioned that a separate State Bar restitution process is just now starting and can be lengthy depending on individual circumstances. Consumers must show that they lost money due to an attorney’s dishonesty.

Meloch said the fund has received 1,500 requests totaling $7.4 million as a result of the mass joinder fraud. The State Bar pursued discipline against five lawyers who were involved:

• Anthony J. Kassas, 38, of San Francisco (bar number 227647)
• Philip A. Kramer, 56, of Calabasas (bar number 113969)
• Christopher J. Van Son, 53, of Oak View (bar number 133440)
• Mitchell J. Stein, 57, of Hidden Hills  (bar number 121750)
• Paul W. Petersen, 55, of Huntington Beach (bar number 170922)

Kassas, Kramer and Petersen have been disbarred and Van Son’s license was suspended.

Stein’s discipline case is on hold pending the conclusion of criminal proceedings against him in Florida, which were unrelated to the mass joinder fraud. Stein has been on interim suspension since being convicted in 2013 of conspiracy to commit mail and wire fraud, aiding and abetting mail fraud, aiding and abetting securities fraud, aiding and abetting money laundering and conspiracy to obstruct justice.

The mass joinder operation was one of a number of loan modification fraud schemes that proliferated during the housing crisis. Those cases are taking a toll on the bar’s Client Security Fund, which paid out a record $11 million in 2013.

There are more payouts to come. In addition to the applications pending in the mass joinder case, the disbarment earlier this year of Stephen Lyster Siringoringo of Garden Grove led to 650 applications for restitution totaling $2.8 million. Siringoringo took illegal advanced fees from homeowners seeking loan modification services.

Consumers who have questions about the restitution process may visit the Client Security Fund’s web page or call 213-765-1140.