Share this on Twitter Share this on Facebook Share this on Linked In Share this by Email
MCLE Self-Assessment Test

Three more lawyers prohibited from practice due to loan modification activities

Continuing its effort to protect the public from lawyers who take advantage of distressed homeowners, the State Bar prosecutor’s office has secured orders of involuntary inactive enrollment for three Southern California attorneys: Eric Douglas Johnson of Los Angeles, Mark Alan Shoemaker of Long Beach and Brian Colombana of Lake Forest.

Besides the three involuntary inactive enrollments, the bar’s Office of Chief Trial Counsel has obtained the resignations of 13 attorneys involved in foreclosure misconduct since creation of the Loan Modification Task Force in April 2009. Five loan modification trials are pending and another 2,000 related investigations are underway.

“The Chief Trial Counsel’s office continues to send the message that attorneys guilty of misconduct — especially toward homeowners who are at their most vulnerable when facing the loss of their homes — will be prosecuted and disciplined,” said Interim Chief Trial Counsel Russell Weiner.

In a June 17 ruling, State Bar Court Judge Richard Honn said Colombana’s conduct “poses a substantial threat of harm to his clients or the public.” He cited 13 declarations by clients from California, South Carolina, Minnesota, Nevada, New Mexico, Maryland, Utah and New York who paid upfront fees to one of the loan modification companies with which Colombana [#238272] was affiliated, including Loan Negotiators of America, Housing Law Center and Mortgage Relief Law Center.

In most cases, clients never even met the attorney but dealt with non-lawyer representatives of the loan modification companies. Through the companies, Colombana, 29, “convinced numerous cash-strapped homeowners to pay him thousands of dollars in hopes of saving their homes from foreclosure,” Honn wrote.…"Many of these homeowners were worse off after retaining respondent’s services.” The judge noted that many of the clients were current with their mortgages but then were advised by Colombana’s affiliates to stop paying. “Soon these clients were behind on their mortgage payments and facing foreclosure, and [Colombana] wasn’t there to help,” Honn wrote.

He said Colombana continues to harm clients by failing to refund unearned fees or communicate with them and demonstrates a pattern of behavior likely to continue to cause substantial harm.

The bar received at least 44 complaints about Colombana in the last eight months of 2009 and filed a petition to lift his license in April. According to the petition, Colombana promised to win substantial reductions of monthly mortgage payments — sometimes as low as 2 percent interest — and claimed a 99.9 percent success rate. At least one client’s home was sold at auction and two others were facing foreclosure when the petition was filed against Colombana.

Colombana said he does not pose a threat to the public and denied all the allegations in his response to the charges, which he said were part of the bar’s “shotgun approach” to eliminating attorneys who provide loan modification services. He said he was retained by 5,000 clients and the complaint rate was less than 1 percent.

He said he resolved complaints in other states and now practices only in California, where complaints could have been resolved if the bar had not been so secretive. “The State Bar’s practice of secretly compiling complaints for nearly a year and then bringing expedited disbarment proceedings based on substantial harm is truly questionable,” Colombana said.

In separate rulings in May, Honn found that the conduct of Johnson (#224065), 55, and Shoemaker (#134828), 49, also poses a “substantial threat of harm” to their clients or the public. They also were ordered involuntarily enrolled as inactive members of the State Bar under Business and Professions Code Sec. 6007.

Johnson associated with several non-attorney legal organizations, lending his name and status as an attorney to a firm offering bankruptcy filing and assistance, a business handling forensic audits and loan modifications and two other loan modification companies. Honn cited cases in which homeowners were promised that their homes would not be foreclosed but the homeowners lost them anyway after having made significant payments to the non-attorney companies.

In particular, he noted the experiences of Micaela Gonzalez of Azusa and Maria and Juan Henriquez of Costa Mesa. Gonzalez signed an attorney agreement with the Johnson law Group even though she only dealt with non-attorney employees of Avantgarde, a loan modification business that Johnson worked with for a time. When he left in April 2009, he did not inform his Avantgarde clients that he had severed the relationship, the State Bar Court decision said.

Gonzalez was repeatedly told that her loan modification was moving forward, but in June 2009 she was informed that her home had been foreclosed. Avantgarde refunded none of the $3,700 she had paid.

The Henriquezes did meet with Johnson at one point, according to Honn’s decision, and they were told they had a very good case in arguing for loan modification. The couple paid an initial $3,600 and then were told by a non-lawyer at Avantgarde to pay him $1,900 a month that would go into an account for the lender “to demonstrate that they had the ability to afford payments in that amount.”

Johnson “lacked control and failed to supervise” any of the organizations with which he was associated, Honn wrote in his May 18 order. “This lack of control and failure to supervise consequently led to, among other things, the unauthorized practice of law, misrepresentations and client harm.” At one point, they were told not to make the check out to Avantgarde but to leave the payee line blank. They also were told not to contact their bank. When the Henriquezes sent a letter to Avantgarde seeking a $15,000 refund, there was no response and they retained different counsel.

Shoemaker, whose case was investigated and prosecuted with the help of the California Department of Real Estate, has owned and operated a loan modification business called Advocate for Fair Lending since 2008. Shoemaker “used Advocate and his status as an attorney to convince cash-strapped homeowners to pay him thousands of dollars in hopes of saving their homes from foreclosure,” Honn wrote in his May 28 order. Shoemaker, however, “often did little to nothing to help these clients. In fact, many of these homeowners were worse off after retaining [Shoemaker’s] services.”

The order referred to 18 examples in which Advocate clients, who signed power of attorney when they contracted with Advocate, were not helped and asked for refunds. A few did get refunds; many others did not. Some clients reported that their lenders said they had never been contacted by Advocate on their behalf.

Advocate’s publicity material promised that “if we are unable to obtain any concession or benefit for you, [Advocate] will refund ALL payments made by you to us.”

Carnetta McGhee was able to obtain a full refund of $2,000 10 months after she signed up with Advocate and after she refused to pay another $1,000 because her phone calls were not returned. However, many other clients received no help and no refund. Ruben Tostado paid Advocate more than $7,000 to obtain a loan modification, but after he paid the money and then followed up with phone calls to Advocate, he was told no one was available to speak to him. When he went to Advocate’s office, he was told he could get neither his file nor a refund.

Shoemaker argued that he was merely the president of Advocate and did not represent any Advocate clients in a legal capacity. Honn did not accept that argument. “Advocate’s clients were also [Shoemaker’s] clients,” Honn wrote. “An attorney cannot use a power of attorney form to absolve themselves of the ethical mandates they have sworn to uphold.”