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MCLE Self-Assessment Test

The Client Security Fund: One victim’s story

By Psyche Pascual
Staff Writer

Jewell Matthews was one of the legions of homeowners looking for help when she and her late husband ran into trouble paying the mortgage on their Pennsylvania home.

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It was 2010, and when she received a solicitation from a California attorney named Philip Kramer in the mail, Matthews thought it was the answer to her prayers. For one thing, it bore the name of her mortgage lender and it looked official. After Matthews provided her loan documents and handed over $3,000, the law office gave her nothing but excuses. Matthews, a church pastor, admits she was a little trusting, but she was also at her wit’s end.

“Sometimes we do things because we are desperate, and we just don’t do research,” she said. “I thought since he was an attorney, this man has taken an oath. Why would he not do what he said he was going to do?”

As it turns out, Matthews was not alone. The State Bar of California and the Attorney General’s office shut down Kramer’s office in 2011 and he was disbarred for collecting advanced fees from other clients.

But this year Matthews got back the $3,000 she paid. It was all thanks to the bar’s Client Security Fund, a pool of money intended to reimburse clients of dishonest California lawyers.

Matthews is just one of the hundreds of consumers who are expected to receive about $8 million in reimbursements this year, said Lori Meloch, the Client Security Fund’s director.

“Luckily we’re receiving additional monies this year from the Board [of Trustees]. So instead of $6 million, we have $8 million to pay out,” she said. “That will go quickly.”

It can take years from the time a client files an application with the Client Security Fund to the time he or she is reimbursed. First, a complaint against an accused attorney can take years to make its way through the State Bar discipline system. If the attorney is disciplined, an application for reimbursement is reviewed in the order it was received. For attorneys whose misconduct affected scores of clients, that can mean a long wait.

For one recently disciplined attorney, James Parsa, the fund received more than 1,000 applications, and “that’s just one respondent,” Meloch said.

Fund staffers are also working through the applications that were filed during years since the recession hit in 2008. In 2010 alone, the Client Security Fund received its largest number of applications ever: 3,875. Numbers began to taper off in 2012, but new applications based on loan modification fraud are still pouring in and still make up almost a third of new cases. Meloch said her staff is working to shorten the time to process payments.

“I’m telling people right now that it’s going to be at least 24 months because of the limited resources of the fund,” she said.

Clients may help shorten that time frame by submitting critical financial documents, such as bank statements and copies of the backs and fronts of checks, along with the initial application. They should also make sure the applications have an original signature, not a photocopy, Meloch said.

Matthews, the Pennsylvania homeowner, was able to keep her home, and recently she received another solicitation letter from an attorney offering to help with her mortgage. She tossed it into the trash.

“I just thank God I got my money back even though it was years later. It was a blessing for me,” she said.