STATE BAR LOAN MODIFICATION TASK FORCE SHUTS DOWN PRACTICES OF MORE LAWYERS

MEDIA CONTACT:  Diane Curtis   415-538-2028   diane.curtis@calbar.ca.gov

San Francisco, November 10, 2009 — The State Bar of California announced today that action has been taken against five more lawyers under investigation for loan modification misconduct, bringing to 14 the number of attorneys who have resigned or been placed on involuntary inactive enrollment since creation of the bar's Loan Modification Task Force in April.

"I am very pleased with the results being obtained by members of our Loan Modification Task Force," said Interim Chief Trial Counsel Russell Weiner. "They have exceeded my expectations. Our office has been aggressively investigating and prosecuting attorneys alleged to have committed loan modification misconduct. Any attorney thinking that he or she can commit loan modification misconduct and get away with it for a significant period of time should think again."

On Nov. 2, Timothy Thurman [#216048], 37, resigned with charges pending following his arrest by FBI agents in October at his Altadena home. He was charged with creating and using a court order containing what he knew to be a forged signature of a federal judge. Thurman allegedly gave the document to his clients, who had sought Thurman's help to avoid eviction, telling them to give it to the sheriff, who became suspicious and contacted the judge. Thurman's practice, Trinity Law Group in Los Angeles, which he started earlier this year, was doing lender litigation and loan modification. State Bar investigators worked with the FBI in the investigation.

On Nov. 4, the Loan Modification Task Force obtained the resignations with charges pending of Gary Davidson [#32110], 75, of Costa Mesa, and Eric Douglas Johnson [#224065], 55, of Culver City.

On Nov. 4, Paul Lucas [#163076], 48, of the Lucas Law Center in Aliso Viejo, was ordered involuntarily inactive for posing "a substantial threat of harm to (his) clients or the public" under Business and Professions Code 6007. State Bar Court Judge Lucy Armendariz said Lucas had inaccurately described his firm's refund policy and its business relationship with Future Financial Services. She also said that Lucas had formed a partnership with a nonlawyer in violation of State Bar rules and aided in the unauthorized practice of law.

Armendariz noted that the Lucas Law Center, Future Financial and others had generated 45 State Bar complaints and 89 Better Business Bureau complaints. The Federal Trade Commission also issued a preliminary injunction against Lucas Law Center and Future Financial Services. Armendariz said Lucas, through his staff, agents and advertisements, misrepresented the scope of his service to clients, collected advance fees under false pretenses, recklessly advised clients to stop making mortgage payments, failed to perform services, failed to promptly refund earned fees and repeatedly failed to respond to client inquiries.

On Nov. 6, Sean Rutledge [#255938], 34, of Irvine, who started United Law Group in August 2008, was enrolled as an inactive member of the State Bar pending further order under Business & Professions Code 6007. Rutledge "promised to help troubled homeowners - many of whom were in arrears or on the brink of foreclosure - modify their home loans and maintain financial stability," State Bar Court Judge Richard Honn wrote in his order of inactive enrollment. "Instead, he took their money and time and offered little or nothing in return. In fact, due to their loss of money and time, many of respondent's clients ended up in a worse position than they were in when they originally turned to respondent for help... respondent has engaged in a pattern of client neglect involving failing to perform, failing to communicate, and/or failing to refund unearned fees in 14 separate client matters."

The Loan Modification Task Force has received more than 1,250 complaints and is investigating almost 250 lawyers. Each task force investigator oversees about 135 cases, and almost 20,000 attorney files have been removed from the offices of attorneys whose loan modification practices have been shut down or abandoned. State Bar investigations are up 69 percent over 2008.

The State Bar has been working with local law enforcement as well as the state Attorney General's Office and the FBI to address the problem of businesses and law firms preying on people about to lose their homes through foreclosure. Orange County Deputy District Attorney George McFetridge Jr. said coordination between the State Bar and his office in combating "these criminal enterprises that prey on desperate homeowners" has been invaluable. "I'm also thrilled that the State Bar has taken such an aggressive stance against attorneys who employ cappers, split fees with non-attorneys, engage in false advertising and commit fraud on the public," he wrote in a letter to State Bar President Howard Miller.

Last month, a new law, SB94 by Sen. Ron Calderon, D-Montebello, took effect that prohibits attorneys and any others involved in mortgage relief from taking upfront fees for loan modification work. Weiner said the new law should reduce the number of lawyers committing loan modification misconduct.

Founded in 1927 by the legislature, the State Bar of California is an administrative arm of the California Supreme Court, serving the public and seeking to improve the justice system for more than 80 years. All lawyers practicing law in California must be members of the State Bar. By November 2009, membership reached more than 222,000.

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