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AN INCISIVEMEDIA PUBLICATION VOL. 00, NO. 000
March 8, 2011
FORECLOSURE FALLOUT Firm spin-off could fold within 2 months
DAIL BUSINESS REVIEW Y
DaviD J. STeRn To ShuT foreclosure practice
by Paola Iuspa-Abbott
David Stern’s reign as South Florida’s foreclosure king is coming to a rapid end. His Plantation law firm will shut down its foreclosure practice by March 31, according to a regulatory filing by DJSP Enterprises, the publicly traded company spun off from the law firm. In a separate letter to the state Agency for Workforce Innovation, DJSP said it could be forced to shut down within two months because of the “sudden loss of demand” for its services. The Stern firm was DJSP’s biggest customer. Stern’s firm and DJSP processed thousand of foreclosures following the collapse of the residential melanie Bell real estate market. But the Fort Lauderdale attorney Dawn Rapoport and Boca Raton attorney Chandra Parker Doucette are two operations — which representing former Stern employees in a class action. employed 1,200 lawyers and support staff as recently as August 2010 — have ment agencies, including as president and chief exStern estimates his law shed most of the workers the Florida attorney gen- ecutive to focus on the law firm still needs to withfollowing allegations they eral. firm. draw from about 100,000 and other foreclosure proSince September, mort“We are still working files statewide, he said in cessors across the nation gage giants Fannie Mae, right now, but we are not a March 4 letter to Circuit helped lenders take back Freddie Mac and several making any further com- Court Judge Lee Haworth homes using faulty docu- large lenders have stopped ments,” said DJSP spokes- in Sarasota. Stern said ments. sending the firm and DJSP man Chris Simmons. most of the lenders took The Stern law firm is foreclosure cases. Attorney Jeffrey Tew, see stern, one of several under inStern ran HEAD HERE DJSP until who represents David on following page vestigation by law enforce- October, when he resigned Stern, declined comment.
This article is reprinted with permission from the Daily Business Review. © 2011
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STERN: Lawyer put several of his multimillion-dollar homes up for sale
possession of their files in November. Many still have to inform courts who will replace Stern, he said. Stern said his attorneys are attempting to attend hearings in cases where no replacement has been named but that he and the firm no longer have the “financial and personal resources to continue to file the motions to withdraw in the tens of thousands of cases that we still remain as counsel of record.” “Therefore, it is with great regret that we will be ceasing the servicing of clients,” the letter said. Some former firm and DJSP employees are suing the firm, DJSP and Stern personally, claiming they were terminated without proper notice in violation of federal labor laws. Fort Lauderdale attorney Dawn Rapoport, who represents some of Stern’s former employees, said she met with DJSP representatives on Feb. 9 to discuss the case and was not told of the company’s doubtful future. For that reason, she agreed to a standard scheduling conference. Last week, she obtained a Feb. 15 letter in which DJSP warned the state’s Agency for Workforce Innovation that it planned to lay off 96 employees to reduce its workforce to 54. It also said “the company may cease to operate” within two months. “They had given no indication of that whatsoever,” said Rapoport, of the Rapoport Law Group. “We were misled about the defendant’s position and where they were going to be.” Rapoport fears there will be nothing to go after if DJSP closes down and Stern begins selling his assets. Stern recently put up for sale a 2-acre waterfront parcel on Hillsboro Mile in Hillsboro Beach for $9.95 million. He also is trying to sell a six-bedroom home in Colorado for $6.9 million. Craig Erickson, a yacht broker with Camper & Nicholsons, denied recent reports that Stern’s 40-foot yacht, named Misunderstood, is on the market for $18 million. “The liquidation of many of his personal assets will affect our clients’ rights,” Rapoport said. “The case has been moving on a fast pace as it is, but given their major announcement four days after we filed the plan, we feel it should be fast-tracked.” gate foreclosure firms over questionable documents. Her effort paid off last year, when the Florida attorney general launched an investigation of the Stern firm and other foreclosure operations. The Florida Bar is also investigating Stern’s law practice. “It gives some hope that the powerful, the wealthy and the well-placed in the entire mortgage/Wall Street conglomerate … are not too big to fail,” said Epstein, who runs ForeclosureHamlet.org. “History will show that [Stern’s]foreclosure practices were more than just insufficient and deficient documents,” Epstein said Epstein questions why The Florida Bar has not taken action against Stern. Florida Bar spokeswoman Francine Walker said it was not clear when the investigation would be concluded. “Think of us as a prosecutor. We need to make sure that we have a case,” she said.
Paola Iuspa-Abbott can be reached at (305) 347-6657.
proposed class action Rapoport, Boca Raton attorney Chandra Parker Doucette, and Gary Michael Farmer and Steven Jaffe, with Farmer Jaffe Weissing Edwards Fistos & Lehrman in Fort Lauderdale, represent four former Stern employees in the proposed class action. Rapoport said more than 700 former Stern employees could join the suit. Rapoport wants U.S. District Judge Ursula Ungaro to expedite discovery in the suit because
Happy activist Foreclosure activist Lisa Epstein is encouraged by the news from DJSP. Two years ago, Epstein and a group of distressed homeowners spearheaded an effort to get law enforcement agencies to investi-
This article is reprinted with permission from the Daily Business Review. © 2010