Conn. AG Slams State Marshals For Double Billing When Process Serving In Foreclosures; Practice Coincided With Possible Attorney Kickback Arrangement

In Hartford, Connecticut, The Hartford Courant reports:

• Attorney General Richard Blumenthal, in a sweeping action against some of the highest-earning state marshals, has concluded that a handful of marshals broke the law when they double-billed for the delivery of papers in foreclosure actions. In a 21-page legal opinion, Blumenthal called on the State Marshal Commission to seek restitution from marshals who overcharged, and he said that his investigation was continuing and could lead to legal action. A Courant story last month reported that marshals collected as much as $1 million in unnecessary fees in foreclosure cases, before the practice was halted this summer. "Piling unlawful fees on property owners facing foreclosure adds both insult and injury," Blumenthal said. "There is a clear and unequivocal message going forward that multiple fees for a single action are illegal and improper and cannot be charged."

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• The double-billing began in early 2007, with a small group of marshals who regularly worked for the state's two large foreclosure law firms, Hunt Leibert and Bendett & McHugh. The marshals included a three-page lien document known as a lis pendens each time they delivered legal papers in a foreclosure suit, but treated the delivery of that document as an entirely separate action, charging a second service fee and even double-charging for mileage. The practice typically added $30 to $150 to each service. After the fee increases, the firms filed about 30,000 foreclosure suits before abandoning the practice following reports in The Courant and questions from Blumenthal's office. Blumenthal said that not only were the extra fees excessive, but that state law does not even require that the document be served on defendants in a foreclosure suit.

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• The extra fees in foreclosure cases coincided with an attempt by principals of the two large law firms to set up a separate company, called Connecticut Service Network, that would collect money every time a marshal served a foreclosure suit.(1) In 2007, Blumenthal declared that arrangement illegal. Neither the firms nor the marshals have said why they began charging extra for delivering the lis pendens.

For thr story, see Blumenthal: Some State Marshals Broke Law By Double-Billing.

From the Office of the Connecticut AG:

• Press release: Attorney General Finds Marshals Who Bill Extra For Certain Foreclosure Documents Violate State Law,
• Conn. AG's formal legal opinion to the Chairperson of the State Marshal Commission.

(1) In an earlier story (see Courant Probe: Marshals Charged Unnecessary Fees From 2007 Until Recently), The Hartford Courant reported:

• Principals of the state's two main foreclosure law firms — Hunt Leibert Jacobson and Reiner, Reiner — had quietly set up a private bookkeeping company and were asking marshals to pay money to the new business for every foreclosure suit they served. Marshals working for those firms stood to lose at least half a million dollars a year in payments to the new business, called Connecticut Service Network. But by the time the company started operating, the marshals were offsetting those costs with the extra fees they were charging, The Courant found. SewerServiceAlpha