Attorneys Begin Going Down In Ongoing California State Bar Loan Modification Probe; 700+ Investigations Active

The State Bar of California announced this week:

• The State Bar’s loan modification task force announced [Wednesday] that it obtained the resignations of three California attorneys as a result of misconduct related to their loan modification activities.(1) It also placed another attorney on inactive status, charging his work poses a threat to the public, and has undertaken similar efforts against two other lawyers.(2)

• In addition, James Parsa, a southern California lawyer who extensively advertises his loan modification work, resigned [Wednesday]. He faced interim suspension from practice as a result of a 2001 misdemeanor conviction for sex with a child under 18 that he never reported to the bar. Parsa, 44, has advertised heavily throughout California for the past several months, offering to help homeowners facing foreclosure. Although he provided evidence to the bar that he was in fact working on cases, an investigator uncovered two 2001 misdemeanor convictions for sex with an underage girl. The bar court ordered that Parsa be placed on interim suspension. His resignation will make the suspension moot.

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• Last month, it released the names of 16 attorneys it was investigating for possible misconduct related to loan modification.(3) Four of the six who resigned or face inactive enrollment were on that list.

For more, see Attorneys Resign Over Loan Modification Activities.

(1) The attorneys who resigned from the State Bar are:

• CAMERON EDWARDS, Alliance Law Center in San Diego, resigned Sept. 25,
• RONALD RODIS, of Rodis Law Group and America’s Law Group in Newport Beach, resigned Oct. 13 (Rodis Law Group and America’s Law Group were named in this Temporary Restraining Order With Asset Freeze in a separate legal action brought by the Federal Trade Commission),
• JEFFREY NEMEROFSKY, U.S. Advocacy Law Group and U.S. Financial Products, in Laguna Niguel, resigned Oct. 16.

(2) Those the bar is seeking to place on involuntary inactive status for posing “a substantial threat of harm to (their) clients or the public” under Business & Professions Code §6007(c) are:

• PAUL LUCAS, of Lucas Law Center in Aliso Viejo. The State Bar petitioned to put him on inactive status Sept. 21; Lucas did not reply to the petition and the State Bar Court has taken the matter under submission (Lucas, his firm, and others were named in this separate legal action brought by the Federal Trade Commission),
• SEAN RUTLEDGE, of United Law Group in Irvine, has a hearing Oct. 23; the bar filed its petition Sept. 22. The bar earlier charged him with seven counts of misconduct in handling a loan modification for a client who paid an advance $3,500 fee. Rutledge never took any action to negotiate with the client’s mortgage lender, the bar charges.

In addition, CHRISTOPHER L. DIENER, of Irvine, principal attorney for Home Relief Services LLC, was placed on inactive status Oct. 9, due to the State Bar Court judge's finding that he poses a substantial threat of harm to his clients and the public. Diener is also a target in a recent lawsuit brought by the California Attorney General in connection with his loan modification activities. See Questionable Short Sale Services Alleged By California AG In Recent Suit Against Group Accused Of Squeezing Homeowners For Upfront Fees For Loan Mods.

(3) According to their press release, The State Bar's 10-person loan modification task force has 738 active investigations underway. The task force was created in March after receiving thousands of calls from homeowners complaining that lawyers have done no work after taking fees purportedly to help avoid foreclosure. For those interested in The Bar's view on attorney participation in loan modifications, see ETHICS ALERT: Legal Services to Distressed Homeowners and Foreclosure Consultants on Loan Modifications.