Lawyer Misconduct Rises With Foreclosure Record

USA - Canada next?
Hundreds of foreclosure attorneys investigated in California for duping desperate homeowners


Warren Jacobs was desperate when he received a "robo-call" promising to help him stave off foreclosure of his home near Dallas.

The father of six had lost his construction job, lacked health insurance and couldn't pay bills for his 17-year-old daughter's cancer treatment, let alone his mortgage.

So on Jan. 21, he dialed the return number and was connected to the United Law Group. Minutes later Jacobs agreed to scrape together $2,000 to pay the Irvine, Calif. law firm.

He unwittingly became one of the many thousands of homeowners authorities allege have been taken in by unscrupulous or incompetent loan modification attorneys who rushed into a burgeoning legal niche: helping financially struggling homeowners re-negotiate their mortgages.

Ripoffs of homeowners have become so commonplace that state bar associations from Florida to Arizona are warning their members of the many ethical pitfalls awaiting those who exploit the mortgage crisis. The California State Bar launched a task force a year ago to examine thousands of homeowner complaints about foreclosure lawyers.

Currently, the California Bar is investigating more than 400 attorneys who are suspected of ripping off thousands of homeowners across the country.

The organization that licenses and disciplines California's more than 250,000 lawyers already has suspended or obtained the resignations of 15 lawyers while disciplinary charges are pending.

The first to be charged was Sean Rutledge, founder of the law firm that purported to represent Jacobs and 13 other homeowners.

Just months after securing a law license, Rutledge had been flying high. His United Law Group ramped up to several lawyers and opened offices in other states.

Today his license is suspended, his nascent career lies in tatters and he is under investigation in California and Ohio for taking fees of up to $3,500 from desperate homeowners then allegedly doing little — or nothing — to save their homes.

Could this Happen in Canada?