by David Dayen
“You can find them,” Dick replied.
Ken Suggs immediately raised several issues. Under the Fair Debt Collection Practices Act (FDCPA), damages were limited to $1,000 per plaintiff. You would need a massive amount of plaintiffs to justify the up-front cost, which he put at $500,000. Attorney’s fees were also limited under the FDCPA. And a case filed under the federal Racketeer Influenced and Corrupt Organizations (RICO) Act, which could implicate Deutsche Bank in DocX’s activities the way a mob boss is implicated in the work of their hit-men, didn’t apply where they lived, in the Eleventh Circuit, because case law made it impossible to get a RICO class certified.
Somehow Lynn convinced Harpootlian and Suggs to fund the case anyway, with the hope of opening the class nationally down the road. She wanted to be first to file so they wouldn’t get edged out if other cases were consolidated. Harpootlian placed newspaper ads in hard-hit states, seeking people injured by foreclosure. They got a stream of replies, which Lynn answered personally. The stories were miserable, tales of people facing evictions with nowhere to go, people convinced of their failures as human beings. Lynn would tell them they were worth more than their credit scores. Not every homeowner had DocX documents, but Lynn knew that didn’t matter; she typically found the same fabrications, the same forgeries. She sent two sets of reports on her findings: one to her class action lawyers on the civil side, and one to the U.S. attorney in Jacksonville on the criminal side.
One discovery stayed in Lynn’s head, like an earworm of a song you can’t drum out. She was trying to search public records in Nassau County, New York, where a state judge had just issued a ruling favorable to homeowners. But she ended up instead at the site for Nassau County, Florida, and it led her serendipitously to a remarkable mortgage assignment. The opening sentence contained the standard boilerplate, except for one piece near the end:
American Home Mortgage Acceptance, whose address is 538 Broadhollow Road, Melville, New York, does by these presents hereby grant, bargain, assign, transfer, convey, set over and deliver unto BOGUS ASSIGNEE FOR INTERVENING AS[SIGN]M[EN]TS, whose address is XXXXXXXXXXXXX, the following described mortgage . . .
The property address, for a home in Fernandina Beach, Florida, was on the document. So was the name of the original borrower (Ann Patton), the loan amount ($150,430), and the assignment date (October 31, 2008). But instead of the company receiving the mortgage in the transfer, DocX recorded “BOGUS ASSIGNEE FOR INTERVENING ASMTS.” Linda Green signed this notarized document as the vice president of American Home Mortgage Acceptance, but transferred it to a bogus company. Literally.
Since DocX only created mortgage assignments so companies could prove standing in foreclosure cases, eventually this document, BOGUS ASSIGNEE and all, would get filed with the clerk of courts in Nassau County, Florida, and go into a courtroom as evidence. It was obviously a placeholder document DocX never changed by filling in the name of the actual company involved in the transfer. Whoever created the template for mortgage assignments at DocX apparently designed a subtle commentary about the company’s production of bogus documents for a living. That person probably never expected anyone on the outside to see this little joke.
On February 8, the day before the happy hour, Lisa Epstein found her court reporter in the hallway outside courtroom 4A. Lisa was a bundle of nervous energy for her first-ever appearance in front of a judge; her personal foreclosure case had gone a year without a trial date. Unfortunately, she didn’t get a chance that day, either. Judge Sasser never called the hearing, as the other cases went long. The judge rescheduled Lisa for Friday. Lisa had to give the court reporter $100—they get paid whether they work or not—and make plans to come back in a few days. That meant more money for the court reporter, more money for Jenna’s babysitter, and three more days of waiting.
The next evening, on a clear, cool Tuesday, Lynn Szymoniak parked a block away from E. R. Bradley’s Saloon. She wanted to get there early and scope out homeowners as they arrived; she needed more class members for the lawsuit, and this would be a target-rich environment. After briefly greeting Lisa and Michael, Lynn began to place poster boards against windows and stools all around Bradley’s, like a litigator prepping the courtroom for a big case. Michael excused himself from Lisa. He wanted to size up the evidence.
The poster boards contained blown-up mortgage assignments and other documents. Michael scanned them one by one. The different renderings of Linda Green’s signature made him chuckle. But he stared at the BOGUS ASSIGNEE document for a long time.
Nye Lavalle walked in, wearing a blue blazer with a large crest on the front pocket. Some other lawyers and homeowners congregated, and another guest speaker named Lane Houk, a former employee of several large mortgage banks and an expert in securitization, began his presentation.
Michael approached Lisa and Lynn, who were chatting, and pulled Lisa aside. “You’ve been talking to this lady, right? How does she sound?”
Lisa said, “Fine, I guess. Why?”
“I think she’s a fucking kook.”
Michael was always cautious of scam artists, tinfoil hat types, the kind of people who sometimes flitter on the edges of social movements. And he didn’t put it past the banks to use a mole to discredit them. He brought Lisa over to the BOGUS ASSIGNEE document. “This lady’s crazy. There’s no way this is a real document.” While Michael had a low opinion of the mortgage industry, the idea that they would be this stupid was quite a stretch. “Bogus assignee? Come on, man!”
While Lane Houk wrapped up his talk, Lynn struck up a conversation with Nye. “What do you think happened to the original notes and the as signments?” Nye asked. Lynn said she didn’t know, and Nye pitched a theory about a secret warehouse in Tijuana with trucks loading up documents. Lynn just smiled.
When Michael interrupted the conversation, Lynn figured her turn was up. “Where do you want me to stand?” she asked.
“That assignment over there,” Michael said, pointing to the BOGUS ASSIGNEE document. “Where did you get it?”
Lynn recognized Michael’s tone; she’d heard it before, from her lawyer, her children, and virtually everyone else inclined to dismiss her claims. “Oh, the bogus one. Nassau County. You can look it up yourself.”
“Is there a book and page number?”
“I think so.”
They walked over, and the top of the document read “Book 1592, Page 444.” Michael had his laptop with him; it was that kind of happy hour. So he logged on, went to the Nassau County clerk’s website, and plugged in the book and page number. Sure enough, the same assignment came up on the site. “Holy shit, this is real!”
Not only did DocX file the mortgage assignment to BOGUS ASSIGNEE, but the clerk of courts even entered the grantee as “BOGUS ASMTS.” In other words, someone in the office read that document, saw it was made out to BOGUS ASSIGNEE, and, instead of raising questions, typed it into the system that way. Not only that, but the docket showed that Ann Patton, the homeowner, lost her home to repossession. Given Florida law, that meant there had to have been a trial, or at least a hearing, where a judge, sworn to uphold the law, issued a final judgment for foreclosure, even though the assignment dictated that the beneficiary of the home would be a company called BOGUS ASSIGNEE.
Michael went to the front of the room and quieted everyone down. “Thanks for coming,” he said. “I want to introduce you to someone. When she walked in the room I thought she was nuts, but now I think we actually have a lot to learn from her. Here’s Lynn Szymoniak.”
Lynn delivered her presentation, giving the short version of her document discovery—she had repeated it so much, she could tailor it like a political stump speech. Lynn stressed that she needed plaintiffs who could show injury from phony documents for her proposed class action suit. Lynn referred to the poster boards arrayed around the room, including the BOGUS ASSIGNEE document. The crowd buzzed at that one. The whole speech didn’t last much longer than five minutes, but Lynn received a warm ovation.
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The happy hour congregants broke into small groups. Lisa wound up at a table with Lynn and a young man wearing a black baseball cap low on his head. His name was Damian Figueroa, and he drove up from Fort Lauderdale for the meeting. The David J. Stern foreclosure mill filed an imminent action on his home, where he held a permit to house his dogs and his pet monkey, Misha. He told Lisa and Lynn he had to avoid eviction, because no landlord would let him keep Misha.
Damian’s métier at the time was online video, and he’d produced a five-part series over the past week about his own mortgage, an IndyMac loan with assignments from Erica Johnson-Seck, she of the infamous deposition at 4closureFraud. The same officers were signing for both IndyMac and MERS in his case. Matt Weidner, the lawyer and blogger from St. Petersburg, picked up the videos for his site. Lynn had seen them, too, emailing Damian to praise his “excellent work.” Lynn left shortly after her presentation, but she exchanged business cards with Damian and some others, promising to follow up later about class action opportunities. The happy hour didn’t break up until late that night.
Michael fired up his laptop the second he got home. He grabbed a copy of the BOGUS ASSIGNEE document from the Nassau County public records. By seven o’clock the next morning, he published it at 4closureFraud. “Looks like DocX’s ‘art department’ forgot to change the wording on their assignment of mortgage template before they filed this one.”
At four o’clock that afternoon, Michael saw a comment on the post from a familiar name, DinSFLA. “Wait . . . there is more. INCREDIBLE,” DinSFLA wrote, with a link to a YouTube video. DinSFLA was the online nom de plume of Damian Figueroa. Like Michael, he couldn’t stop thinking about the BOGUS ASSIGNEE document from the previous night’s happy hour. So he ran a search in his home county, Broward, and found another one.
“I am going to show you something that is going to make you extremely mad,” Damian’s video began. He stuck the original BOGUS ASSIGNEE document next to a new mortgage assignment, also created by DocX, for a home in Pembroke Pines, Florida. It used the same language as the original document: “hereby grant, bargain, assign, transfer, convey, set over and deliver unto BOGUS ASSIGNEE FOR INTERVENING ASMTS.” Damian also showed the book and page number, so anybody watching could call up the document themselves. Korell Harp, the jailed identity fraudster, was the vice president of the mortgage servicer, Qualified Financial, on this assignment. Damian finished the video by channeling the expected thoughts of the average viewer: “Seriously, this has got to be a joke.”
In Michael’s experience searching public records, as soon as you find two of anything, with a little persistence you can find thousands. So he started digging, and by the end of the day he tracked down seven more BOGUS ASSIGNEE documents. A couple of them added a new wrinkle: the company doing the transferring was also absent, replaced on the template with A BAD BENE, short for “a bad beneficiary.” The signers of the document were from the company transferring the mortgage (at least that was the theory), so right on the assignment, Korell Harp was listed as the vice president of A BAD BENE. The person who made the DocX templates had a wicked sense of humor.
Michael posted a new story with the headline “Bogus Assignee for Intervening Asmts All Over the Public Records!” He stressed that judges were allowing foreclosures to proceed based on obviously phony documents. Karl Denninger picked up the story.
Lisa and Michael talked all day about these assignments, which seemed so blatantly fraudulent that they couldn’t be ignored by the media. The more they could track down, the bigger they could build the story. So they brought in Damian and Lynn and decided to split up the country. For the next seventy-two hours the four researchers would divvy up every searchable public records database in America and look for BOGUS documents. Because they didn’t have the funds to pay search fees, this limited them to Arizona, California, Florida, Georgia, Kentucky, Illinois, Michigan, and Nevada. But that included all four of the “sand states,” those hit hardest by the housing bubble’s collapse. There would be hundreds of thousands, perhaps millions, of records to search. Lisa called the operation “Project BOGUS.”
Damian emailed Lisa that day: “Wowzers! That Linda Green has like 20 different signatures!” Lisa replied: “Only 20? Keep looking!”
That week felt like a dam bursting. Lynn brought the BOGUS assignment to the happy hour on Tuesday. More BOGUS documents were found on Wednesday. On Thursday, while Lisa, Michael, Lynn, and Damian searched for more, the Florida Supreme Court amended its rules of civil procedure. They accepted the recommendation of the foreclosure task force, endorsed in Lisa’s comment letter, to require plaintiffs to review and verify ownership of the note and the accuracy of all documents in their complaints prior to foreclosure. The court specifically established the amendment to “prevent the wasting of judicial resources” on lost note counts and lawsuits brought without standing to foreclose, and “to give trial courts greater authority to sanction plaintiffs who make false allegations.” The court also specifically acknowledged to Lisa that she made “well-reasoned arguments.”
That next day, Friday, was the rescheduled hearing for Lisa’s motion to dismiss for lack of prosecution. This time Judge Sasser called the hearing to order promptly at 11:05 a.m. Lisa approached the podium with butterflies in her stomach. But the adversary in the case, the David J. Stern law firm, did not even send a representative. Judge Sasser told Lisa she put a call in to Stern’s office, and after a short recess the judge decided to proceed without them.
Judge Sasser asked Lisa to state her name for the record. For months Lisa had watched this judge stand mute, while homeowners lost their homes to foreclosure, without ever casting a critical eye at the evidence. But her broad smile didn’t betray any frustration. “My name is Lisa Epstein, I am here as an interested person, not a party to the case.” The judge asked Lisa if she served the sixty-day notice for lack of prosecution, and Lisa replied that she sent the plaintiffs notice by fax and mail. After verifying that, Judge Sasser looked straight at Lisa and said, “I’ve read the entire court file, I’ve read your motion, and I’m going to grant your motion.”
Lisa went silent for a second. “Motion to dismiss granted?”
“Motion to dismiss granted.”
A tear started to form in Lisa’s eye. She could hear her heart beating. “Are you okay?” Judge Sasser asked. “Do you need some tissues, Ms. Epstein?”
“No, ma’am.”
The motion to dismiss was without prejudice, so U.S. Bank could always refile. But for the moment it actually worked. An “interested person” without legal training, Lisa got a foreclosure case kicked out of the Palm Beach County court system. Judge Sasser told Lisa she could have the lockbox taken off the door of the home. Tami and Vincent Savoia could move back in if they wanted.
Before going home, Lisa stopped off at a bar and had the most satisfying glass of wine of her life. When she finally got home, she scanned the one-page order granting the motion and posted it at Foreclosure Hamlet. The caption read, “Happy Valentines Day America! This is for you!”
By Sunday night, the volunteer research team—Lisa, Michael, Lynn, and Damian—downloaded thirty-six BOGUS ASSIGNEE documents, at least one in all eight states tested. None of them believed these were the only BOGUS documents out there; they came from just a few days of limited searches. “The Whole Country Is Bogus,” read the headline at 4closureFraud Monday morning. “At first I thought it was some kind of joke,” Michael wrote. “Well it is, and the joke is on all of us. Doesn’t anyone look at these papers before filing them? Do the courts even care they are allowing people’s homes to be taken away by some BOGUS document?”
Lisa punctuated her update on Project BOGUS at Foreclosure Hamlet by quoting the English dramatist John Webster:
Let guilty men remember, their black deeds
Do lean on crutches made of slender reeds.
A week later, Tom Lyons of the Sarasota Herald-Tribune wrote about the BOGUS documents. And in April, acting
on a tip from Lynn, the Wall Street Journal ran a story about DocX and its parent company, Lender Processing Services. The paper published several examples of mortgage assignments “that incorrectly claimed an entity called ‘Bogus Assignee’ was the owner of the loan.” A spokeswoman for LPS reassured the reporters that the word “BOGUS” was merely used as a placeholder.
12
THE REVOLUTION WILL BE BLOGGED
February 2010
Matt Weidner, the young JEDTI warrior, sat in his office on the second floor of a historic building on Mirror Lake Drive in St. Petersburg, the light dancing on the lake in the warm sunshine. When not in court, Matt was usually in this office, blogging. His secretary buzzed that he had a call.
“Hey, I’ve been following your blog and I wanted to let you know what was going on,” the voice on the other end said.
“Who is this?”
“My name’s Michael Redman. Do you know the FBI, CIA, and Department of Justice have been coming to your site?”
Matt, who knew Michael’s name from 4closureFraud, was as used to receiving strange phone calls as any lawyer. But this seemed a little outrageous. Nevertheless, when he installed Michael’s tracking software and checked his site’s visitors, he saw the same IP addresses: FBI, DoJ, even state agencies and district courts, from which people logged onto the site at crazy hours—3:00 a.m., 4:00 a.m.
Michael tracked visitors with a program called Stat Counter, and it may have been his favorite part of running his own site. It monitored activity in real time, so he could see individuals come in and out, click on different links, and so on. This was Michael in his element: in the shadows, watching those who watched him. In one week in February 2010, 4closureFraud logged visits from Georgetown University, MERS, Lender Processing Services (the parent company of DocX), the county of Los Angeles, and, oddly, a Dairy Queen. On February 22, someone from DocX popped around the site for four hours, visiting dozens of different pages. Practically every mortgage servicer, foreclosure mill law firm, major bank, regulator, and law enforcement office spent some time on Michael’s site. And he watched them all.