Chain of Title

by David Dayen

  Tompkins, another recent Obama appointee, came with the FBI agent in charge of the region; they were on the same page. About twenty civil and criminal staffers attended the meeting. Tompkins agreed to investigate. A relieved Lynn got on her return flight, wanting only to go home and relax. Just before the plane took off, she reached forward for the in-flight magazine. The stranger sitting next to her, a thin, unassuming-looking man wearing a dark shirt, dark sport jacket, and glasses, leaned forward at the same time. He turned to face Lynn.

  “You know what happens to people who sue banks?”

  “What?”

  “They end up dead.”

  If it were a movie, the music would swell, the camera would dolly in to capture Lynn’s terror, and the screen would cut to black. But because it was really happening, Lynn had to sit there for two hours next to the man who’d just threatened her life, while he casually flipped through magazines and ordered a drink. Cloak-and-dagger films don’t teach you how to react for those two hours. Should I call the flight attendant? Lynn thought. What would I say? That this man threatened to kill me if I sued a bank? That was the other strange thing. Nobody at this point really knew Lynn had sued a bank. The class action was only live for a few days before being withdrawn.

  Lynn opted to just gaze straight ahead catatonically, playing the words over and over in her head. She didn’t move an inch the whole way to Palm Beach.

  At the March happy hour, Michael told Lisa they needed to go to Miami that weekend. The Florida attorney general’s office and something called the Interagency Mortgage Task Force scheduled an event called “The Housing Crisis: Who to Trust and Where to Turn.” A dozen state and local agencies and the federal Department of Housing and Urban Development planned to take part, soliciting information from the public about “mortgage fraud.”

  Mortgage fraud meant something very particular to law enforcement: individual borrowers lying on their applications to acquire home loans, or scam artists ripping off homeowners with false promises about mortgage modifications. Nobody at this forum would expect allegations about phony documents and broken chains of title. But Lisa agreed they had to attend. She remembered the missed opportunity after she spoke to the lawyer from the Florida attorney general’s office for ninety minutes but never heard back. This event offered a chance for a reboot.

  There was one problem: the seminar fell on a Saturday. Attending would break Michael’s vow to reserve weekends for his wife, Jennifer, and daughter, Nicole. Jennifer agreed that JPMorgan Chase tried to steal their house, but she didn’t see why Michael had to investigate anyone else’s foreclosure, especially if it took him away from his family.

  For months Michael held to the separation between weekday and weekend, a wall between the online and offline worlds. Michael would log off 4closureFraud on Fridays and not return until Monday. Lisa wouldn’t be able to contact him. But Michael told his wife he was making an exception, just this once. The whole point of his preoccupation with foreclosure fraud was to hand it off to law enforcement, and this presented an opportunity. Jennifer didn’t like it. When Michael walked out the door that Saturday morning in Port St. Lucie, he said in parting, “I’m doing this for us.” She slammed the door behind him.

  At Lisa’s co-op, Michael had to watch her put together dozens of printouts to hand to officials at the forum. “Let’s go already,” Michael said. “We’re like an hour late!” Lisa hurried up and finally made it into the car. They got a mile down I-95 before Lisa realized that she brought none of the printouts with her and they had to go back. Michael could only shake his head.

  They drove seventy-five miles from West Palm Beach to Florida International University, a pleasant, palm-tree-lined campus that looked more like a corporate office park than a college. One massive building abutted a man-made lake, the white façade reflected in the water. Inside, in a large hall, various agencies set up booths where individuals could present complaints or ask questions. The seminar was open to the public, but there was also a closed session with the Florida Department of Law Enforcement, the state Office of Financial Regulation, and the Miami-Dade Police Department. Lisa and Michael walked into the closed session, acting like they belonged there, and nobody stopped them. But as they suspected, the agencies were prepared to hear about mortgage fraud, these small-time scams. Banks trying to prove ownership of a loan by forging a document was a foreign concept. As Michael put it, mortgage fraud happens when you defraud a bank; foreclosure fraud is when the bank defrauds you.

  Finally they found the attorney general’s table, manned by a short blond woman with glasses. Lisa approached angrily. “I called in a complaint a couple months ago. I had a ninety-minute conversation with someone in your office, and I was supposed to give a video deposition, but nobody followed up. I really need to speak to June Clarkson.”

  The woman looked at Lisa and said, “I’m June Clarkson. I’m happy to hear from you.”

  When June spoke with Lisa in October, she’d just started working at the Economic Crimes division. She didn’t even have a phone extension. None of the secretaries knew who June was when Lisa called in, and so they couldn’t figure out where to transfer the call. It was just a mix-up.

  The Economic Crimes division had been early in identifying trouble at Countrywide, the subprime giant, and played a role in the multistate enforcement order against the lender. It investigated a wide range of consumer fraud issues, from puppy mills to pill mills and even foreclosure mill law firms. Complaints from individuals got reviewed at the main attorney general’s office in Tallahassee, then referred back to the regional offices. Republican Bill McCollum, a twenty-year congressman and a House manager in the Bill Clinton impeachment trial, became Florida’s attorney general in 2006, with clear designs on the governor’s mansion. It didn’t hurt someone running for governor to build a record of protecting consumers. So there was an opening for prosecutors to get aggressive.

  June told Lisa and Michael to drop by the Fort Lauderdale office the following week and to bring in all the evidence they had gathered. Lisa said, “You don’t get it. There are hundreds of thousands of documents across the state.”

  “Just bring in everything,” June replied.

  Before Lisa and Michael went to Fort Lauderdale, they checked with Tom Ice about the status of the investigation into Erin Cullaro, the Economic Crimes division lawyer who moonlighted notarizing Florida Default Law Group affidavits. Ice Legal discovered that Erin Cullaro used to be the expert witness on these affidavits, with her sister-in-law Lisa Cullaro serving as the notary. When Erin left for the attorney general’s office, they switched places. Tom Ice obtained Erin’s “Request for Approval of Dual Employment Outside State Government,” filled out months after she entered public service. Erin wrote that she planned to “notarize documents,” without naming the employer, Florida Default Law Group. She also stipulated that the dual employment would “not create a conflict of interest nor the appearance of impropriety,” and that it would not take up too much time. According to the request, she would only notarize documents from 7:00 to 7:15 p.m. on Mondays, Wednesdays, and Fridays.

  Despite such a cramped work schedule, Erin Cullaro managed to notarize 150,000 FDLG documents in just over three years. She received a $2 fee per notarized document, putting her annual compensation from FDLG close to six figures for what she alleged was forty-five minutes of work a week.

  Tom and Ariane cross-checked the affidavit dates with a calendar, finding that Erin notarized documents on days other than Monday, Wednesday, or Friday. She also signed on days when travel records indicated that she was outside the state, meaning she couldn’t have possibly witnessed the document preparation. Ice Legal also found Erin’s signature in several different handwriting styles, suggesting that she didn’t sign those documents herself but just lent her name to the process, allowing her and her sister-in-law to split the proceeds. This was exactly the conduct the Economic Crimes division should be investigating, and one of its own staff was e
ngaged in it.

  Tom hadn’t yet deposed Erin and Lisa, as FDLG filed a motion for a protective order to stop any testimony. Foreclosure defense attorney Matt Weidner also had a case going with the Cullaros, and when he tried to take their depositions, their attorneys released an old document that they claimed included Matt’s forged signature. A contractor installing a driveway for Matt signed a permit himself when Matt wasn’t around. The difference was that the contractor never filed the document with a court, it had nothing to do with the foreclosure case Matt was defending, and they found one signature of Matt’s versus 150,000 from the Cullaros. With typical understatement, Matt raged about secret-police-style blackmail. Whatever the analogy, it showed that the Cullaros were willing to do anything to cover up their actions.

  The week of Lisa and Michael’s meeting, a judge ruled that Ice Legal’s deposition of the Cullaros could go forward; FDLG doggedly filed a motion to reconsider. They also withdrew Cullaro affidavits statewide, including in Lisa’s case. FDLG wanted to pretend 150,000 Cullaro affidavits never existed; like the familiar effort by weekend hackers on Florida golf courses, they sought a mulligan.

  After hearing all this, Lisa decided she would have to tell June Clarkson about her colleague’s extracurricular activities. This made Michael highly uncomfortable. “We’re going to go into their offices and tell them that they’re a bunch of frauds?” But Lisa was adamant. June told her to bring everything, after all.

  The reddish brown 110 Tower in downtown Fort Lauderdale, near the Broward County courthouse and the local jail, took up a city block. The Economic Crimes division of the Office of the Attorney General was located on the ninth floor. A security detail led Michael and Lisa to the offices. They had to go up in one elevator, change cars, and then go back down to reach the ninth floor. Security brought them into a conference room obscured by tinted glass. They had to turn off their cell phones, and they couldn’t leave the room without an escort, not even for the bathroom. Lisa asked for a glass of water; security said no. Michael wondered whether this was a meeting or an interrogation.

  After a few minutes June walked in with a colleague, Theresa Edwards, a taller woman with red hair and piercing blue eyes. June said hello curtly and sat down. Their demeanor made it clear this was a business meeting, not a social call.

  “Before I start,” Lisa blurted out, “I’m just a little concerned about your colleague Erin Cullaro.”

  “We do have a colleague named Erin Cullaro. She works in the Orlando division,” Theresa said. “What’s your concern?”

  Lisa slid a set of documents across the conference table. “Here are my papers, with my name on them,” Lisa said, “and here’s her signature on my papers. Now, I heard you’re investigating this foreclosure mill, Florida Default Law Group, and Erin Cullaro is signing documents and foreclosure papers for the same firm.”

  June scowled. “This can’t be the same person,” she said. She and Theresa told Lisa and Michael to wait there, grabbing the documents and storming out.

  Lisa turned white. They could not contact anyone outside the building. They could not leave the conference room. These state prosecutors had her foreclosure documents. And they looked angry. Michael, who earlier said he was attending this meeting under protest, gave Lisa an I-told-you-so look.

  “What?” Lisa said in response. Did Michael really think these prosecutors would arrest them for telling the truth? Then again, it was her word against a colleague’s. Anything was possible.

  With the situation heightening his existing paranoia, Michael conjured visions of secret jail cells in the basement. The day before, Michael texted friends, telling them where they were headed. “If you don’t hear from me, you know what to do,” he told them. He even set up his friend Deirdre with bail money. Michael pulled out his phone and turned it on, desperate to reach the outside world, but he couldn’t get any service. Lisa’s phone also had no bars. Michael pointed to a computer in one corner of the room, but neither of them wanted to appropriate government equipment for their own purposes.

  “How are we going to get out of here?” Michael asked. Lisa began to tremble.

  They could do nothing but sit. And wait. And wait. It seemed like hours went by. Nobody checked on them; nobody came to the door.

  Finally, after what was in fact only thirty minutes, June and Theresa returned, their expressions changed from fury to something more like embarrassment. June spoke first. “We want to apologize. This is the Erin that we work with. We’ll be looking into this.”

  That set the tone for the meeting. Lisa and Michael showed them the BOGUS documents, the impossible notarizations, the faulty endorsed notes. They pulled out a new assignment Lynn had written about, where DocX forgot to change the effective date, so it read 9/9/9999 (meaning the homeowner didn’t have to worry about foreclosure for around eight thousand years). They traced these bad documents back to specific third-party processors and foreclosure mills, and provided examples of fellow Floridians who were kicked out of their homes using this questionable evidence. After months of practice, Lisa and Michael crafted a persuasive case that banks had botched the ownership records on an untold number of properties and, instead of fixing their mistakes, decided to fudge it.

  June Clarkson and Theresa Edwards had to acknowledge how plausible it sounded. These were official documents submitted to state courts and recording offices. And the Erin Cullaro situation enabled Lisa and Michael to earn their trust. They all exchanged information and agreed to stay in touch.

  Immediately after the meeting, June and Theresa told their supervisor, Bob Julian, about Erin Cullaro’s extracurricular activities with Florida Default Law Group. They discovered what Michael and Lisa already knew: Erin had special dispensation to act as a notary on certain days and certain hours of the week. But Lisa and Michael told them how Ice Legal determined that Erin couldn’t have signed all the notarizations on those dates.

  On March 26 Matt Weidner couldn’t wait any longer. Fuming about the Cullaros’ sleazy effort to muzzle him, he posted one of Ice Legal’s court memos, showing Erin Cullaro’s position with the attorney general’s office and her array of signatures. Michael had been holding back on this for months, but after Weidner’s release he ran with it, too. Michael added a screenshot showing that Erin Cullaro, who was supposed to be an independent “expert” for Florida Default Law Group, was actually their lead attorney before changing jobs. “The best way to stop a criminal investigation is to become one of the investigators,” Michael wrote.

  In their bid to avoid depositions, Erin and Lisa Cullaro promised to never again sign affidavits for Florida Default Law Group. But a week after everything went public, Michael found an FDLG affidavit for reasonable attorney’s fees signed by John Cullaro. Apparently he replaced his wife as FDLG’s expert witness. Could the employment pool in that part of Florida really be so thin that it narrowed down to one family? Meanwhile, Lisa subpoenaed the Cullaros for testimony in her foreclosure case, prompting telephoned threats from John, who was also his wife’s lawyer. “Let the judge decide,” Lisa yelled back, and hung up the phone.

  June and Theresa got another lead when the FDIC’s Sheila Bair forwarded Lynn Szymoniak’s letter about foreclosure fraud to them. Lynn came to Fort Lauderdale for a meeting with a binder of examples from DocX and Lender Processing Services, gift-wrapping the entire scheme for the prosecutors. June and Theresa were initially skeptical of an industrywide conspiracy, but it was hard to retain such doubt amid the evidence. They asked Lynn a familiar prosecutor’s question: what’s the worst thing someone will say about you? Lynn replied that she had children out of wedlock. Theresa cracked up. “So did I,” she said.

  On April 29, attention-hungry attorney general Bill McCollum announced that his office was investigating FDLG and Lender Processing Services/DocX, which was unusual because he hadn’t yet filed charges. The release noted that the civil investigation concerned “fabricating and/or presenting false and misleading documents in foreclosure
cases.” The Economic Crimes division in Fort Lauderdale, aka June and Theresa, would handle the case. The attorney general also opened an inspector general investigation into Cullaro’s activities with FDLG.

  It would take more than a year before Cullaro was fired. But after having their pleas for support met with indifference, skepticism, or outright laughter, Lisa and Michael finally had some positive reinforcement. This was a crack in the foundation. And they wanted to ensure that crack would grow.

  14

  THE RALLY IN TALLY

  February 24, 2010

  At a local costume shop on Okeechobee Road, Lisa Epstein helped Michael Redman zipper himself into a plush pig outfit, complete with anime-style large eyes and a cartoonish smile. Michael looked like the mascot for a local sports franchise (“Ladies and gentlemen, here are your West Palm Beach Swine!”). Lisa rummaged through the aisles, finding a tuxedo with glittery lapels, dollar-sign earrings, white gloves, a top hat and cane, and a bushy moustache. She was a monocle away from being the Monopoly man.

  The costume shop clerk, who rarely saw customers outside of Halloween, asked, “What are you guys doing this for?”

  “You wouldn’t believe it if we told you,” Lisa answered.

  The clerk hesitated for a moment. “Oh, wife swapping?”

  “What? No!”

  A few days later Michael and Lisa were heading to the massive Palm Beach County Convention Center, which they had been scoping out for two days. For a few years the Neighborhood Assistance Corporation of America (NACA) had been holding multiday Save the Dream events all over the country, for tens of thousands of homeowners. NACA rented out large arenas and brought in mortgage servicers, encouraging them to negotiate one-on-one workouts on the spot, into NACA-approved loan modifications. They operated through a combination of radical activism and pragmatic partnerships with the banks.