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Foreclosure king 'created chaos on the courts' and should be disbarred, referee says

A Florida lawyer once dubbed the “foreclosure king” should be disbarred for failing to supervise law firm personnel who mishandled foreclosures and filed improperly notarized paperwork, a disciplinary referee has concluded.

The lawyer, David Stern, closed his firm in 2011 amid lost work caused by robosigning allegations, notifying judges by letter that he wouldn’t be able to do further work on some 100,000 pending foreclosures, according to prior news coverage.

“This case aptly illustrates the manner in which one attorney, David Stern, either in his capacity as the sole managing partner of his firm or in his individual capacity, created chaos on the courts of Florida, prejudicing the whole system,” referee Nancy Perez wrote in her report. The Daily Business Review covered her recommendation.

The “root cause” of the problems, Perez wrote, was the excessive volume of files taken in by Stern’s firm. At the apex in 2008, attorneys in the firm each handled an average of more than 1,600 case files. Most of the associates were newly admitted lawyers who would have been unable to handle the “tsunami of work” even if they had received proper training, Perez said. As a result, they missed court appearances and mishandled cases.

Stern’s goal, Perez said, was to increase business and firm income, aiding the sale of his back-office document-processing operations, which netted him $58 million. He told one employee that the sale was partly contingent on the volume of files processed by the firm, Perez said. He did not properly supervise lawyers and nonlawyers, she said, who in some cases filed forged and false affidavits that were improperly notarized by firm personnel.

Stern’s “failure to exercise care resulted in massive injury to the system,” Perez wrote. “The incidents were not isolated, but rather a representation of the culture of the firm, as to the low level of competence and ethics. He is the lawyer. It was his firm. Mr. Stern is responsible.”

Perez also criticized Stern for maintaining his firm did not have the financial ability to properly withdraw from the 100,000 pending cases. His net worth revealed his own financial resources were sufficient. “David Stern and the firm are one entity,” she wrote. “His statement was a misrepresentation.”

Perez said Stern had not shown remorse for his actions and blamed others for the problems. “He has taken no responsibility,” she said. “The mistake or difficulties are the actions of others.”

Prior coverage:

ABAJournal.com: “Former foreclosure titan David Stern faces bar complaint”