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Law Enforcement Raids Law Firm Accused Of Scamming Desperate Homeowners

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FORECLOSURE
Protesters work on a prop in Freedom Plaza as they prepare for a rally against big banks and home foreclosures in Washington, DC, May 20, 2013. AFP PHOTO/JIM WATSON (Photo credit should read JIM WATSON/AFP/Getty Images) | JIM WATSON via Getty Images

It was a gut-level appeal to desperate people locked in a mortgage dispute with their bank.

For thousands of dollars upfront, plus an additional monthly fee, homeowners could piggyback onto one of more than a dozen lawsuits launched by the Hoffman Law Group, a Florida firm suing banks over alleged abuses. Loan reductions and cash compensation were all but assured, staff say they were told tell to homeowners, reading from a script the firm provided. Justice for bank "shenanigans" would be served.

But it wasn't long before some clients began seeking justice of a different sort: from the firm, which they claim bilked them out of money they could ill afford to pay, to fund cases that had no chance of success. On Wednesday, law enforcement officials went after the firm, raiding its Palm Beach office and freezing the assets of its name partner, Marc Hoffman, according to a report in the Palm Beach Post.

A cease-and-desist order taped by agents to the front window of the law office indicates that the raid was related to a legal action initiated by the Florida attorney general and the federal Consumer Financial Protection Bureau, according to the Palm Beach Post. The Post reported that the order names Hoffman and two of his business associates, Michael Harper and Benn Wilcox, as defendants.

The raid appears to represent a final shuttering of a firm that has increasingly attracted scrutiny from law enforcement officials and the press.

In June, an examination by The Huffington Post found that many of the cases claimed by the firm as evidence of its advocacy on behalf of homeowners had been withdrawn, or tossed out of court by irate judges who said they lacked the most basic elements of valid legal challenges. Many of the lawsuits, which named Bank of America, JPMorgan Chase and other major financial institutions, were essentially photocopies of each other, with just the names of the plaintiffs changed.

Former employees of the firm alleged to HuffPost that the entire operation was a scam, designed to reap large profits from desperate homeowners who could hardly afford the fees. Though clients were promised legal representation, the firm never investigated their claims or provided any meaningful legal assistance, employees alleged.

Last week, an Orlando TV station profiled a client of the firm who had paid thousands of dollars in fees, only for the firm to withdraw the case it had filed on her behalf without telling her. That decision to withdraw followed a judge's order that described the lawsuit as "totally unacceptable," according to the report.

On July 9, the Florida Bar Association sued the Hoffman firm, alleging that advertising leaflets mailed to potential clients were misleading. New Mexico's attorney general has ordered the firm to stop advertising in that state, and initiated an investigation into Michele Stephens, a former Hoffman group lawyer turned whistleblower.

Wednesday's raid, which suggests that charges are forthcoming, is the most serious action taken against the firm to date.

The Florida attorney general's office and the consumer bureau declined to comment on the raid. There is no record of the legal action in Miami district court, where according to a Palm Beach Post photo the cease-and-desist order was filed. It's not even clear what agency the law enforcement officials conducting the raid represented -- they declined to identify themselves to the Palm Beach Post reporter who was at the scene.

It's not clear how many people paid the firm for representation. Stephens told HuffPost that at one point, the firm represented 1,500 clients. She and Hoffman were the only licensed attorneys at the firm, she said.

Lawyer-directed scams make up an increasingly large share of mortgage complaints. Last year, nearly 60 percent of all complaint calls to the mortgage help "HOPE" hotline involved an allegation against a lawyer. The average loss claimed in schemes involving or directed by lawyers was $3,601 -- about $800 more than in other types of deceptions, according to an analysis by the nonprofit group the Lawyers’ Committee for Civil Rights Under Law.

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