January 10, 2014
On Tuesday, January 7, 2014, the Florida Supreme Court disbarred David J. Stern, the Florida attorney who built a career and amassed a fortune representing banks in foreclosures. There was no battle. Stern did not appeal a referee’s recommendation in October for disbarment. Stern was given 30 days to close his practice, but his firm was already shut down in 2011, after extensive publicity regarding the manufacturing of loan documents, shoddy and unethical practices.
Palm Beach County Circuit Court Judge Nancy Perez acted as the referee. In her recommendation, Judge Perez noted that Stern did not express any remorse and tried to blame his employees.
In 2010, Stern sold a portion of his enterprise, the non-law firm operations, for $58 million. Stern is required to pay $49,125 to the Florida Bar as reimbursement for the investigation. (Stern’s 17,000 square foot waterfront home is on the market at $32 million, so this fine is unlikely to cause him any financial distress.)
Stern’s firm represented foreclosing banks in over 200,000 cases across Florida. Cheryl Samons, Stern’s office manager, signed tens of thousands of mortgage assignments falsely stating that bank trustees had acquired mortgages on dates when no such transactions ever occurred, so that the assignments could be filed in court cases and official county records to expedite foreclosures. Samons signed documents as an officer of many banks, but most often as an officer of Mortgage Electronic Registration Systems, Inc. In thousands of cases, Samons signed as if she were a MERS officer to transfer loans from Countrywide Home Loans or GMAC Mortgage on dates when no such transfers ever really occurred. Fraudulent Affidavits of Non-Military Service were filed in cases so that banks could foreclose on active-duty military families, in violation of federal laws. Affidavits of service were also fraudulently filed and hundreds of dollars in phony service fees were tacked onto thousands of foreclosures. In several cases, where Samons shoddily forgot to sign, the blank line was “witnessed” and notarized. Documents were also back-dated when notarized.
Stern’s lawyers also relied heavily on loan documents prepared by document mills DocX and GMAC. When exposed robo-signers Jeffrey Stephan or Linda Green signed documents, these documents were most often sent to David Stern’s lawyers so that homeowners could be easily defeated in foreclosure cases.
No criminal charges have been filed against Stern, or those who employed him. Despite all the national mortgage settlements, Stern’s clients have never even been required to remove the fraudulently created documents from the official records, file corrected versions, or notify courts or litigants that phony documents were filed and used in foreclosures. Stern was never ordered to clean up the deluge of toxic documents he caused. No government agency has ever required MERS to disavow the thousands of documents Samons wrongfully created in the name of MERS.
“Follow the money” is a white-collar crime axiom that is not followed when the trail leads to the big banks or federal agencies. If Stern knew far in advance of any audit by Fannie Mae, and wined and dined Fannie executives and took them to courtside seats at Miami Heat games, and played golf at the most expensive resorts, no one in law enforcement will do more than raise an eyebrow for fear that they will join the ranks of those fired for trying to do their job.
Stern can continue to laugh all the way to the bank.