Chain of Title (21 page)

The timing was excellent in one respect. As a public company, Lender Processing Services needed to submit a financial statement to the Securities and Exchange Commission, disclosing any legal actions against them. The company must have turned its statement in after the class action was filed but before it was dismissed. “The complaint essentially alleges that the ‘industry practice' of creating assignments of mortgages after the actual date on which a loan was transferred from one beneficial owner to another is unlawful,” read the disclosure. “The complaint also challenges the authority of individuals employed by our document solutions subsidiary to execute such assignments as officers of various banks and mortgage companies.” LPS added that they identified an unspecified “defect” in the notarization of certain documents from DocX, and claimed to be working on rectifying it. But this was the real bombshell: “
Most recently, we have learned that the U.S. Attorney's Office for the Middle District of Florida is reviewing the business processes of this subsidiary,” referring to DocX.

That was Lynn's case out of Jacksonville. In fact, she learned that a grand jury had been empaneled, because whenever she gave her contacts the name of someone who might have new information, they would immediately respond, “Would they be willing to speak to a grand jury?” Lynn's friend Tommy, the insurance fraud investigator who partnered with the FBI on these cases, also knew how to slip Lynn hints of progress. He would say things like, “I can't talk this weekend—some stupid woman is making me go to Alpharetta, Georgia,” the home of DocX. All the prosecutors in the U.S. attorney's office boasted about how everyone associated with this scheme would go to jail. Lynn even learned that DocX moved its operations out of Alpharetta and into the main LPS headquarters in Jacksonville, fleeing the scene like burglars after a heist.

One person willing to speak to the grand jury was Nye Lavalle. After the happy hour, he called up Lynn and asked to take her to lunch. “You and I seem like we're working on the same things,” he said. They went to Lynn's favorite restaurant in City Place, a multistory outdoor mall in downtown West Palm Beach. Within ten minutes Nye took photos out of his wallet. “I want to show you my new girlfriends,” he said to Lynn, pointing to a picture of him with two women young enough to be his daughters. Lynn smirked. They talked about the various investigations they had embarked on. “What I'm really involved in is filing claims,” Nye said. “But I can't talk to you about it here.”

“At City Place?” Lynn said.

“I mean I don't want to talk to you about it within the boundaries of the United States.” Nye proceeded to ask Lynn to accompany him on a boat into international waters, saying it would protect them from charges of conspiracy.

Lynn took about half a second to politely decline. Foreclosure fraud made her crazy, but not
that
crazy.

Lynn also kept up with Damian Figueroa, the homeowner from the happy hour. When Lynn was searching for plaintiffs on the class action that later fell apart, she sent Damian a retainer agreement to act as his lawyer, which he happily signed. Stuck with a dead case, Lynn thought she could still represent Damian in a class action against his plaintiffs, the David J. Stern law firm and MERS; neither of them was a bank, so the Fair Debt Collection Practices Act stumbling block might not apply. But she'd have to sell the lawyers with the cash on it.

Damian asked Lynn about filing something he heard about, called a
qui tam
action.
“Here is the problem with the
qui tam
,” Lynn emailed back. “The VICTIM must be the government—as a plaintiff, you stand in the shoes of the government that has been defrauded. The government is a victim as it is financially investing in these over-valued securities—but we both know that the homeowners are the real victims.” The other problem with a
qui tam
, which could be pursued under a federal statute called the False Claims Act, is that the relator—the plaintiff who acts on behalf of the government—must have knowledge unknown to the general public. Lynn's information came from publicly recorded documents, and deciding whether they were “known to the general public” would be up to a judge. Dick Harpootlian
and Ken Suggs did suggest a
qui tam
case, with Lynn as the relator. She mentioned this to Damian, and threw out the possibility that they could file together. Damian was willing to co-file. The two continued to exchange information; by this time, Lynn had a coterie of pen pals and collaborators from all over the country, helping her build a body of evidence.

Lynn had her own foreclosure case to worry about. She filed for sanctions against Marshall C. Watson, the foreclosure mill, for fabricating evidence. She also wanted to depose Linda Green and her DocX bosses. Mark Cullen, her lawyer, encouraged her to go to the courthouse and watch foreclosure cases, mainly so she could understand her chances of success. “You'll see—they will give you thirty seconds, and you'll lose.”

In the courtroom, Judge Meenu Sasser dispatched cases at almost precisely that rate. Lynn focused on the handful of homeowners in the room. They all looked tired, as though they had been in this fight for so long it would almost be a relief to see it end. Being in foreclosure took a physical toll on homeowners, a daily puncturing of their already reduced self-esteem. Activists heard constantly about stress-induced illnesses, heart problems, depression. You could read it on people's faces.

Lisa ran into Lynn in the courtroom. Every time a plaintiff's lawyer would move to drop the lost note count and claim that they found the note, Lynn would say “liar” under her breath. Lisa just laughed. It kept happening, case after case. Found note, found note, found note. If Judge Sasser considered this unusual, she didn't let it show.

After the session gaveled to a close, Lisa told her new friend about how she would drive around the alphabet streets in Lake Worth, looking at boarded-up homes. “There are streets like that in Palm Beach,” Lynn replied. They got in Lynn's car and drove to Pinewood Avenue, just a couple of miles away, literally across the train tracks from downtown. The homes were one-story ranch-style models built in the 1920s and 1930s, and their current state revealed the passage of time. Many still had the antiquated wiring and plumbing from the original installation; none had central air conditioning. Yet Lynn found sales in this area as high as $250,000 at the height of the bubble. Nearly all of the mortgages from these homes were securitized and put into trusts, and now few of the properties were inhabited.

Lisa was amazed by how Lynn could tick off the names of the trustees for every home on Pinewood. “That's a Deutsche Bank, that's Bank of America,
that's Fannie,” Lynn said as she passed each property. The neglect stood out: damaged roofs, black mold. Once the mold set in there wasn't much to do but bulldoze; the property couldn't be sold anymore. Passing by one house, Lisa spotted an extension cord that ran into the neighbor's home, from which the first house's residents were siphoning power. “They call this the historic district,” Lynn said.

After touring Pinewood, Lynn and Lisa decided to get some lunch. Lynn got through about half her salad when Lisa asked if she was going to finish it. She admitted that she wasn't working at the chemo center anymore, and every little bit helped. Lynn wasn't in the best financial condition, either: once foreclosure fraud invaded her life, she mostly gave up legal work. She and her son, Zach, started selling old stuff on eBay to pay the electric bills and keep the grass cut. But Lynn marked the expression in Lisa's eyes, and gave her the leftover salad in a to-go box.

Michael got a call in late February from someone he hadn't heard from in months: Carol Asbury, the defense attorney from the Neil Garfield seminar. Carol had a business proposition: she wanted to sponsor
4closureFraud
. Michael met Carol at her office to go over the particulars. They would take
4closureFraud
off WordPress and onto its own server, and Carol would cover all webhosting expenses. Michael would still be the lead writer, free to post whatever he wanted without interference. Carol might write posts every now and then, but that wasn't central to the deal. She really wanted an ad for her law firm in a prominent spot. And Michael would do all intake of new clients brought in from that ad. For this, Carol offered $40,000 for the first year.

Michael liked Carol; she seemed like someone who wanted to fight for people. And it was hard to overcome the flattery of having something he did in his spare time turn into a valuable commodity. Michael wasn't sure about the intake, but he was hearing from foreclosure victims anyway; at least now he'd get paid for it. So he agreed to let Carol underwrite the site. It shifted from
4closurefraud.wordpress.com
to
4closurefraud.org
.
Unbeknownst to Michael, Carol listed it as her law firm's website in official registries.

Carol set Michael up with a meeting location for prospective clients, in a rickety two-story building in Lake Worth. The first floor was a telemarketing
office, and the employees always seemed to be loitering at the entrance on a cigarette break, no matter what time of day. Prospective clients had to stagger through a haze of smoke to reach Michael's desk. But they came, one by one, as the crisis metastasized in south Florida.

Michael had to lead a double life to make it work. He drove every day from Port St. Lucie to the Toyota dealership in North Palm Beach. At some point he'd announce that he had to go to the port to check on some cars they were exporting overseas. But instead he'd head to the new office, meet with homeowners, write a couple of posts, and check feeds. Then he'd race back to Toyota in the afternoon, and then home to Port St. Lucie. Life had already been a grind dealing with just the blog; this took Michael completely over the edge.

Like Lisa, he had foreclosure fraud on the brain twenty-four hours a day. Mentally, he checked out of his day job. And he felt guilty about it. So he told his managers that he wanted to quit. “This isn't fair to you guys; I'm spending 90 percent of my time here on something other than what I'm supposed to be doing,” he told them. The lead manager replied that Michael's 10 percent beat most of the staff's 100 percent. They wouldn't let him resign. So Michael kept making the trips back and forth, from Port St. Lucie to North Palm Beach to Lake Worth and back, up I-95 and down.

The same week he made the deal with Carol Asbury, Michael heard from Tom and Ariane Ice. Two months had passed since they sent him a deposition, but this was a good one. Cheryl Samons worked for the David J. Stern law firm, a foreclosure mill that ballooned to nine hundred employees during the crisis, filing more than seventy thousand cases in 2009 alone, diligently forcing people out of their homes all week long and sometimes on weekends. The company also owned several ancillary services, making money at every stage of the foreclosure process. Stern lived like a captain of industry, with a $15 million mansion on the Intracoastal and a 130-foot yacht named
Misunderstood
. According to rumor, he initially considered calling it
Su Casa Es Mi Casa
.
He recently bought his neighbor's $8 million property to tear it down and build a tennis court.

Samons had been Stern's operations manager for fourteen years. The first half of the deposition, taken back in May 2009, spun a familiar story: Samons signed an untold number of documents per month (“it's definitely not more than a million,” she said when asked), without any personal
knowledge about the contents, without even reading them.
She signed as a vice president or assistant secretary of MERS without being paid by them or having any other official duties.

But near the end, Tom Ice brought up something new. He showed Samons a document she signed that was notarized by Valerie Nemes, a notary in the Stern office. The date of execution on the document was June 19, 2007, three days before the foreclosure case was filed. But Tom had another piece of evidence. “Here's a printout from
MyFlorida.com
Notary Public Commission for Valerie Nemes,” he said. “And it shows that the issue date for her commission was August 20, 2008. So how is it possible that this was notarized on June 19, 2007, over a year before she was issued that commission?”

“I can't testify to that,” Samons said brusquely.

Tom showed Samons another assignment where the notary wasn't a notary at the date of execution. Samons breezily dismissed it as a mistake: “There would be no purpose in backdating an assignment.” But the backdating was necessary because the mortgages weren't assigned at the time of the transfer, which violated the pooling and servicing agreement. Stern's assembly-line operation, which got a flat fee for every foreclosure rather than billing hourly, foreclosed first and mocked up the documents later. But if the foreclosure predated the assignment, Stern's client could not possibly have standing; they wouldn't own the loan on which they were trying to enforce the terms. Backdating the assignments was the only way to win cases.

Tom kept pulling out backdated assignments with impossible notarizations. He had twenty-one in all. Eventually Samons grew angry. “Do I have to say the same thing on every single assignment? Because I can tell you I don't remember. You're going to ask me if I think it was backdated. I'm going to tell you no. I'm going to tell you I don't know what the mistake is. I don't know if I want to answer the same question every single time.”

After she finished her rant, Tom calmly went forward. “You are a notary?” he asked Samons.

“I am a notary.”

“How often does it get renewed?” asked Tom, referring to the notary stamp.

“I don't remember off the top of my head.”

“I'll represent to you it's every four years.”

“Okay.”

“When it gets renewed every fourth year, you get a new stamp, right?”