LOS ANGELES, Calif.--California Department of Justice officials raided a Calabasas law firm as part of an investigation into alleged legal fraud that may have touched thousands of victims, the state attorney general said today.
Nineteen DOJ agents and other state authorities seized computers, client files and 16 bank accounts Wednesday from the law firm of Kramer & Kaslow.
Attorney General Kamala Harris accused the firm of bilking close to 2,500 distressed homeowners facing foreclosure in a so-called mass-joinder scam, which "victimized them for a second time."
Harris said the firm urged homeowners in California and 17 other states to pay between $4,000-$10,000 to join a class action lawsuit against mortgage lenders, but in reality treated the plaintiffs' cases separately. Clients who pursued information from the lawyers about their cases were rebuffed, and in some cases their calls were never returned.
The U.S. Department of Housing and Urban Development (HUD) offers similar legal services for free, Harris said.
She said three firms and 14 other telemarketing firms are being charged with fraudulent and unfair business practices, paying non-lawyers to market legal services, and illegally sharing client fees with marketers.
The clients were promised relief from their lenders, new interest rates as low as 2 percent, principal reduction or elimination, and in some cases financial damages, Harris said.
She said the lawsuit targets four attorneys, but dubbed Philip Kramer the "ringleader." Calls to Kramer's residence were not returned. The California Bar Association changed the firm's voicemail to alert clients that their files have been confiscated and provide instructions for retrieving their case files.
The firm's website offers to help clients assert their "legal rights through 'mass action' litigation to force the banks to do what they should have done voluntarily and pay for their predatory lending tactics."
Harris said the firm could face tens of millions of dollars in fines, penalties and and restitution.