IN RE CERTIFICATION OF NEED FOR ADDITIONAL JUDGES, Fla: Supreme Court 2010

No. SC10-320.

Supreme Court of Florida.

February 25, 2010.

QUINCE, C.J.

Pursuant to our constitutional obligation to determine the state’s need for additional judges in Fiscal Year 2010-2011 and to certify “our findings and recommendations about that need” to the Legislature,[1] we hereby certify the need for additional judicial resources as follows.

Certification is “the sole mechanism established by our constitution for a systematic and uniform assessment of this need.” In re Certification of Need for Additional Judges, 889 So. 2d 734, 735 (Fla. 2004).

This Court acknowledges that Florida and our country remain in an economic recession. Like all sectors of our society, the judicial branch is coping with the impact these economic forces are having on the daily operations of our courts, which are faced with increased workloads, reduced resources, and ever-increasing demands on judges and staff. Together, these factors impede the proper administration of justice.For our trial courts, fewer resources and no new judgeships for the last three fiscal years have slowed case processing times and negatively impacted clearance rates. Justice in many instances is delayed.[2] Moreover, the mortgage foreclosure crisis continues unabated with a second wave of foreclosures forecast.[3] These foreclosures have implications for homeowners, lending institutions, neighborhoods, the courts, and Florida’s economy. Further, budget reductions and the resultant loss of supplemental judicial resources, such as case managers, magistrates, and staff attorneys, continue to impact the courts’ ability to respond effectively to the needs of children, families, the business sector, and the public. Although the central purpose of this opinion is to fulfill our constitutional obligation to discuss specifically the certification of judicial need, we must place the consideration of judicial need in a larger justice system context. Therefore, this Court first addresses recent developments in court system funding and the loss of non-judge resources before directly addressing the implications for judicial certification.

STATE COURTS REVENUE TRUST FUND

Because of the economic crisis and as part of its ongoing effort to seek stable funding for Florida’s State Courts System, the Supreme Court has worked with legislative leaders to identify a stable funding source for Florida’s courts. In response, during Special Session A 2009, the Legislature created the State Courts Revenue Trust Fund. The fund supports most court operations with the exception of some judicial salaries which remain general revenue funded. The primary revenue stream supplying the trust fund became effective July 1, 2009. The Supreme Court is grateful to the Legislature for the establishment of this fund, which we believe will help stabilize Florida’s court system. The creation of the State Courts Revenue Trust Fund is also consistent with the Seven Principles of Court Funding advanced through the State Courts System’s Funding Justice initiative.[4] Nevertheless, while the new trust fund appears to promise greater long-term stability, it has not yet impacted the budgetary reductions experienced by the judicial branch over the last two fiscal years. The budget reductions, coupled with no new judgeships for the last three fiscal years, have combined to create an environment of increased judicial workload, caseload backlog, and court delay. 

BUDGET REDUCTIONS

Since July 1, 2007, the State Courts System has experienced a ten percent budget reduction. These reductions have come from our operating budget, including expense dollars, contractual dollars, and the loss of positions throughout the state. Strict hiring and travel policies have also been in effect for the last two years. These restrictions were necessary to comply with overall reductions to our budget. Nonetheless, they come at a price. Court operations have been significantly hampered by the loss of positions that provide direct support to our judges. In order to comply with the legislative request to reduce its budget, Florida’s court system over the last three budget years has lost or eliminated 103.25 case managers, 23.75 magistrates and associated administrative staff, 38.5 law clerks, 18.5 due process positions (i.e., court reporters, court interpreters, and expert witnesses), and 106.5 positions from court administration, appellate clerks’ offices, and appellate marshals’ offices. Of the 290.5 total positions lost in the judicial branch, 249 trial court positions have been eliminated throughout the state. Also substantially reduced were contractual dollars used to hire Civil Traffic Infraction Hearing Officers (CTIHO). As a result, much work previously performed by CTIHOs was absorbed by our county court judges. 

LOST RESOURCES AND CASE PROCESSING TIMES

The budget reductions and loss of positions sustained by the State Courts System over the last two fiscal years continue to be felt in every judicial circuit. We cannot overstate the causal relationship between the loss of supplemental resources and the increases in case processing times. When judges must absorb the workload of case managers, staff attorneys, or hearing officers, case processing times inevitably worsen. The net result is court delay. Moreover, having judges perform the work of subordinate staff is not a prudent use of higher level judicial resources. Judicial time is best spent adjudicating cases, and the loss of supplemental resources has consequences for litigants across all case types. While Floridians continue to access their courts initially through filings, they are being forced to wait inordinate periods of time for final resolution of their cases while judges find it more and more difficult to advance their dockets and clear out backlogged matters.[5] 

CIRCUIT COURT IMPACT

Children and families are especially at risk when resources become scarce. In particular, the loss of case managers in our family divisions directly threatens the level of justice afforded to children and families. Case managers are acutely needed in matters involving custody, visitation, paternity, child support, dependency, delinquency, termination of parental rights, and domestic and repeat violence. Many families involved in such cases have limited means and represent themselves in court. Additionally, many of these families have multiple cases which require coordination to eliminate duplicate hearings and orders. Typically, our family law case managers shepherd cases through the court system by performing intake, screening, evaluation, monitoring, coordinating, scheduling, and referral activities. These activities enable cases to proceed smoothly and timely through the court process. When these positions are eliminated, these tasks fall on the presiding judge. This scenario creates case processing delays, non-referrals, or the minimization of judicial time spent helping children and families. In addition to losing our case management support, our court system has also lost magistrates and attendant administrative staff statewide during this period. Magistrates support the adjudicatory process in the trial courts by performing certain quasi-judicial functions that are routine, computational, or managerial in nature under the authority of the court. Frequently, they are assigned to family law divisions and assist judges by hearing matters related to paternity, dissolution, custody, child support and visitation. They frequently establish attorney fees and costs, submit recommended orders to a judge, and ensure the collection of fines. Their availability enables judges to focus their time on more contentious and complex issues requiring judicial expertise. This division of labor has proven to be both effective and economical. When magistrates are either reduced or eliminated from the case processing equation, judges must then absorb their work. This inevitably contributes to case processing delays. The loss of staff attorneys and law clerks similarly has affected judicial workload and impeded the movement of cases especially in post-conviction criminal cases. Law clerks provide basic legal research assistance to judges, including the preparation of legal memoranda and drafts of court orders. Their work enhances the adjudication of cases because they are able to identify and analyze relevant laws and cases before the court. Without this resource, a judge’s ability to process cases in a manner that ensures both quality and efficiency is diminished because the judge is retrieving materials and unable to delegate basic and routine legal research. Other factors contributing to circuit court workload include the mortgage foreclosure crisis previously mentioned which continues to overwhelm Florida’s court system. Although the dramatic increase in mortgage foreclosure filings is expected to abate at some future date and therefore may not be a part of the long-term sustained net need, there is evidence that a second wave of foreclosures is now entering the court system and that this workload issue will persist. Various media reports note that many of these new foreclosures are fueled by double digit unemployment, declining housing prices, and the lingering recession. Over a 36-month period (Fiscal Year 2005-2006 to Fiscal Year 2007-2008), real property/mortgage foreclosure filings increased by 396 percent in our trial courts. During the same time period, the clearance rate for real property/mortgage foreclosure cases decreased by 52 percent, from 94 percent in Fiscal Year 2005-2006 to 42 percent in Fiscal Year 2007-2008. According to Realty Trac,[6] Florida has the third highest rate of mortgage foreclosures in the country with one in every 158 housing units in foreclosure. Condominium foreclosures are contributing to the crisis. 

COUNTY COURT IMPACT

 As reflected in dropping clearance rates, no other resource has hindered the operations of county courts more than the loss of a substantial portion of the Civil Traffic Infraction Hearing Officer (CTIHO) monies. CTIHOs are members of The Florida Bar who contract with the courts to preside over civil traffic infraction hearings.[7] They are an economical and effective resource dedicated to the disposition of civil traffic infractions. Their availability enables county court judges to adjudicate county criminal and civil matters in a timely manner. In several circuits, the availability of CTIHOs has also enabled county court judges to assist with judicial workload in circuit court. Therefore, the loss of this resource is two-fold: (1) county judges now provide diminished assistance in circuit court, and (2) county judges must now spend a far greater portion of their time presiding over traffic matters. The cascading effect is less time spent assisting circuit court judges, less time focused on more complex county court criminal and civil matters, and more time spent on traffic cases. The net result is case delay and backlog in circuit and county court. Although this opinion is constitutionally required to discuss judicial need, this Court finds it important to advise the Legislature that the elimination of case managers, law clerks, magistrates, court reporters, and court interpreters, coupled with no new trial judges in three years, has long-term structural implications for the court system. If the Legislature is unable to provide new judgeships due to the economic crisis, we encourage it to consider all the more seriously restoring positions lost over the last two years, as has been requested in our annual legislative budget request. 

STATE ATTORNEY, PUBLIC DEFENDER, REGIONAL COUNSEL, AND CAPITAL COLLATERAL REPRESENTATIVE STAFFING

 This Court also remains concerned about the staffing levels of state attorney and public defender offices, the Offices of Regional Counsel, and the offices of the Capital Collateral Representatives. The need persists to reconcile the certification of new judgeships with sufficient staffing for these entities. This is a systemic issue and should be approached as such. We encourage the Legislature to consider the needs of the state attorneys, public defenders, Offices of Regional Counsel, and Capital Collateral Representatives if new judgeships are authorized for our criminal divisions, particularly in light of the staffing reductions they have experienced in recent years. 

TRIAL COURT CERTIFICATION

 For some time, this Court has used a case-weighting system based on accepted standards of measurement in determining the need for additional judges.[8] The case weighting system distinguishes different types of cases and assigns different amounts of time that must be spent on cases of each type, producing a total judicial need for each circuit. Additionally, we adjust for differing jury trial rates in each circuit and county and consider the actual number of judges requested by the chief judge in each circuit. The resulting certification is an objective statement of what the trial courts need to meet their workload. Over the last ten years, we have conducted a continuous evaluation of the certification process. As noted in last year’s opinion, we are now applying the use of sustained judicial need into our methodology. Sustained judicial need is the minimum of the calculated net need over a three-year period. Each year this three year “window” moves forward a year, considering the current year’s net need and the previous two years’ net need in the sustained need calculation. Any new judges received during the previous year’s session are factored into the current year’s net need.[9] From Fiscal Year 2006-2007 to Fiscal Year 2007-2008 total filings have increased by 21 percent in circuit court. Growth in civil filings by 85 percent is the main contributing factor to the statewide increase in circuit court. Real property and mortgage foreclosure case filings have more than doubled from the previous fiscal year, representing an increase of 171,426 filings. Product liability, condominium, and contract and indebtedness case filings have also risen considerably, by 267 percent, 117 percent, and 29 percent respectively. Substantial growth in filings in felony case types also contributed to an overall rise in circuit court filings from Fiscal Year 2006-2007 to Fiscal Year 2007-2008. The largest felony case type in terms of number of filings, property crime (including burglary, theft, worthless checks, and other felonies) increased by five percent. Additionally, capital murder and robbery case filings also rose by a considerable percentage, six and 15 percent respectively. County court filings experienced significant growth from Fiscal Year 2006-2007 to Fiscal Year 2007-2008 as well, with statewide filings increasing by five percent (excluding civil traffic infractions). Growth in civil filings was also the main contributing factor to the statewide increase in county court, with overall civil filings rising by 14 percent. Those cases involving small claims (up to $5,000), civil ($5,001 to $15,000), and evictions increased by 16 percent, 20 percent, and six percent, respectively. Further, the overall statewide circuit court clearance rate[10] from Fiscal Year 2006-2007 to Fiscal Year 2007-2008 has decreased by ten percent. Clearance rates in all divisions dropped in Fiscal Year 2007-2008, with the lone exception of the circuit criminal division. The chief judges of the trial courts are ensuring that all due process (e.g., speedy trials) and other constitutional requirements related to felony proceedings are being met. This often requires the redeployment of judicial resources from other court divisions. The circuit civil division experienced a significant clearance rate decline of nineteen percent, statewide. Similarly, the county court clearance rate decreased by four percent with the county civil division declining by five percent. The sustained impact of the mortgage foreclosure crisis is even further compromising the clearance rates in circuit civil divisions for all circuits in Florida. In many jurisdictions, circuit civil judges cannot keep pace with the volume. As a result, homeowners and lending institutions are subject to increasingly long delays for resolution to their cases.[11] In view of the foregoing considerations, this Court certifies the need for 37 new circuit court judges for Fiscal Year 2010-2011, distributed as follows: 

1. Five additional circuit court judges each for the First and Fifth circuits;

2. Three additional circuit court judges each for the Seventh, Nineteenth, and Twentieth circuits;

3. Two additional circuit court judges each for the Fourth, Sixth, Ninth, Tenth, Fourteenth, and Fifteenth circuits; and

4. One additional circuit court judge each for the Second, Eighth, Eleventh, Twelfth, Thirteenth, and Eighteenth circuits.

Further, we certify the need for 53 new county court judges for Fiscal Year 2010-2011, as follows: 

1. Eight additional county court judges for Duval County;

2. Six additional county court judges each for Miami-Dade and Broward counties;

3. Five additional county court judges for Palm Beach County;

4. Three additional county court judges for Hillsborough County;

5. Two additional county court judges each for Pinellas, Volusia, Orange, Polk, and Lee counties; and

6. One additional county court judge each for Okaloosa, Columbia, Citrus, Lake, Marion, Alachua, Osceola, Highlands, Manatee, Sarasota, Bay, Brevard, Seminole, St. Lucie, and Collier counties.

In addition to the judges certified above, we also have reviewed the following requests, which we deny for the following reasons. We have specifically reviewed the requests from chief judges to certify three circuit court judges in the Ninth Judicial Circuit and Eleventh Judicial Circuit and note that the sustained judicial need is less than the judgeships requested.[12] Accordingly, we deny those requests. We have also reviewed the chief judge’s requests for an additional county court judge for Pasco County. We have determined that in the absence of special circumstances, we must also deny this request. We emphasize that in addition to mathematical calculations, our staff performs extensive analysis of each circuit’s request in order to analyze the availability of supplemental resources and any special circumstances justifying an exception. 

DISTRICT COURTS OF APPEAL

Like the trial courts, the district courts have also experienced the loss of supplemental support staff due to the economic crisis. During Fiscal Year 2008-2009 a total of 25.5 FTE were lost due to reductions in the district courts’ collective budget. As with the circuit courts, the loss of staff attorneys and law clerks in the district courts has affected judicial workload and impeded the movement of cases. Staff attorneys provide legal research assistance, prepare legal memoranda, and assist in drafting opinions. The absence of staff attorneys and other court support staff that were lost has contributed to more lengthy case processing times and diminished clearance rates in the district courts. Under the weighted caseload per judge threshold set forth in rule 2.240(b)(2)(B), Florida Rules of Judicial Administration, “[t]he court will presume that there is a need for an additional appellate court judgeship in any district for which a request is made and where the relative weight of the cases disposed on the merits per judge would have exceeded 280 after application of the proposed additional judge(s).”[13] Only the Second District requested a judgeship, citing numerous workload factors including increased filings, decreasing clearance rates, post-conviction appeals, reduced staffing complements, and limited judicial availability. Although qualified to receive a judgeship last year, they did not request one, citing the economic climate within the state. While we are sympathetic to the workload in the Second District, using our certification methodology, they do not currently qualify for an additional judgeship after the methodology is applied. Therefore, their request is denied. 

DISTRICT COURTS OF APPEAL CERTIFICATION

In keeping with our policy of not requesting judgeships unless qualified and requested by the chief judge of a district court, we do not certify the need for any additional district court judges.  

CONCLUSION

Florida’s court system remains under duress. The state and national recession of the last two years and the resulting budget reductions for the courts are taking a sustained toll on Florida’s judges, court staff, and most importantly those who are accessing our courts. Case filings are up and clearance rates are down. Judicial dockets are full, scheduling is problematic, and case processing times are delayed. Florida’s court system has now gone three years without the authorization of any new judgeships despite a demonstrated and sustained need. The absence of new judgeships is now being felt by all sectors of our society who seek justice through the court system. We submit this opinion recognizing that it is difficult for the Legislature to fund the many competing critical issues confronting our state given the fiscal crisis the state is enduring. If funds become available, we encourage the Legislature to authorize those judgeships certified in our circuit and county courts. Additionally, while we have identified our judicial need in this opinion, we are equally concerned with the allocation of adequate court support staff and supplemental resources in the statutorily defined court elements that will enable the courts to respond effectively to the needs of children, families, the business sector, and the public. Without these court support staff and supplemental resources, the administration of justice is undermined. It is so ordered. PARIENTE, LEWIS, CANADY, POLSTON, LABARGA, and PERRY, JJ., concur. [1] Article V, section 9 of the Florida Constitution provides in pertinent part: Determination of number of judges.—The supreme court shall establish by rule uniform criteria for the determination of the need for additional judges except supreme court justices, the necessity for decreasing the number of judges and for increasing, decreasing or redefining appellate districts and judicial circuits. If the supreme court finds that a need exists for increasing or decreasing the number of judges or increasing, decreasing or redefining appellate districts and judicial circuits, it shall, prior to the next regular session of the legislature, certify to the legislature its findings and recommendations concerning such need.  [2] See Office of the State Courts Administrator, Clearance Rate Dashboard, Quarter Ending September 30, 2009 (Data as of November 5, 2009), http://www.flcourts.org/gen_public/stats/bin/ClearanceRateDashboard.pdf. [3] See Mortgage Bankers Ass’n, Delinquencies Continue to Climb in Latest MBA National Delinquency Survey, Nov. 19, 2009, http://www.mbaa.org/NewsandMedia/PressCenter/71112.htm; Seeking Alpha.com, Seasonal Bump in Case-Shiller Home Price Index Abates, Nov. 29, 2009, http://seekingalpha.com/article/175233-seasonal-bump-in-case-shiller-home-price-index-abates; Realty Trac, Job Losses Foreshadow More Foreclosures, Risk, http://www.realtytrac.com/contentmanagement/realtytraclibrary.aspx?channelid=8&accnt=0&itemid=7727 (last visited February 23, 2010). [4] See Florida State Courts, Funding Justice, http://www.flcourts.org/gen_public/funding/index.shml (last visited Feb. 23, 2010). [5] A 2008 study by the Washington Economics Group, Inc., has estimated delay in case processing mortgage foreclosure cases costs Florida’s economy $17 billion a year. Washington Economics Group, The Economic Impacts of Inadequate Funding for Florida’s Courts (2008). [6] Realty Trac is an online realtor website that tracks mortgage foreclosures by state and may be found at http://www.realtytrac.com. [7] In Fiscal Year 2007-2008, Civil Traffic Infraction Hearing Officers presided over approximately 489,162 cases in Florida. [8] This system was developed in response to the proviso language of the 1998 General Appropriations Act, in which the Legislature directed that the judicial branch employ a certification methodology that relies on case weights and calculations of available judge time to determine the need for additional trial court judges. See Ch. 98-422, § 7, at 3963, Laws of Fla. Pursuant to this direction, the judicial branch undertook an extensive project to design and implement a weighted caseload system, assisted by the National Center for State Courts and endorsed by the Office of Program Policy Analysis and Government Accountability. [9] In re Certification of Need for Additional Judges, 3 So. 3d 1177, 1181-82 (Fla. 2009)[10] The “clearance rate” is a calculation of the number of cases disposed of divided by the number of cases filed in the same year. The clearance rate has a reasonable ease of calculation, is a useful measure of the responsiveness of a court to the demand for services, and is nationally recognized as a measure of court performance. [11] See Florida Supreme Court Task Force on Residential Mortgage Foreclosure Cases, Final Report and Recommendations on Residential Mortgage Foreclosure Cases (2009), available at http://www.floridasupremecourt.org/pub_info/foreclosure.shtml. [12] Total judicial need is the total number of judges required to complete all expected workload. Net judicial need is the difference between the total judicial need and the number of existing judges. Sustained net need is defined as constant need over time. [13] The number established in the rule, 280, does not represent the filings per judge but is a weighted threshold calculated according to the process described in the DCA Workload Report issued in 2005 by the Commission on District Court of Appeal Performance and Accountability. See Supreme Court of Florida Commission on District Court of Appeal Performance and Accountability, DCA Workload Report to the Supreme Court (2005), available at http://www.flcourts.org/gen_public/court-services/bin/2005DCAWorkloadReport.pdf.

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Law Firm of David J. Stern (DJSP) Appears to Be Under State And Federal Investigation For Fraud, Stern Law Firm Even Has It’s Own “Michael Clayton”.

Forrest McSurdy Michael Clayton came to Stern’s rescue on my ordeal with the MILL! So I can vouch for what this article states about the “fixer” is 100% accurate !

Meticulously Written by Florida’s Very Own Bill Warner Private Detective, SARASOTA TO PANAMA CITY FL

Friday, May 14, 2010

A subsidiary of a company that is a top provider of the documentation used by banks in the foreclosure process is under investigation by federal prosecutors. The prosecutors are “reviewing the business processes” of the subsidiary of Lender Processing Services Inc., (LPS) based in Jacksonville, Fla., according to the company’s annual securities filing released in February. People familiar with the matter say the probe is criminal in nature.

Lender Processing Services Inc., (LPS) does work for the Law Firm of David J. Stern (DJSE) in Plantation Fl. Michelle Kersch, an LPS spokeswoman, said the subsidiary being investigated is Docx LLC. Docx processes and sometimes produces documents needed by banks to prove they own the mortgages. LPS’s annual report said that the processes under review have been “terminated,” and that the company has expressed its willingness to cooperate. Ms. Kersch declined to comment further on the probe.

A spokesman for the U.S. attorney’s office for the middle district of Florida, which the annual report says is handling the matter, declined to comment.  The case follows on the dismissal of numerous foreclosure cases in which judges across the U.S. have found that the materials banks had submitted to support their claims were wrong. Faulty bank paperwork has been an issue in foreclosure proceedings since the housing crisis took hold a few years ago. It is often difficult to pin down who the real owner of a mortgage is, thanks to the complexity of the mortgage market. LPS was recently referenced in a bankruptcy case involving Sylvia Nuer, a Bronx, N.Y., homeowner who had filed for protection from creditors in 2008.

Diana Adams, a U.S. government lawyer who monitors bankruptcy courts, argued in a brief filed earlier this year in the Nuer case that an LPS employee signed a document that wrongly said J.P. Morgan Chase & Co. had owned Ms. Nuer’s loan.  Documents related to the loan were “patently false or misleading,” according to Ms. Adams’s court papers. J.P. Morgan Chase, which has withdrawn its request to foreclose, declined to comment.

A Florida state-court judge, in a rare ruling, said a major national bank perpetrated a “fraud” in a foreclosure lawsuit filed by the Law Firm of David J. Stern, raising questions about how banks are attempting to claim homes from borrowers in default.

The ruling, made last month in Pasco County, Fla., comes amid increased scrutiny of foreclosures by the prosecutors and judges in regions hurt by the recession. Judges have said in hearings they are increasingly concerned that banks are attempting to seize properties they don’t own.

The Florida case began in December 2007 when U.S. Bank N.A. sued a homeowner, Ernest E. Harpster, after he defaulted on a $190,000 loan he received in January of that year. The Law Offices of David J. Stern, which represented the bank, prepared a document called an “assignment of mortgage” showing that the bank received ownership of the mortgage in December 2007. The document was dated December 2007.

But after investigating the matter, Circuit Court Judge Lynn Tepper ruled that the document couldn’t have been prepared until 2008. Thus, she ruled, the bank couldn’t prove it owned the mortgage at the time the suit was filed. The document filed by the plaintiff (through the Law Firm of David J. Stern), Judge Tepper wrote last month, “did not exist at the time of the filing of this action…was subsequently created and…fraudulently backdated, in a purposeful, intentional effort to mislead.” She dismissed the case.

Forrest McSurdy, a lawyer at the David Stern firm (McSurdy is General Councel for Stern law Firm) that handled the U.S. Bank case, said the mistake was due to “carelessness.” The mortgage document was initially prepared and signed in 2007 but wasn’t notarized until months later, he said. After discovering similar problems in other foreclosure cases, he said, the firm voluntarily withdrew the suits and later re-filed them using appropriate documents.

Foreclosure mill lawyer Forrest McSurdy calls truth a “technicality”. Lawyers operating foreclosure mills often are paid based on the volume of cases they complete. Some receive $1,000 per case, court records show. Firms compete for business in part based on how quickly they can foreclose. The David Stern law firm had about 900 employees as of last year, court records show.


“The pure volume of foreclosures has a tendency perhaps to encourage sloppiness, boilerplate paperwork or a lack of thoroughness” by attorneys for banks, said Judge Tepper of Florida, in an interview. The deluge of foreclosures makes the process “fraught with potential for fraud,” she said (Law Firm of the David J. Stern) .

At an unrelated hearing in a separate matter last week, Anthony Rondolino, a state-court judge in St. Petersburg, Fla., said that an affidavit submitted by the David Stern law firm on behalf of GMAC Mortgage LLC in a foreclosure case wasn’t necessarily sufficient to establish that GMAC was the owner of the mortgage. “I don’t have any confidence that any of the documents the Court’s receiving on these mass foreclosures are valid,” the judge said at the hearing.

Forrest G. McSurdy of Stern & McSurdy, P.A. Incorporated by David J Stern, Forrest G McSurdy, Stern and McSurdy, P.A. is located at 801 S University Dr Ste 500 Plantation, FL 33324. Stern and McSurdy, P.A. was incorporated on Friday, October 08, 1999 in the State of FL and is currently active. David J Stern represents Stern and McSurdy, P.A. as their registered agent.

Forrest McSurdy of the Law Firm of David J. Stern in Plantation Florida appears to show up everytime there is a legal mess to clean up for the Stern Law Office, McSurdy is Stern’s fixer ”Michael Clayton”.   ”Michael Clayton Movie” The Truth Can Be Adjusted Plot: A law firm brings in its “fixer” to remedy the situation after a lawyer has a breakdown while representing a chemical company that he knows is guilty in a multi-billion dollar class action suit.


Forrest McSurdy of the Law Firm of David J. Stern in Plantation Florida shows up as legal counsel for all of Stern’s attorneys when there is a Florida Bar complaint filed agasint them.

Chardan 2008 China Acquisition Corp. (CACA, CACAW, CACAU) signed a definitive agreement for a business combination with DAL Group, LLC, a provider of processing services for mortgage lenders and servicers in Florida. At the closing of the business combination with Chardan, DAL will own 100% of the business and operations of Default Servicing, Inc. and Professional Title & Abstract Company of Florida and the non-legal operations supporting the foreclosure and other legal proceedings handled by the Law Offices of David J. Stern, P.A., collectively known as the Company.  Default Servicing, Inc is now STERN HOLDING COMPANY – DS, INC see Florida Division of Corporations records click here.

Upon consummation of the transaction, Beijing, China-based Chardan will change its name to DJSP Enterprises, Inc. “DJSP” (David J. Stern Processing), and its stock is expected to trade on the Nasdaq under the symbols DJSP, DJSPU, and DJSPW. Assuming no redemptions by Chardan shareholders, the current owners of the company, the “Stern Parties” will receive approximately $111 million from DAL and the right to receive another $35 million in post-closing cash. In addition, “Stern Parties” will also hold equity interests. Kerry Propper, Chardan’s chief executive officer said, “The acquisition should generate significant value for our shareholders. David J. Stern, who will be DJSP’s CEO, has an impressive record building this business by continually strengthening the customer relationships on which it is based.”

Chardan 2008 China Acquisition was run by Kerry S. Propper he has had some problems with the SBA and the Department of Justice as did his father Dr. Richard D. Propper. Kerry S, Proper, Richard D. Propper and Royale Holdings own 1,151,128 shares of Chardan 2008 China Acquisition, they are the majority share holders of the company now directly linked to David J. Stern and DJSP Enterprises, Inc..

DAVID J. STERN LAW OFFICE is DJSP Enterprises on NASDAQ, Major Shareholders David J. Stern and Kerry S. Propper the Subject of Department of Justice Investigation And SBA Law Suit.
1). Kerry S. Propper was the subject of 2003 Federal law suit filed in Conn. by the Small Business Administration one of his co-defendants was Acorn Ct Investments LP, they all ended up paying the SBA $1,764,333 in total see link http://www.paed.uscourts.gov/documents/opinions/04D0487P.pdf

2). Kerry S. Propper was/is under Dept of Justice investigation with his father Richard Propper. One of their partners was convicted of defrauding the SBA and sent to Federal prison for 70 months. SBA seeks to recover $96 million from Richard Propper and the rest of the crew in yet another SBA lawsuit, see info below……

DEPARTMENT OF JUSTICE;
FRIDAY, DECEMBER 29, 2006, U.S. Files Suit Against John Torkelsen, Richard Propper, Daniel Beharry, & Sovereign Bank Alleging Fraud of $32 Million Against the Small Business Administration.

WASHINGTON – The Justice Department announced today that it has filed a lawsuit accusing John Torkelsen, Richard Propper, Daniel Beharry, and Sovereign Bank of defrauding the Small Business Administration’s Small Business Investment Company (SBIC) program of $32 million. The suit was filed in the Eastern District of Pennsylvania under the False Claims Act, which allows the United States to recover up to three times the amount of its losses plus civil penalties.


The government’s complaint alleges that Torkelsen, Propper and Beharry violated the conflict of interest and management fee rules of the SBIC program by engaging in multiple secret transactions that funneled government money into companies controlled by Propper and Beharry or Torkelsen and his family. The SBIC program has rules designed to prevent the unauthorized investment of government funds in companies controlled by those who act as managers of the SBICs. The alleged fraud is believed to be the largest perpetrated upon the program to date.


The SBIC program, administered by the U.S. Small Business Administration, was created in 1958 to fill the gap between the availability of venture capital and the needs of small businesses in start-up and growth situations. The government, itself, does not make direct investments or target specific industries. Rather, the SBIC program is a “fund of funds” – meaning that portfolio management and investment decisions are left to qualified private fund managers. Small businesses which qualify for assistance from the program are able to receive equity capital, long-term loans and expert management assistance.


The investigation of the fraud allegations against the defendants was conducted by the U.S. Attorney’s office in Philadelphia, Pa.; the U.S. Small Business Administration’s Office of Inspector General and Office of General Counsel; the Federal Bureau of Investigation; and the Justice Department’s Civil Division. The United States has settled with, or reached settlement in principle with, a number of other individuals or entities involved in the alleged fraud.


David J Stern Attorney, Related People:

Adam S Gumsom
•Forrest G McSurdy
•Gibbons Cline
•Howard Bernstein
•James Rosen
•Nuccia McCormick
•Roger Wittenberns
•Spring Baldini


Related Companies:
•Attorneys’ Title Agency, P.A.
•Default Services, Inc.
•Default Servicing, Inc.
•Law Offices of David J. Stern, P.A.
•Professional Title and Abstract Company of Florida
Stern and McSurdy, P.A.
•Sunset Servers of South Florida, Inc.
•The Harborage Association Inc.

THE REAL EMPLOYERS OF THE SIGNERS OF MORTGAGE ASSIGNMENTS TO TRUSTS: BY Lynn E. Szymoniak, Esq.

THE REAL EMPLOYERS OF THE SIGNERS OF

MORTGAGE ASSIGNMENTS TO TRUSTS

BY Lynn E. Szymoniak, Esq., Editor, Fraud Digest (szymoniak@mac.com),

April 15, 2010

On May 11, 2010, Judge Arthur J. Schack, Supreme Court, Kings County, New York, entered an order denying a foreclosure action with prejudice. The case involved a mortgage-backed securitized trust, SG Mortgage Securities Asset Backed Certificates, Series 2006-FRE2. U.S. Bank, N.A. served as Trustee for the SG Trust. See U.S. Bank, N.A. v. Emmanuel, 2010 NY Slip Op 50819 (u), Supreme Court, Kings County, decided May 11, 2010. In this case, as in hundreds of thousands of other cases involving securitized trusts, the trust inexplicably did not produce mortgage assignments from the original lender to the depositor to the securities company to the trust.

This particular residential mortgage-backed securities trust in the Emmanuel case had a cut-off date of July 1, 2006. The entities involved in the creation and early agreements of this trust included Wells Fargo Bank, N.A., as servicer, U.S. Bank, N.A. as trustee, Bear Stearns Financial Products as the “swap provider” and SG Mortgage Securities, LLC. The Class A Certificates in the trust were given a rating of “AAA” by Dominion Bond Rating Services on July 13, 2006.

The designation “FRE” in the title of this particular trust indicates that the loans in the trust were made by Fremont Investment & Loan, a bank and subprime lender and subsidiary of Fremont General Corporation. The “SG” in the title of the trust indicates that the loans were “securitized” by Signature Securities Group Corporation, or an affiliate.

Fremont, a California-based corporation, filed for Chapter 11 bankruptcy protection on June 19, 2008, but continued in business as a debtor-in-possession. On March 31, 2008, Fremont General sold its mortgage servicing rights to Carrington Capital Management, a hedge fund focused on the subprime residential mortgage securities market. Carrington Capital operated Carrington Mortgage Services, a company that had already acquired the mortgage servicing business of New Century after that large sub-prime lender also filed for bankruptcy. Carrington Mortgage Services provides services a portfolio of nearly 90,000 loans with an outstanding principal balance of over $16 billion. Nearly 63% of the portfolio is comprised of adjustable rate mortgages. Mortgage servicing companies charge  substantially higher fees for servicing adjustable rate mortgages than fixed-rate mortgages. Those fees, often considered the most lucrative part of the subprime mortgage business, are paid by the securitized trusts that bought the loans from the original lenders (Fremont & New Century), after the loans had been combined into trusts by securities companies, like Financial Assets Securities Corporation, SG and Carrington Capital.

Carrington Capital in Greenwich, Connecticut, is headed by Bruce Rose, who left Salomon Brothers in 2003 to start Carrington. At Carrington, Rose packaged $23 billion in subprime mortgages. Many of those securities included loans originated by now-bankrupt New Century Financial. Carrington forged unique contracts that let it direct any foreclosure and liquidations of the underlying loans. Foreclosure management is also a very lucrative part of the subprime mortgage business. As with servicing adjustable rate mortgages, the fees for the foreclosure management are paid ultimately by the trust. There is little or no oversight of the fees charged for the foreclosure actions. The vast majority of foreclosure cases are uncontested, but the foreclosure management firms may nevertheless charge the trust several thousand dollars for each foreclosure of a property in the trust.

The securities companies and their affiliates also benefit from the bankruptcies of the original lenders. On May 12, 2010, Signature Group Holdings LLP, (“SG”) announced that it had been chosen to revive fallen subprime mortgage lender Freemont General, once the fifth-largest U.S. subprime mortgage lender. A decision to approve Signature’s reorganization plan for Fremont was made through a bench ruling issued by the U.S. Bankruptcy Court in Santa Ana, CA. The bid for Fremont lasted nearly two years, with several firms competing for the acquisition.

The purchase became much more lucrative for prospective purchasers in late March, 2010, when Fremont General announced that it would settle more than $89 million in tax obligations to the Internal Revenue Service without actually paying a majority of the back taxes. The U.S. Bankruptcy Court for the Central District of California, Santa Ana Division, approved a motion that allowed Fremont General to claim a net operating loss deduction for 2004 that is attributable for its 2006 tax obligations, according to a regulatory filing with the Securities and Exchange Commission.

In addition, Fremont General will deduct additional 2004 taxes, because of a temporary extension to the period when companies can claim the credit. The extension from two years to five went into effect when President Obama signed the Worker, Homeownership, and Business Assistance Act of 2009. While approved by the bankruptcy court judge, the agreement must also meet the approval of the Congressional Joint Committee on Taxation, but according to the SEC filing, both Fremont General and the IRS anticipate that it will be approved. In all, Fremont’s nearly $89.4 million tax assessment was reduced to about $2.8 million, including interest. In addition, as a result of the IRS agreement, a California Franchise Tax Board tax claim of $13.3 million was reduced to $550,000.

Another development that made the purchase especially favorable for SG was the announcement on May 10, 2010, that Federal Insurance Co. has agreed to pay Fremont General Corp. the full $10 million loss limits of an errors and omissions policy to cover subprime lending claims, dropping an 18-month battle over whether the claims were outside the scope of its bankers professional liability policies.

All of these favorable developments are part of a long history of success for Craig Noell, the head of Signature Group Holdings, the winning bidder for Fremont. Previously, as a member of the distressed investing area at Goldman Sachs, Noell founded and ran Goldman Sachs Specialty Lending, investing Goldman’s proprietary capital in “special situations opportunities.”

Bruce Rose’s Carrington Mortgage Services and Craig Noell’s Signature Group Holdings are part of the story of the attempted foreclosure on Arianna Emmanuel in Brooklyn, New York. U.S. Bank, N.A., as Trustee for SG Mortgage Securities Asset-Backed Certificates, Series 2006 FRE-2 attempted to foreclose on Arianna Emmanuel. The original mortgage had been made by Fremont Investment & Loan (the beneficiary of the $100 milion tax break and the $10 million insurance payout discussed above).

To successfully foreclose, the Trustee needed to produce proof that the Trust had acquired the loan from Fremont. At this point, the document custodian for the trust needed only to produce the mortgage assignment. The securities company that made the SG Trust, the mortgage servicing company that serviced the trust and U.S. Bank as Trustee had all made frequent sworn statements to the SEC and shareholders that these documents were safely stored in a fire-proof  vault.

Despite these frequent representations to the SEC, the assignment relied upon by U.S. Bank, the trustee, was one executed by Elpiniki Bechakas as assistant secretary and vice president of MERS, as nominee for Freemont. In foreclosure cases all over the U.S., assignments signed by Elpiniki Bechakas are never questioned. But on May 11, 2010, the judge examining the mortgage assignment was the Honorable Arthur J. Schack in Brooklyn, New York.

Bechakas signed as an officer of MERS, as nominee for Fremont, representing that the property had been acquired by the SG Trust in June, 2009. None of this was true. Judge Schack determined sua sponte that Bechakas was an associate in the law offices of Steven J. Baum, the firm representing the trustee and trust in the foreclosure. Judge Schack recognized that the Baum firm was thus working for both the GRANTOR and GRANTEE. Judge Schack wrote, “The Court is concerned that the concurrent representation by Steven J. Baum, P.C. of both assignor MERS, as nominee for FREMONT, and assignee plaintiff U.S. BANK is a conflict of interest, in violation of 22 NYCRR § 1200.0 (Rules of Professional Conduct, effective April 1, 2009) Rule 1.7, “Conflict of Interest: Current Clients.”

Judge Schack focused squarely on an issue that pro se homeowner litigants and foreclosure defense lawyers often attempt to raise – the authority of the individuals signing mortgage assignments that are used by trusts to foreclose. In tens of thousands of cases, law firm employees sign as MERS officers, without disclosing to the Court or to homeowners that they are actually employed by the law firm, not MERS, and that the firm is being paid and working on behalf of the Trust/Grantee while the firm employee is signing on behalf of the original lender/Grantor.

Did the SG Trust acquire the Emmanuel loan in 2006, the closing date of the trust, or in 2009, the date chosen by Belchakas and her employers? There are tremendous tax advantages being claimed by banks and mortgage companies based on their portfolio of nonperforming loans. There are also millions of dollars in insurance payouts being made ultimately because of non-performing loans. There are substantial fees being charged by mortgage servicing companies and mortgage default management companies – being paid by trusts and assessed on homeowners in default. The question of the date of the transfer is much more than an academic exercise.

As important as the question of WHEN, there is also the question of WHAT – what exactly did the trust acquire? What is the reason for the millions of assignments to trusts that flooded recorders’ offices nationwide starting in 2007 that were prepared by law firm employees like Bechakas or by employees of mortgage default companies or document preparation companies specializing is providing “replacement” mortgage documents. Why, in judicial foreclosure states, are there thousands of Complaints for Foreclosure filed with the allegations: “We Own the Note; we had the note; we lost the note.” Why do bankruptcy courts repeatedly see these same three allegations in Motions For Relief of Stay filed by securitized trusts attempting to foreclose? If the assignments and notes are missing, has the trust acquired anything (other than investors’ money, tax advantages and insurance payouts)? In many cases, the mortgage servicing company does eventually acquire the property – often by purchasing the property after foreclosure for ten dollars and selling it to the trust that had claimed ownership from the start.

Where are the missing mortgage assignments?

WHERE TO REPORT FINANCIAL FRAUD/DOJ

StopFraud.gov - Financial Fraud Enforcement Task Force

 I would *NOT* make a report by e-mail.  I would send a signature-required package.

http://www.stopfraud.gov/report.html  

Fraudulent activities should always be reported to your local law enforcement office. The following is additional information on how specific types of fraud complaints or cases of suspected fraud can be submitted to federal agencies.