Why the whales? After the day I’ve had, I need some serenity!
In the course of my practice, I have the opportunity to correspond with a lot of people. In our bankruptcy practice, most of those people are in dire financial situations. In what appears to be a rapidly growing trend, those in economic distress appear to be the target of more and more deceptive schemes and fraud than ever before. To this, one might respond “this isn’t new,” and of course you would be right. The news is rife with articles about people being ripped of. What I find scary these days, however, is that previously highly-regarded professionals are getting wrapped up in these schemes, and the scope of these schemes is growing exponentially every day.
Today marks a new record — I’ve spoken with or emailed more people in one day who were taken advantage of than ever before. By way of example, I spoke with prospective clients who paid a law firm — yes, a law firm, engaged in loan modifications, a large up-front fee. After months of no action, that law firm (The Rodis Law Group, later America’s Law Group) and the non-attorney parent company allegedly running the law firm had their assets frozen by the Federal Trade Commission and a Receiver installed by the US District Court to wind-up the firm’s operations. Those people who paid their money up front will almost certainly never receive their money back nor their files. In the case of my prospective client, that firm cost her $5,500 and six months time she could have used to legitimately be working on a loan modification. The scale of this fraud is unimaginable — it is alleged that in the first four months of 2009, that law firm collected $6.5 million dollars in fees from persons all over the United States. The law firm is only licensed in the State of California to practice law.
Another call involved an attorney who took an up front fee “in cash” to represent the client in a bankruptcy. Months later, when nothing had been done to move her closer to filing bankruptcy, she demanded her file and her money back, only to be given about 25% of her “cash” retainer back, and nothing substantive from her file. This prospective client is now extremely distrusting of any professional, and has again lost time and money she can dearly not afford.
Another email was from an individual who had hired a “debt relief” company out of Texas to negotiate her debt. First, let me say now that in my personal opinion, the entire “for profit” debt relief, debt consolidation, debt negotiation business is a huge scam. The person who contacted me was allegedly counseled by Debt-Relief USA to stop making payments to her creditors, and rather to make a monthly payment (presumably less than what was being paid to her creditors) each month to the company. After many months, the debt relief company would attempt to negotiate a reduced payoff with her creditors. The problem is, Debt-Relief USA filed Chapter 11 bankruptcy in June, and on June 24, 2009, the Bankruptcy Court converted the case to a Chapter 7 liquidation. The prospective client in question now not only is going to lose all or most of what was paid to the debt relief company; further, she probably does not have any deals negotiated with her lenders, and is extremely delinquent in her payments with no means of bringing the debt current. Their actions have forced this individual into bankruptcy.
I’m pretty exhausted and frankly disappointed in those who prey on people in dire straights. There are legitimate companies who can work with you to modify a loan, or attempt to negotiate an out-of-court debt settlement, but as a general rule, one should ask questions, ask to speak to referrals, search the internet for positive or negative reviews. In short, for any professional service you seek, please do your homework, and avoid those who actively seek to rip you off.
David L. Gibbs is an attorney with The Gibbs Law firm, APC. The firm’s practice focuses on issues related to Bankruptcy, Business Law and Manufactured Housing; including community subdivision, pre-purchase diligence and analysis as well as advising community owners on operational, financial and enforcement issues. The firm also represents manufactured home dealers in a wide range of issues. David L. Gibbs is admitted to the Federal Courts for the Central and Southern District of California, and also holds a California real estate broker’s license. The firm continues to offer a wide range of real estate and business related services as it has done for 34 years from its offices in San Clemente. Mr. Gibbs can be reached at (949) 492-3350.
*Image Courtesy of National Geographic — click photo to be taken to the original picture.