Posted on Tuesday, October 19, 2010
Foreclosure attorney David Stern, who is being investigated for fabricating legal documents, purposefully hid files from inspectors with Fannie Mae and Freddie Mac, a former employee said in recently released deposition.
Stern had a tight-knit relationship with the two mortgage giants, and referred to them as his “babies,” former employee Kelly Scott said.
Scott also said office managers and key staff members got gifts, including new cars.
Stern’s law firm is one of the largest foreclosure law firms in Florida, handling thousands of cases per month. Attorney General Bill McCollum is investigating the firm for allegedly creating phony documents. McCollum’s office released three more depositions in the case Monday.
Jeffrey Tew, an attorney for Stern, has already discounted the state’s depositions, which so far have been of former employees who may be disgruntled, and said he was not allowed to cross-examine them.
Scott said Stern would get tipped off that Freddie Mac and Fannie Mae were coming to visit.
“If certain files weren’t updated correctly and there was lack of process, they would change the client code in the file. … If it was Countrywide, they would change it into a different client name with a sticker and print it out, and then these files were transferred into a room where they would hide them and keep them behind closed doors until the client would leave,” Scott said.
Scott said Stern would take care of the expense of bringing them to the office: hotel, food, rental cars – “whatever the client needed.”
Fannie and Freddie weren’t happy with progress at one point, and told Stern’s firm to “pick up the speed”… to meet quotas, Scott said.
When Freddie Mac officials would leave the office, the staff would change the file codes back again. She said she personally did this on five or six occasions, involving more than 500 files.
Scott said some managers would look the other way when process servers billed for service on three or more people at one address, even though the case only involved one person.
If they found files without the proper notice of service documents, they gave them to office manager Cheryl Samons, and the files would reflect the proper paperwork within an hour or two, Scott said.
South Florida Business Journal - by Paul Brinkman