Citigroup Claims No 'Robo-Signings' Despite Using Foreclosure King

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His firm, which filed 70,382 foreclosure cases last year, is the largest of four under investigation by McCollum for allegedly filing improper documents with courts to hasten the overloaded foreclosure process.

Foreclosure Industry Poster Boy

To detractors, the 50-year-old Stern has become emblematic of the foreclosure crisis, the architect of what they call a giant assembly line that has undermined struggling homeowners at a time of record foreclosures. Nationwide, there were 2.8 million foreclosures in 2009. Florida leads the nation in foreclosures with more than 400,000 filings this year alone.

"He is notorious in Florida and, in the rest of the country, we pay some attention to Florida because the worst behavior often emanates from there," said Linda Fisher, a professor and mortgage-fraud expert at Seton Hall University's law school. She said she had no direct knowledge of the Stern's practices. "I've heard some pretty bad stories about Stern for at least the last couple of years or so."

To defenders, Stern is a hard worker who has legally reaped enormous profits representing banks and financial services in actions against tens of thousands of delinquent borrowers.

"It's really unfair to make the foreclosure lawyer ... somehow a villain," Tew said. "With the increase in volume, there's no question that David firm's revenues have grown dramatically but there's nothing wrong with that. He's not gouging."

Tew said Stern's firm makes about $1,400 per foreclosure, totaling about $98 million last year.

Still, the rising foreclosure tide also meant shortcuts and sloppy legal work, according to Kapusta's sworn statement to the state attorney general.

The paralegal, who worked for Stern a little more than a year, described an office where signatures on notarized documents were regularly forged, legal papers were outsourced to Guam and the Philippines, and shouting matches erupted when cases stalled.

The accusations, in a sworn statement taken late last month by the Florida attorney general, coincide with mounting nationwide criticism of the practices used to take homes from families.

Kapusta, who claims she was fired by the firm in July 2009 after refusing to falsify documents, said Stern's business jumped from about 200 employees to 1,100 in one year as foreclosures skyrocketed and staff struggled to keep up.

Notary stamps were always available, and employees such as Kapusta, who were not notaries, routinely used them on official documents, she said. Those who could best fake the signature of the person who verified foreclosure affidavits were allegedly sought out to forge her name.

"If you focus on the way these businesses operate, it's, at best, sloppy and, at worst, fraudulent," Fisher said of the firms that have become known as foreclosure mills. "The whole system was broken down."

Tew dismissed Kapusta's allegations as simply untrue, the rants of a disgruntled former employee. "You can see she has a real vindictiveness against the firm," he said.

Stern's lawyer denied any wrongdoing in the foreclosure process.

"There is no question that there is a necessity to make these foreclosures correct and appropriate," Tew said. "We do not admit that there was any intentional cutting of corners. There may have been some human error on a very small percentage but there was no intentional cutting of corners."

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