The elusive David J. Stern, whose law firm handled foreclosures on hundreds of thousands of Florida homes, took the witness stand in his own defense Thursday with testimony so exuberant at times the judge had to ask that he lower his tone.
On the fourth day of the Florida Bar’s pursuit of 17 complaints against Stern, and with his license at stake, the 53-year-old sat before an almost empty courtroom for nearly four hours rejecting any notion that he be held accountable for flawed and fraudulent documents produced by his employees.
It’s the first time Stern has spoken publicly about the explosive growth and epic collapse of his Plantation-based firm in 2010 after the launch of an ultimately failed state investigation and allegations that he ran a foreclosure sweatshop focused more on speed than accuracy.
“These files aren’t brain surgery,” Stern said, explaining why attorneys were assigned up to 1,600 cases each in 2008 before he hired extra staff and the caseload dropped to 900 in 2010. “That’s why they could handle the volume. These are cookie cutter processes.”
As Florida’s foreclosure crisis swelled, Stern, a former college soccer player, grew his firm by taking on mega-bank clients and federal mortgage backers Fannie Mae and Freddie Mac. His office, once 800 square feet, ballooned to seven floors with 1,500 employees, including 150 attorneys.
In 2010, Stern sold the non-legal, back operations of his enterprise for $58 million.
He was rich, but with his name on so many foreclosures, he said Thursday that he became seen as “Darth Vader because you are taking people’s homes.”
“I didn’t create it, I simply represented the banks at their request in getting their collateral back,” Stern said.
Stern, and his attorney Jeff Tew, downplayed the complaints levied by the Bar as simple mistakes. The 40 examples of improperly notarized or signed documents out of 277,000 cases are minor, Stern said.
A judge’s complaint that Stern’s attorneys weren’t showing up to trial was because of a glitch in the firm’s mailroom, Stern said. And when an estimated 100,000 cases were left in limbo after Stern’s firm was fired, it was the clients’ fault for snatching away cases and ignoring Stern’s plea that they devise an orderly transfer.
Freddie Mac, Stern said, sent in “Nazis” to retrieve files.
“This is my life,” he said. “This is what I did. It’s what I poured my heart and soul into.”
Palm Beach County was left with about 9,000 Stern foreclosure cases that needed to be assigned to new attorneys after his firm was fired. Block hearings were set up to transfer the cases, but Stern acknowledged there are still foreclosures statewide where he is the attorney of record.
Stern, a tall man with a runner’s physique and closely cropped graying hair, was high energy throughout the hours-long questioning, expounding on answers at length, and at times talking over his own defense attorney to such an extent that he was scolded by the judge.
“He’s the one directing the ship in terms of your defense,” said Palm Beach County Circuit Court Judge Nancy Perez about Tew. “So you need to answer the questions that are asked.”
Although the hearing is in Broward County Court, the Florida Supreme Court appointed Perez as referee. After the end of the hearing, expected today, she will make a decision about whether Stern should face sanctions.
Bar attorneys charged that Stern should be held responsible for allowing a “culture” at his firm of lax oversight and little regard for following the rules. Earlier in the week, Judge Stanley H. Griffis of the 8th Judicial Circuit in North Florida, said he had to teach young attorneys from Stern’s firm how to try their cases — a job he didn’t feel was his.
“Even if there were just 40 files we found, is it your position that those failures should be forgiven and not be considered rule violations?” asked Bar Counsel/Senior Attorney Randi Lazarus.
“Mistakes do happen,” Stern replied.
Foreclosure defense attorney Tom Ice of Royal Palm Beach was one of the first to expose paperwork problems from Stern’s firm. He testified Tuesday about backdated affidavits, and believes Stern should be disbarred.
“Any lesser punishment will send the message that attorneys cannot be held accountable for the systems they set up in their firms that allow, even encourage, underlings to falsify evidence in a court of law,” Ice said. “He may have become a symbol for all that was wrong with the banks and the attorneys who served them when the foreclosure crisis began, but that symbolism is richly deserved.”