Robosigning king David J. Stern visited “massive injury” on Florida’s foreclosure system and should be stripped of his license to practice law, a judge said Monday.
Stern was accused of running a foreclosure mill that used flawed and fraudulent documents to push mortgage defaults through Florida courts during the Great Recession. The Florida Bar asked Stern to give up his license.
During a five-day hearing in Fort Lauderdale this month, Stern argued that his firm simply made a few mistakes in a tiny percentage of the 277,000 foreclosure cases it handled.
“Mistakes do happen,” Stern said.
Palm Beach County Circuit Judge Nancy Perez disagreed. Appointed “referee” in the case by the Florida Supreme Court, she rejected Stern’s arguments in a strongly worded 35-page report released Monday.
“His failure to exercise care resulted in massive injury to the system,” Perez wrote. “The incidents were not isolated, but rather a representation of the culture of the firm.”
So explosive was the growth of Stern’s Plantation-based firm that he sold his back-office operations in 2010 for $58.5 million, a sum partly based on the volume of cases he handled. The buyer was DJSP Enterprises, a shell company based in the British Virgin Islands that listed Stern as its chairman, president and chief executive.
DJSP Enterprises posted sales of $260 million in 2009, according to a filing with the Securities and Exchange Commission. Stern’s empire collapsed in 2010 amid allegations that he ran a robosigning sweatshop more concerned with speed — and hefty legal fees — than accuracy.
Testifying this month, Stern, 53, said his attorneys had no problem handling up to 1,600 cases each, a workload he later cut to 900 cases.
“These files aren’t brain surgery,” Stern said. “That’s why they could handle the volume. These are cookie cutter processes.”
Perez wasn’t swayed. She pointed to one Broward County judge who felt compelled to dismiss 15 of Stern’s cases in the second half of 2009 because Stern’s attorneys didn’t show up at case management conferences.
“Mr. Stern has not expressed any remorse in these proceedings,” Perez wrote. “He has taken no responsibility.”
Perez also scolded Stern for blaming his attorneys and paralegals for the flaws in foreclosure filings.
“As the only partner and sole managing attorney, he has the ultimate responsibility for his firm,” Perez wrote.
Perez ordered Stern to pay the Florida Bar’s legal costs of $49,767.62. Stern has 60 days to request a Supreme Court review of Perez’s recommendation that he lose his law license.