Andy Kroll

Andy Kroll

Senior Reporter

Andy Kroll is Mother Jones' Dark Money reporter. He is based in the DC bureau. His work has also appeared at the Wall Street Journal, the Guardian, Men's Journal, the American Prospect, and TomDispatch.com, where he's an associate editor. Email him at akroll (at) motherjones (dot) com. He tweets at @AndyKroll.

Get my RSS |

Advertise on MotherJones.com

Fallen Foreclosure King David J. Stern Disbarred

| Mon Jan. 13, 2014 12:19 PM EST

The long, legal saga of David J. Stern, the south Florida attorney who made a fortune off the wave of home foreclosures stemming from the housing crisis, has reached its end.

After years of court battles over the practices of Stern's once-mighty, multimillion-dollar law firm, the Florida Supreme Court last week disbarred Stern. As the Palm Beach Post reports, a Palm Beach County judge who refereed Stern's case and who recommended disbarment criticized the 53-year-old lawyer for failing to take responsibility or show "any remorse" for his firm's actions. Mother Jones was one of the first news outlets to expose the shoddy and legally questionable work done by Stern's army of lawyers and paralegals as it foreclosed on hundreds of thousands of Floridians, including backdating crucial documents used to foreclose on homeowners. Nancy Perez, the Palm Beach County judge, said the blame fell on Stern for that shoddy work. "The incidents were not isolated, but rather a representation of the culture of the firm, as to the low level of competence and ethics," Perez wrote. "(Stern) is the lawyer. It was his firm. Mr. Stern is responsible."

Stern's firm, at its peak, was a juggernaut. In the mid and late 2000s, the government-owned enterprises Fannie Mae and Freddie Mac, as well as many of the nation's largest banks, retained Stern's firm to litigate an ever-growing pile of foreclosure cases in Florida, an epicenter of the housing meltdown. At one point, the Law Offices of David J. Stern handled as many as 100,000 foreclosure cases. Stern's firm and others like it were dubbed "foreclosure mills," employing hundreds and even thousands of lawyers and paralegals who pushed through foreclosure cases assembly-line-style. Incredibly, the federal government played a key role in creating foreclosure mills, as I reported:

Fannie and Freddie also reshaped the foreclosure industry. Their huge holdings meant they had to deal with thousands of foreclosures annually—even during time when relatively few loans were going bad. In the 1990s, the market expanded into subprime territory to feed the securitization beast, and borrowers began defaulting at higher rates. Hiring lawyers on a case-by-case basis was burdensome, so Fannie and Freddie put together a stable of law firms willing to litigate large bundles of foreclosures quickly and cheaply. They urged these handpicked firms to bring all foreclosure-related services—inspections, eviction notices, sales of repossessed properties, and so forth—in-house. Thus emerged the foreclosure supermarket.

...Stern's company is one of dozens of mills that now churn through more than a million cases a year for Fannie and Freddie, big banks, and private lenders. Built like industrial assembly lines, the mills employ small armies of paralegals and other low-level employees who mass-produce court filings, run title searches, and schedule scores of hearings and property auctions daily. Staff attorneys appear for dozens of court hearings in rapid succession, dashing from one courtroom to the next with rolling file cabinets. Stern and his ilk typically create in-house subsidiaries that bill the parent law firm for the various paper-pushing tasks. "All sorts of crap is loaded on," notes Irv Ackelsberg, a Philadelphia consumer-law attorney.

The business model is simple: to tear through cases as quickly as possible. (Stern's company handled 70,382 foreclosures in 2009 alone.) This breakneck pace stems from how the mills get paid. Rather than billing hourly, they receive a predetermined flat fee for the foreclosure—typically around $1,000—plus add-ons for all the side services. The more they foreclose, the more they make. As a result, say consumer attorneys and legal experts, even families who have been foreclosed upon illegally—and can afford to make good on their mortgages—end up getting steamrolled. "It's 'How fast can I turn this file?'" says Ira Rheingold, executive director of the National Association of Consumer Advocates in Washington, DC. "For these guys, the law is irrelevant, the process is irrelevant, the substance is irrelevant."

The foreclosure mill model made Stern a very rich man. When I reported on him in August 2010, he lived in a $15 million, 16,000-square-foot mansion on the Atlantic Intracoastal Waterway in Fort Lauderdale. Docked on his property was Misunderstood, his 130-foot, jet-propelled Mangusta yacht—a $20 million-plus replacement for his previous 108-foot Mangusta. He also owned four Ferraris, four Porsches, two Mercedes-Benzes, a Cadillac, and a Bugatti.

But the cavalier, always-be-foreclosing attitude of his firm caught up with Stern. Days after I published my investigation into Stern, then-Florida Attorney General Bill McCollum opened an investigation into his firm and two other foreclosure mills for "allegedly improper actions." Since then, Stern has been in and out of court fighting off lawsuits targeting him and his firm, which has since the vast majority of its business. The news of Stern's disbarment is just the latest blow for the one-time king of the foreclosure business. The state Supreme Court ruling ordered Stern to close his firm within 30 days. 

Stern, for his part, seems to have found a new calling after his foreclosure empire crumbled. He's now an investor in Five Guys burger joint franchises.

Chris Christie's Not in the Clear Yet. These Text Messages Show Why.

| Fri Jan. 10, 2014 3:57 PM EST
New Jersey Gov. Chris Christie

At his Thursday press conference, New Jersey Gov. Chris Christie said he played no part in causing a traffic jam last fall on the George Washington Bridge and in nearby Fort Lee. He ultimately took responsibility for the debacle, but Christie said his deputy chief of staff, Bridget Anne Kelly, had ordered the traffic jam without his knowledge. Emails showed that she had been in cahoots with David Wildstein, a Christie appointee at the Port Authority of New York and New Jersey. Christie fired Kelly on Thursday, and he insisted that she was the only member of his inner circle who knew that the traffic mess was politically motivated and not the result of a supposed traffic study.

Yet text messages turned over to investigators by Wildstein raise the possibility that months before the disclosure this week of Kelly's bombshell email—"Time for some traffic problems in Fort Lee"—other senior Christie aides knew the traffic study excuse wasn't true.

Here's the backstory. The traffic jam happened on the week of September 9 and quickly became a local controversy. Lawmakers began investigating, and on November 25, Bill Baroni, another Christie appointee at the Port Authority, testified before the New Jersey Assembly's transportation, public works, and independent authorities committee. Baroni told lawmakers that the lane closures were part of a study to determine whether Fort Lee should have three dedicated lanes leading onto the George Washington Bridge.

State lawmakers didn't buy Baroni's explanation. "I think that at best this was clumsy and ham-handed," said committee chair John Wisniewski, a Democrat. "At worst, this was political mischief by a political appointee."

Immediately after his testimony, according to documents released this week, Baroni texted David Wildstein asking how Christie administration officials in Trenton, the state capital, had reacted to his testimony:

[11/25/2013 11:58 AM] David Wildstein: You did great
[11/25/2013 11:58 AM] Bill Baroni: Trenton feedback
[11/25/2013 11:59 AM] Bill Baroni: ?
[11/25/2013 11:59 AM] David Wildstein: Good
[REDACTED MESSAGE]
[11/25/2013 11:59 AM] Bill Baroni: Just good? Shit
[11/25/2013 12:00 PM] David Wildstein: No i have only texted brudget [Bridget Anne Kelly] and Nicole they were VERY happy
[11/25/2013 12:00 PM] Bill Baroni: Ok
[11/25/2013 12:00 PM] David Wildstein: Both said you are doing great
[11/25/2013 12:06 PM] David Wildstein: Charlie said you did GREAT

Note the two names in that exchange we have placed in bold type: Nicole and Charlie. According to public records and news stories, the only Nicole politically close to Christie at the time was Nicole Davidman, who was the governor's campaign finance director in 2013 and the wife of Christie's press secretary. The only Charlie in Christie's inner circle was Charles McKenna, Christie's chief counsel and the aide who helped lead Christie's internal investigation of the bridge mess. State investigators assume that the Charlie mentioned in this text is McKenna, according to a legislative source, but they are not yet certain about Nicole (though they have not yet identified other possibilities).

Presuming these texts refer to Davidman and McKenna, here's what needs to be answered: Were these two Christie lieutenants happy about Baroni's testimony for the same reason as Kelly? Both Kelly and Wildstein knew the study wasn't the true cause of the traffic mess, and it's reasonable to conclude that they were delighted because Baroni had stuck to that story and not said anything about Kelly instructing Wildstein to cause the jam that paralyzed traffic in Fort Lee for days. But did Charlie and Nicole cheer Baroni's bogus testimony in the same way? And what does it mean that Wildstein, the man who arranged the lane closures, lumped together Kelly, the aide who instigated the closures, and Nicole? (Christie touched on this only briefly in his press conference: "I believe that I've spoken to everyone who was mentioned in the emails except for Charlie McKenna, who is away at a family funeral. And I am confident, based upon my conversations with them, that they had no prior knowledge nor involvement in this situation.")

This is just one line of inquiry Bridgegate investigators ought to focus on. Christie asserts that Kelly was the only member of his political team in on the bridge caper. But if others were aware of Baroni's stonewalling, the governor has a problem—especially if that includes McKenna, whom Christie has used to probe the bridge scandal. At the least, it might be ill-advised for the governor to have a fellow who apparently praised Baroni's bogus testimony in charge of investigating the cover-up.

Christie's office did not respond to a request for comment for this article.

Tue May. 25, 2010 8:22 AM EDT
Mon May. 24, 2010 12:35 PM EDT
Mon May. 24, 2010 8:47 AM EDT
Fri May. 21, 2010 9:02 AM EDT
Thu May. 20, 2010 8:48 PM EDT
Thu May. 20, 2010 2:23 PM EDT
Wed May. 19, 2010 3:58 PM EDT
Wed May. 19, 2010 1:50 PM EDT
Wed May. 19, 2010 9:44 AM EDT
Tue May. 18, 2010 12:41 PM EDT
Tue May. 18, 2010 9:41 AM EDT
Tue May. 18, 2010 8:54 AM EDT
Mon May. 17, 2010 2:26 PM EDT
Mon May. 17, 2010 12:49 PM EDT
Mon May. 17, 2010 7:42 AM EDT
Thu May. 13, 2010 11:50 AM EDT
Thu May. 13, 2010 9:52 AM EDT
Wed May. 12, 2010 9:38 AM EDT
Tue May. 11, 2010 12:44 PM EDT
Tue May. 11, 2010 10:41 AM EDT
Tue May. 11, 2010 9:51 AM EDT
Mon May. 10, 2010 5:49 PM EDT
Mon May. 10, 2010 2:13 PM EDT
Fri May. 7, 2010 9:47 AM EDT
Thu May. 6, 2010 11:15 AM EDT
Thu May. 6, 2010 10:29 AM EDT
Thu May. 6, 2010 9:04 AM EDT
Wed May. 5, 2010 4:00 PM EDT
Wed May. 5, 2010 1:23 PM EDT
Wed May. 5, 2010 12:10 PM EDT
Wed May. 5, 2010 9:15 AM EDT
Wed May. 5, 2010 8:19 AM EDT
Tue May. 4, 2010 3:00 PM EDT
Tue May. 4, 2010 9:24 AM EDT
Tue May. 4, 2010 8:34 AM EDT
Mon May. 3, 2010 10:18 AM EDT
Mon May. 3, 2010 8:46 AM EDT
Fri Apr. 30, 2010 10:08 AM EDT
Thu Apr. 29, 2010 1:32 PM EDT
Thu Apr. 29, 2010 10:54 AM EDT
Thu Apr. 29, 2010 7:46 AM EDT
Wed Apr. 28, 2010 12:32 PM EDT
Wed Apr. 28, 2010 12:02 PM EDT
Wed Apr. 28, 2010 8:50 AM EDT
Tue Apr. 27, 2010 4:06 PM EDT
Tue Apr. 27, 2010 12:54 PM EDT
Tue Apr. 27, 2010 9:51 AM EDT