Foreclosure mess: Fake signatures and lavish gifts

By Dugald McConnell, CNN producer


WASHINGTON, D.C. (CNNMoney.com) -- As the robo-signing scandal continues to unfold, new allegations have been released about attorneys producing fraudulent foreclosure documents and receiving lavish company rewards.

At one of the largest foreclosure-processing firms in the country, documents were signed by an official who hadn't read them, according to documents released on Monday as part of an investigation by Florida Attorney General Bill McCollum.

McCollum joins the attorneys general in all 50 states in investigating the processing of foreclosures and whether homeowners have been evicted by banks without the required reviews or correct procedures.

According to a sworn deposition released by McCollum's office, Cheryl Salmons, the operations manager at the Florida law firm of David J. Sterns, signed off on as many as a thousand foreclosure files per day.

In the deposition, Salmons' former assistant, Kelly Scott, also claimed the law firm rewarded her boss with vacations, jewelry, and a new BMW SUV.

"She doesn't review [the documents]. She just looks," Scott said in her deposition. "She would just sign all of them."

When Salmons was out of town, "there was someone else that would sign on her behalf," Scott alleged.

Tammie Lou Kapusta, who was fired last year from her position as the firm's chief paralegal, was also questioned, and she described an overworked office that knowingly filed flawed foreclosures on behalf of banks.

Scott and Kapusta said documents were backdated, signatures were not witnessed, and a notary stamp was passed around for general use -- all in an effort to keep up with a tidal wave of foreclosure filings.

An attorney representing Stern and Salmons said the allegations are untrue.

"No misconduct is occurring at David Stern's law firm, and the firm works very diligently to make sure that all the processing is done correctly," said the firm's lawyer, Jeffrey Tew.

Stern and Salmons declined through their attorney to comment, as did Scott and Kapusta.

If the allegations are true, "that is unbelievable to me, " said Clifford Rossi, a former risk-management official at several top banks who is now at the University of Maryland. "There are a set of legal formalities that have to be processed and gone through."

Last year, as foreclosures and evictions soared, Stern's company processed more than 70,000 home foreclosures. The firm has quadrupled in size to more than a thousand employees in just a couple of years, according to former-employee Kapusta, and moved to an eight-story office building in Plantation, Fla. Stern has bought tens of millions of dollars worth of property, yachts, and luxury cars.

"I think that's an American success story," said Tew, the firm's lawyer. "Keep in mind that the people haven't paid their mortgage, and the bank is entitled to foreclose."

But several top banks have said they will no longer seek the firm's services. And on Tuesday, the company announced that CEO David Stern is giving up the title of chairman, and the president and two vice presidents are resigning.

Still, Tew said he has turned over 25,000 documents to state officials, and there is currently no indication that investigators have found anything problematic in them.

"All these foreclosures are supervised by the Supreme Court judge," he said. "What the David Stern Law Firm has done is use modern technology to efficiently process legitimate foreclosures."

CNN's Brian Todd contributed to this report. To top of page


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