Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

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

Overnight Avg Rate Latest Change Last Week
30 yr fixed3.63%3.71%
15 yr fixed2.76%2.84%
5/1 ARM3.10%3.09%
30 yr refi3.63%3.74%
15 yr refi2.79%2.89%
Rate data provided
by Bankrate.com
View rates in your area
Find personalized rates:
  • Find Homes for sale
    Real estate and homes for sale on Trulia

  • Property Type
  • Find a home in: New York | Atlanta | Chicago | Los Angeles
  • Washington D.C | Houston | Philadelphia | More options
Index Last Change % Change
Dow 16,073.82 59.44 0.37%
Nasdaq 4,343.20 74.44 1.74%
S&P 500 1,871.71 19.50 1.05%
Treasuries 1.73 -0.00 -0.06%
Data as of 12:43pm ET
Company Price Change % Change
Bank of America Corp... 12.20 0.00 0.00%
Facebook Inc 102.79 3.25 3.27%
Pfizer Inc 29.80 0.70 2.40%
Walt Disney Co 88.67 -3.65 -3.95%
Microsoft Corp 50.00 0.72 1.46%
Data as of 12:27pm ET


The self-proclaimed king of burgers now has hot dogs on the menu for the first time in its 62-year history. More

Fed Chair Janet Yellen's testimony highlighted concerns about the most recent volatility in global markets as well as the economy's gains. More

Digital, instant and on-demand. That's how we get our movies, travel arrangements, and even bills. Why not our paychecks? More

STEM3 Academy was started specifically for students with autism, ADHD and Asperger's Syndrome. Its STEM-based curriculum is breaking through barriers. More

Instead of asking how long your savings will last, ask how long you should plan for your nest egg to last so it can support you throughout retirement. More