"Foreclosure Mill" King David Stern Now in Deep Financial Trouble
A bit of justice at work. It looks like the man who made a fortune off of other people's misfortune is getting a taste of his own medicine. Andy Kroll at Mother Jones reported that David Stern is closing down his foreclosure law practice.
The reversal of fortune for David Stern and his law firm has been swift and breathtaking. A little over a year ago, the Stern's operation reigned king in the foreclosure business. Its clients included Wall Street powerhouses such as JPMorgan Chase, Bank of America, and Citgroup; the firm was also cozy with government housing corporations Fannie Mae and Freddie Mac, which hand-picked Stern's firm operation to process foreclosure cases for them. In 2009, the firm handled 70,000 foreclosure cases, and employed more than 1,000 people--paralegals, attorneys, paper-pushers, secretaries, and more. From 2006 to 2008, revenue generated by the non-legal, foreclosure-related parts of Stern's operations spiked from $40 million to $200 million. But the big payoff didn't come until January 2010, when Stern spun off those lucrative non-legal operations into a separate, publicly-traded company, netting him $58.5 million.
All this earned Stern multi-million dollar properties, yachts and oodles of fancy sports cars. But the cash came from shady financial dealings that appear to be outright criminal. As Kroll writes:
But last fall, the business empire that allowed Stern to live like a king began to crumble. Days after Mother Jones published my investigation into Stern and the world of foreclosure mills, the Florida attorney general announced a probe into Stern's firm and two others to determine whether "improper documentation may have been created and filed with Florida courts to speed up foreclosure processes, potentially without the knowledge or consent of the homeowners involved." It's all been downhill since then for Stern: Fannie and Freddie dropped him from their "designated counsel" program, and many big banks and mortgage servicing companies stopped hiring his firm. Citing MoJo's reporting, members of Congress demanded investigations into why Fannie and Freddie ever did business with Stern's firm and others like it. Soon, no one, it seemed, wanted to do business with the Law Offices of David J. Stern.
Now his publicly traded company is worthless and he's selling off his pricey assets, laying off staff and is under investigation by the Florida Attorney General. The only shame is that his fall from the top took so long.