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Letter To Government
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To:
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Department of Justice
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Assistant Attorney General Michael Chertoff
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Criminal Fraud Division
Department of Justice
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950 Pennsylvania Ave.
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Washington, District of Columbia 20530-000
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June 19, 2002
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Re: Homeowners Urge U.S. Attorney to Review California Home Foreclosure Racket
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Michael Chertoff - Assistant Attorney General
Department of Justice
Criminal Division
950 Pennsylvania Ave.
Washington, D.C. 20530-0001
We are writing to you on behalf of the National Coalition of Homeowners to request an investigation into the following persons. We are a non-partisan group.
Gray Davis, governor of California
Bill Lockyer, attorney general of California
Lou Correa, assemblyman in California legislature
James Dutra, assemblyman in California legislature
Christine Kehoe, assemblywoman in California legislature
Jackie Speier, senator in California legislature
This is a partial list of the main names.
The 2 central reasons for requesting an investigation are conflict of interest and political corruption. The information to substantiate this is necessarily preliminary. We will be happy to provide more information on request. For convenience sake, the information begins in 1985.
In that year, the California legislature passed a law entitled the Davis Stirling Act. "Davis" is Gray Davis. "Stirling" is Larry Stirling, then a member of the assembly, and now a judge in San Diego. The law regulated homeowner associations. In California, at least 7 million people live in homeowner associations. Nationwide, the estimate is about 50 million.
Davis chose as the author of the bill, Katherine Rosenberry. This is of the utmost significance, because it involves a clear conflict of interest, in the same way that Davis has employed energy consultants who both own stock in and receive income from the the energy companies with which they are negotiating on behalf of the state. (Note: California Secretary of State Bill Jones requested U.S. Attorney to Review Conflicts of Interest Scandal Involving Energy Advisors and Oracle Software in May and June 2002)
Rosenberry was the president of Community Associations Institute(CAI), the leading nationwide lobbyist group of vendors (lawyers, managers, accountants and other service personnel) to homeowner associations. She designed the legislation so that it would be a cash register for these vendor members of CAI. For example, it authorized nonjudicial foreclosure on homes for even the minutest nonpayment of association assessment fees and unlimited lawyers fees. For instance, one family had to file a lawsuit to stop the foreclosure of their home for a false $5 late fee.
This provision in the law is very lucrative for lawyers in at least two ways. First, if a foreclosure does go through, the lawyer not only makes his fees, (in the above mentioned case about $100,00), but he can also purchase the home for a pittance. In one recent Texas case, a lady was evicted from her home for $800, and the house was sold for $90,000.
Second, lawyers make a lot of money by sending dunning letters to homeowners threatening foreclosure. Many homeowners, often too afraid and unable to financially afford an expensive lawsuit, simply pay the amount demanded, which can often run into the thousands. This is extortion. Rosenberry wrote the law.
Another instance of conflict of interest is Jackie Speier, head of the California senate insurance committee. California mandates that homeowner associations carry liability and D&O insurance. This insurance is often used to attack the payers of the insurance premiums - the homeowners. Homeowners have asked Speier repeatedly to provide protections for homeowners in this state-mandated insurance. Speier has consistently refused to do so. A review of her "campaign contributors" include many insurance companies and association managers.
Since 1985 to the present, CAI lawyers and other vendors have consistently made "campaign contributions" to politicians in the California legislature, to obtain favorable amendments to the Davis Stirling Act. There have been at least 32 amendments.
For example, the original Davis Stirling Act allowed the reserve funds of homeowner associations to be used solely for repairs and capital replacements. One CAI law firm who was representing a homeowner association in San Juan Capistrano was illegally being paid out of these reserve funds. The CAI lawyer, Dick Fiore, was the head of the California Legislative Action Committee (CLAC), the lobbying arm of CAI. He simply went to one of his buddies in the California legislature, Dan Hauser, wined and dined him, and a law was passed by Hauser to allow the use of reserve funds for lawyers' fees. This is just one example of an "amnesty law" to cover up the illegal taking of homeowner monies by CAI lawyers.
Currently there are two bills in the California legislature that are pushing the interests of CAI vendors, AB 555 and 2289. The first is being promoted by Correa and Dutra, the second by Christine Kehoe.
AB 555 is being pushed by the California Association of Community Managers (CACM). The bill seeks to grant them monopoly status in the certification process for managers in homeowner associations. They made a $1,000 "donation" to Jackie Speier last year. AB 2289 started out as a pro consumer bill, but has been hijacked by CAI interests.
Homeowners from across the state have repeatedly run into a brick wall when they approach members of the legislature. The money given as "campaign contributions" and possibly otherwise seem to hold the members of the legislature captive. Homeowners believe that this money is buying the legislation.
They have approached Bill Lockyer, the attorney general, to take action on these matter, but he has flatly refused to do anything. When he was in the legislature, he was a friend of CAI. Now he receives huge contributions from the same lawyers whom homeowners file complaints against with his office. His office has refused to investigate any of the fraud, misappropriations, and conflicts of interest complaints against public officials and CAI lawyers.
This matter is of no small moment to the 7 million Californians who live in homeowner associations. Its ripple effect on the 50 million nationwide who live in homeowner associations is not small either. The damage and cost to homeowners throughout the state has been devastating, and will only increase unless prompt and decisive action is taken.
We therefore ask the Department of Justice to step in and investigate this conflict of interest and possible politicial corruption.
Thank you for your attention, and we look forward to your early response.
The National Coalition of Association Homeowners
cc:
Deputy Assistant Attorney General
John C. Keeney
(202)514-2601
Organized Crime and Racketeering Section
Chief: Bruce G. Ohr
(202)514-3594
Deputy Assistant Attorney General
Alice S. Fisher
(202)514-2601
Fraud Section
Chief: Joshua R. Hochberg
(202)514-7023
Email United States Department of Justice
Website - United States Department of Justice
About :Fraud Section United States Department of Justice
The Fraud Section is charged with directing the Federal law enforcement effort against fraud and white collar crime. The Section assumes direct responsibility for conducting grand jury investigations and prosecutions in certain cases that require centralized treatment because of the complexity of the scheme, the multi-district nature of the criminal activity, the sensitivity of the issues, or the necessity for developing model prosecutions to establish the viability of a particular statute, theory, or technique.
Fraud Section investigations often involve business crimes such as financial institution fraud; Internet fraud; fraud in the insurance industry; international criminal activities in violation of the Foreign Corrupt Practices Act; and multi-district schemes that victimize consumers, such as telemarketing and bankruptcy mills. The Section's prosecutions also focus on fraud involving government programs and procurement, including regulatory activity in the securities and commodities markets.
At the request of United States Attorneys' offices, the Section is often called upon to support litigation, consult on complex issues or coordinate investigations. The Section fashions and implements white collar crime policy, provides legal and investigative guidance to the attorneys in the Criminal Division and United States Attorneys' offices, and coordinates information-sharing about white collar crime with state and local law enforcement agencies.
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