June Clarkson and Theresa Edwards Were Fired After Revealing Widespread Foreclosure Fraud
June Clarkson went to Ernie's Bar-B-Q in Fort Lauderdale to have lunch with her supervisor, Bob Julian; and some coworkers. It was a Friday in May 2011, the end of a hectic workweek at the local economic crimes unit of the Office of the Attorney General.
Clarkson, a small, lively woman with glasses and blond hair, had left
a private law firm to accept the sub-$60,000-a-year job. She relished
the idea of being a public watchdog, of digging into the records of
companies to catch them trying to cheat customers.
"It was just right up my alley: people defrauding other people, companies defrauding the public. I thought it was the best thing that had ever fallen into my lap," Clarkson recalls.
She worked closely with colleague Theresa Edwards. Their typical assignments involved consumer fraud, but in 2010, they started getting calls from hard-up homeowners. Millions of families had faced foreclosure in the wake of the housing collapse; most had capitulated under the power of giant banks and simply surrendered their homes. But more and more, Clarkson was hearing from individuals who were fighting back.
These homeowners noticed mistakes in the documents that the banks were using as the basis to seize people's homes: strange signatures, missing information, notary seals with no signature, dates in the future. Skeptics began wondering whether these were in fact not innocent mistakes but symptoms of intentional and possibly systemic fraud. Clarkson and Edwards were some of the first public officials willing to listen to these accusations.
Clarkson noticed Julian's phone ringing during lunch but didn't pay much attention. They drove back to the downtown Fort Lauderdale office building they shared with several of the area's most powerful law firms.
Clarkson returned to her desk, reading through piles of documents. Recently she had been investigating Lender Processing Services (LPS), a company that, by some estimates, helped prepare paperwork for half the foreclosures in the country. Every time she found a red flag — a suspect signature, perhaps, or an intriguing memo — she went next door to Julian's office and showed him. But since lunch, he hadn't been acting normally, she thought. Clarkson came back a couple of times, and each time she announced a discovery, it seemed to pain Julian. Eventually he closed his door, but Clarkson knocked again. Julian just looked up at her. She thought he might be sick. "What's the matter?" she asked. "I'm doing a good job!"
"I know," she remembers him saying. She left and closed the door.
Edwards came back from a morning of depositions and stopped by Julian's office. She was tall and calm-voiced with reddish-brown hair, more experienced at the AG's office than Clarkson.
"Get June and come in here," he told her.
He cut straight to the chase: "You're both done at the end of the day. It's a done deal, all the way up to Tallahassee. You can either quit or be terminated," they remembered him saying.
Clarkson and Edwards left the office, stunned. Edwards had known Julian since law school, and the three of them had worked closely together. The two investigators considered themselves the hardest-working people in the office and had recently received a commendation for their work. Julian had encouraged them to go after the foreclosure-fraud cases with all they had, and they even helped win a $2 million settlement with the foreclosure law firm of Marshall Watson, which had been accused of fudging its documents. So what happened?
The women say that, at the time, they had no idea. But over the past year, as supporters have rallied to their side, they've started to believe they were ousted for political reasons. Going after powerful law firms and banks didn't sit too well with the state's new, business-friendly Republican administration, including Gov. Rick Scott and Attorney General Pam Bondi.
Since their ouster, the women have moved on to private practice and become heroes to some, though their power in court is a shadow of their former influence. Meanwhile, the mortgage industry has not exactly gotten its papers in order.
The complicated system of investments that underlies the industry — mortgage-backed securities, government-sponsored enterprises — may seem distant and fanciful to buyers when they sign on the dotted line and buy into the American dream of home ownership. But the demanding letters that can suddenly show up in the mail — pay now or lose your home — are undeniably real. What if the documentation to back up the bank's claim to your house were missing or incomplete, if the bank was deriving its power from a few pieces of paper slapped together at a document mill? How would you know?
One Saturday afternoon in May 2010, Clarkson was manning the attorney general's table at a mortgage-fraud seminar at Florida International University in Miami. Much of the discussion was about two-bit scams, like companies offering too-good-to-be-true loan modifications. A woman came up to the table. "I've been trying to get in touch with you," said Lisa Epstein, a sharp-eyed brunet in her 40s.
Epstein, a registered nurse, was going through a divorce and had started to worry about money. She asked her lender, Chase Bank, to help work out a solution that would lower her monthly payments. "I had excellent credit and had never paid a bill late," she says. That inquiry led to two surprises: First, Chase told her that another bank, Wells Fargo, was involved and would not allow any sort of loan modification. Second, after weeks of persistence, Chase suggested that no modification would ever happen unless she stopped paying her mortgage for three months.
After getting booted from the Attorney General's
Office a year ago, June Clarkson (left) and Theresa Edwards started a
private law partnership in Fort Lauderdale.
Lisa Epstein was one of the first people to bring
faulty documents to Clarkson and Edwards and is currently running for
Palm Beach clerk of courts.
"It was just right up my alley: people defrauding other people, companies defrauding the public. I thought it was the best thing that had ever fallen into my lap," Clarkson recalls.
She worked closely with colleague Theresa Edwards. Their typical assignments involved consumer fraud, but in 2010, they started getting calls from hard-up homeowners. Millions of families had faced foreclosure in the wake of the housing collapse; most had capitulated under the power of giant banks and simply surrendered their homes. But more and more, Clarkson was hearing from individuals who were fighting back.
These homeowners noticed mistakes in the documents that the banks were using as the basis to seize people's homes: strange signatures, missing information, notary seals with no signature, dates in the future. Skeptics began wondering whether these were in fact not innocent mistakes but symptoms of intentional and possibly systemic fraud. Clarkson and Edwards were some of the first public officials willing to listen to these accusations.
Clarkson noticed Julian's phone ringing during lunch but didn't pay much attention. They drove back to the downtown Fort Lauderdale office building they shared with several of the area's most powerful law firms.
Clarkson returned to her desk, reading through piles of documents. Recently she had been investigating Lender Processing Services (LPS), a company that, by some estimates, helped prepare paperwork for half the foreclosures in the country. Every time she found a red flag — a suspect signature, perhaps, or an intriguing memo — she went next door to Julian's office and showed him. But since lunch, he hadn't been acting normally, she thought. Clarkson came back a couple of times, and each time she announced a discovery, it seemed to pain Julian. Eventually he closed his door, but Clarkson knocked again. Julian just looked up at her. She thought he might be sick. "What's the matter?" she asked. "I'm doing a good job!"
"I know," she remembers him saying. She left and closed the door.
Edwards came back from a morning of depositions and stopped by Julian's office. She was tall and calm-voiced with reddish-brown hair, more experienced at the AG's office than Clarkson.
"Get June and come in here," he told her.
He cut straight to the chase: "You're both done at the end of the day. It's a done deal, all the way up to Tallahassee. You can either quit or be terminated," they remembered him saying.
Clarkson and Edwards left the office, stunned. Edwards had known Julian since law school, and the three of them had worked closely together. The two investigators considered themselves the hardest-working people in the office and had recently received a commendation for their work. Julian had encouraged them to go after the foreclosure-fraud cases with all they had, and they even helped win a $2 million settlement with the foreclosure law firm of Marshall Watson, which had been accused of fudging its documents. So what happened?
The women say that, at the time, they had no idea. But over the past year, as supporters have rallied to their side, they've started to believe they were ousted for political reasons. Going after powerful law firms and banks didn't sit too well with the state's new, business-friendly Republican administration, including Gov. Rick Scott and Attorney General Pam Bondi.
Since their ouster, the women have moved on to private practice and become heroes to some, though their power in court is a shadow of their former influence. Meanwhile, the mortgage industry has not exactly gotten its papers in order.
The complicated system of investments that underlies the industry — mortgage-backed securities, government-sponsored enterprises — may seem distant and fanciful to buyers when they sign on the dotted line and buy into the American dream of home ownership. But the demanding letters that can suddenly show up in the mail — pay now or lose your home — are undeniably real. What if the documentation to back up the bank's claim to your house were missing or incomplete, if the bank was deriving its power from a few pieces of paper slapped together at a document mill? How would you know?
One Saturday afternoon in May 2010, Clarkson was manning the attorney general's table at a mortgage-fraud seminar at Florida International University in Miami. Much of the discussion was about two-bit scams, like companies offering too-good-to-be-true loan modifications. A woman came up to the table. "I've been trying to get in touch with you," said Lisa Epstein, a sharp-eyed brunet in her 40s.
Epstein, a registered nurse, was going through a divorce and had started to worry about money. She asked her lender, Chase Bank, to help work out a solution that would lower her monthly payments. "I had excellent credit and had never paid a bill late," she says. That inquiry led to two surprises: First, Chase told her that another bank, Wells Fargo, was involved and would not allow any sort of loan modification. Second, after weeks of persistence, Chase suggested that no modification would ever happen unless she stopped paying her mortgage for three months.
Epstein was aghast at losing her pristine credit score, but she
complied and stopped paying. After 90 days, she heard nothing. Around
day 117 or so, by her count, she got a knock on the door and was served
with foreclosure papers. Epstein was confused when she examined the
documents and saw that the company attempting to seize her home was not
Chase or Wells Fargo but U.S. Bank.
Epstein began spending her days off at the courthouse, sitting in on foreclosure-court proceedings to acquaint herself with the baffling intricacies of the system. She also looked up other people's documents in the public record. She noticed a pattern in documents that, like hers, had been signed by two women with the same last name: Erin and Lisa Cullaro. In many instances, both the signature and notary lines had the same handwriting; it seemed like one or the other would just sign both of the names. After a little digging, she learned that they were sisters-in-law who both worked at a law firm called Florida Default Law Group in Tampa.
Epstein brought her documents when she finally met with Clarkson and
Edwards in the conference room at their downtown office. Epstein slid a
piece of paper across the table. Clarkson and Edwards realized, to their
horror, that one of the signers, Erin Cullaro, was a colleague of theirs — a fellow fraud investigator at the attorney general's Tampa office.
Clarkson and Edwards had no choice but to report the discovery to Julian, who dutifully sent the news up the line. A resulting investigation revealed that Cullaro had been moonlighting as a document signer for the law firm without telling anyone at her government job. Cullaro was reprimanded and later dismissed from the Attorney General's Office.
"It wasn't fun" turning in a coworker, Clarkson recalls. "It was one of the most horrible experiences I've ever had to go through, besides being fired."
But amid this tempest, Clarkson and Edwards were discovering more and more suspicious documents. With the blessing of Julian and a hunch that something strange was going on, Clarkson and Edwards dug into the ever-deepening piles of papers on their desks.
Before she went on 60 Minutes with revelations of paste-up documents, before she sued her bank, and before she won that suit with an $18 million payout, Lynn Szymoniak could easily have been mistaken for an obsessive nutjob. The living room of her Palm Beach Gardens house contained a wall of binders filled with copies of other people's court records. She burned out one copy machine, and a neighbor donated another. She showed up to meetings with fellow foreclosure activists carrying reams of paper and giant, blown-up copies of documents with obvious mistakes.
If Epstein played the role of the naive newcomer who was surprised at the mistakes she was finding, Szymoniak was the wonkish cynic who figured there must be more. A lawyer with experience investigating white-collar crimes, she had bought a home in 1998 and successfully refinanced in 2006. She says that in early 2008, her bank had raised her interest rate in a technical violation of the terms of her mortgage agreement, so she stopped paying until it could be sorted out. The bank sued for foreclosure that July.
She looked at the assignment of mortgage — a document that proves which bank owns a mortgage, much like a title proves who owns a car — that the bank was using as a basis to seize her home. It was dated September 2008: two months into the future.
Szymoniak asked for more documentation. At first, the servicing company that handled the foreclosure told her it couldn't find the promissory note — an essential document that she signed when she bought the house. By signing a promissory note, the homeowner promises to pay back the bank for a loan to buy a house. Szymoniak says she never received a copy of the promissory note when she initially bought her house.
"A year and a half after my foreclosure was started, they said, 'Eureka! We found the note!' " Szymoniak recalls. She says she was given copies of it, along with two different versions of the "allonge," a page on which the bank endorsed it with an official stamp.
"One of them had a filing strip across the top with a book and page number" indicating where the original version was filed in the courthouse. Ever the skeptic, Szymoniak says she "trooped on down to the courthouse to find what was actually at that book and page number." A clerk helped her pull up the digital file, and Szymoniak was shocked. In the specified place was a different document altogether — although the header and footer matched the copy of the note that the bank had provided.
"Somebody had cut the top strip off my mortgage and the bottom strip and pasted it to the allonge [and then gave me a photocopy]. If you held it up and put it on tracing paper and interposed it, you could tell it was the exact thing."
The bank later blamed a broken copier, but Szymoniak is more blunt: "Documents were being fabricated."
Epstein began spending her days off at the courthouse, sitting in on foreclosure-court proceedings to acquaint herself with the baffling intricacies of the system. She also looked up other people's documents in the public record. She noticed a pattern in documents that, like hers, had been signed by two women with the same last name: Erin and Lisa Cullaro. In many instances, both the signature and notary lines had the same handwriting; it seemed like one or the other would just sign both of the names. After a little digging, she learned that they were sisters-in-law who both worked at a law firm called Florida Default Law Group in Tampa.
Lynn Szymoniak looked into her own foreclosure and
found suspicious documents. She recently won $18 million in a lawsuit
with the U.S. government against several banks.
Clarkson and Edwards had no choice but to report the discovery to Julian, who dutifully sent the news up the line. A resulting investigation revealed that Cullaro had been moonlighting as a document signer for the law firm without telling anyone at her government job. Cullaro was reprimanded and later dismissed from the Attorney General's Office.
"It wasn't fun" turning in a coworker, Clarkson recalls. "It was one of the most horrible experiences I've ever had to go through, besides being fired."
But amid this tempest, Clarkson and Edwards were discovering more and more suspicious documents. With the blessing of Julian and a hunch that something strange was going on, Clarkson and Edwards dug into the ever-deepening piles of papers on their desks.
Before she went on 60 Minutes with revelations of paste-up documents, before she sued her bank, and before she won that suit with an $18 million payout, Lynn Szymoniak could easily have been mistaken for an obsessive nutjob. The living room of her Palm Beach Gardens house contained a wall of binders filled with copies of other people's court records. She burned out one copy machine, and a neighbor donated another. She showed up to meetings with fellow foreclosure activists carrying reams of paper and giant, blown-up copies of documents with obvious mistakes.
If Epstein played the role of the naive newcomer who was surprised at the mistakes she was finding, Szymoniak was the wonkish cynic who figured there must be more. A lawyer with experience investigating white-collar crimes, she had bought a home in 1998 and successfully refinanced in 2006. She says that in early 2008, her bank had raised her interest rate in a technical violation of the terms of her mortgage agreement, so she stopped paying until it could be sorted out. The bank sued for foreclosure that July.
She looked at the assignment of mortgage — a document that proves which bank owns a mortgage, much like a title proves who owns a car — that the bank was using as a basis to seize her home. It was dated September 2008: two months into the future.
Szymoniak asked for more documentation. At first, the servicing company that handled the foreclosure told her it couldn't find the promissory note — an essential document that she signed when she bought the house. By signing a promissory note, the homeowner promises to pay back the bank for a loan to buy a house. Szymoniak says she never received a copy of the promissory note when she initially bought her house.
"A year and a half after my foreclosure was started, they said, 'Eureka! We found the note!' " Szymoniak recalls. She says she was given copies of it, along with two different versions of the "allonge," a page on which the bank endorsed it with an official stamp.
"One of them had a filing strip across the top with a book and page number" indicating where the original version was filed in the courthouse. Ever the skeptic, Szymoniak says she "trooped on down to the courthouse to find what was actually at that book and page number." A clerk helped her pull up the digital file, and Szymoniak was shocked. In the specified place was a different document altogether — although the header and footer matched the copy of the note that the bank had provided.
"Somebody had cut the top strip off my mortgage and the bottom strip and pasted it to the allonge [and then gave me a photocopy]. If you held it up and put it on tracing paper and interposed it, you could tell it was the exact thing."
The bank later blamed a broken copier, but Szymoniak is more blunt: "Documents were being fabricated."
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