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AN INCISIVEMEDIA PUBLICATION VOL. 00, NO. 000
March 8, 2011

DAILY BUSINESS REVIEW

FORECLOSURE FALLOUT Firm spin-off could fold within 2 months

David J. Stern to shut

foreclosure practice
4/C
by Paola Iuspa-Abbott
piuspa@alm.com

David Stern’s reign as

South Florida’s foreclosure

PAGE
king is coming to a rapid
end.
His Plantation law firm
will shut down its foreclo-
sure practice by March 31,
according to a regulatory
filing by DJSP Enterprises,
the publicly traded com-
pany spun off from the
law firm. In a separate
letter to the state Agency
for Workforce Innovation,
DJSP said it could be
forced to shut down within
two months because of the
“sudden loss of demand”
for its services.
The Stern firm was
DJSP’s biggest customer.
Stern’s firm and DJSP
processed thousand of
foreclosures following the
collapse of the residential melanie bell
real estate market. But the Fort Lauderdale attorney Dawn Rapoport and Boca Raton attorney Chandra Parker Doucette are
two operations — which representing former Stern employees in a class action.
employed 1,200 lawyers
and support staff as recent-
ly as August 2010 — have ment agencies, including as president and chief ex- Stern estimates his law
shed most of the workers the Florida attorney gen- ecutive to focus on the law firm still needs to with-
following allegations they eral. firm. draw from about 100,000
and other foreclosure pro- Since September, mort- “We are still working files statewide, he said in
cessors across the nation gage giants Fannie Mae, right now, but we are not a March 4 letter to Circuit
helped lenders take back Freddie Mac and several making any further com- Court Judge Lee Haworth
homes using faulty docu- large lenders have stopped ments,” said DJSP spokes- in Sarasota. Stern said
ments. sending the firm and DJSP man Chris Simmons. most of the lenders took
The Stern law firm is foreclosure cases. Attorney Jeffrey Tew,
one of several under in- Stern ran DJSP until who represents David SEE Stern,
HEAD
vestigation by law enforce- HERE
October, when he resigned Stern, declined comment. on following page

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This article is reprinted with permission from the Daily Business Review. © 2011
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STERN: Lawyer put several of his multimillion-dollar homes up for sale
possession of their files in
November. Many still have
to inform courts who will
replace Stern, he said.
Stern said his attorneys
are attempting to attend
hearings in cases where
no replacement has been
named but that he and the
firm no longer have the
“financial and personal re-
sources to continue to file
the motions to withdraw
in the tens of thousands of
cases that we still remain
as counsel of record.”
“Therefore, it is with
great regret that we will be
ceasing the servicing of cli-
ents,” the letter said.
Some former firm and
DJSP employees are suing
the firm, DJSP and Stern
personally, claiming they
were terminated without
proper notice in violation
of federal labor laws.
Fort Lauderdale attor-
ney Dawn Rapoport, who
represents some of Stern’s
former employees, said she
met with DJSP representa-
tives on Feb. 9 to discuss
the case and was not told
of the company’s doubt-
ful future. For that reason,
she agreed to a standard
scheduling conference.
This article is reprinted with permission from the Daily Business Review. © 2010
Last week, she obtained
a Feb. 15 letter in which
DJSP warned the state’s
Agency for Workforce
Innovation that it planned
to lay off 96 employees to
reduce its workforce to 54.
It also said “the company
may cease to operate”
within two months.
“They had given no in-
dication of that whatso-
ever,” said Rapoport, of
the Rapoport Law Group.
“We were misled about the
defendant’s position and
where they were going to
be.”
Proposed Class
Action
Rapoport, Boca Raton
attorney Chandra Parker
Doucette, and Gary Michael
Farmer and Steven Jaffe,
with Farmer Jaffe Weissing
Edwards Fistos & Lehrman
in Fort Lauderdale, rep-
resent four former Stern
employees in the proposed
class action. Rapoport said
more than 700 former
Stern employees could join
the suit.
Rapoport wants U.S.
District Judge Ursula
Ungaro to expedite dis-
covery in the suit because
Rapoport fears there will be
nothing to go after if DJSP
closes down and Stern be-
gins selling his assets.
Stern recently put up for
sale a 2-acre waterfront
parcel on Hillsboro Mile in
Hillsboro Beach for $9.95
million. He also is trying to
sell a six-bedroom home in
Colorado for $6.9 million.
Craig Erickson, a yacht
broker with Camper &
Nicholsons, denied re-
cent reports that Stern’s
40-foot yacht, named
Misunderstood, is on the
market for $18 million.
“The liquidation of many
of his personal assets will
affect our clients’ rights,”
Rapoport said. “The case
has been moving on a fast
pace as it is, but given
their major announcement
four days after we filed the
plan, we feel it should be
fast-tracked.”
Happy Activist
Foreclosure activist Lisa
Epstein is encouraged by
the news from DJSP.
Two years ago, Epstein
and a group of distressed
homeowners spearheaded
an effort to get law enforce-
ment agencies to investi-
gate foreclosure firms over
questionable documents.
Her effort paid off last
year, when the Florida at-
torney general launched an
investigation of the Stern
firm and other foreclosure
operations. The Florida
Bar is also investigating
Stern’s law practice.
“It gives some hope that
the powerful, the wealthy
and the well-placed in
the entire mortgage/Wall
Street conglomerate …
are not too big to fail,”
said Epstein, who runs
ForeclosureHamlet.org.
“History will show that
[Stern’s]foreclosure prac-
tices were more than just
insufficient and deficient
documents,” Epstein said
Epstein questions why
The Florida Bar has not
taken action against Stern.
Florida Bar spokes-
woman Francine Walker
said it was not clear when
the investigation would be
concluded.
“Think of us as a pros-
ecutor. We need to make
sure that we have a case,”
she said.
Paola Iuspa-Abbott can be
reached at (305) 347-6657.