AUGUSTA — One of three lawyers facing possible discipline by the Maine Board of Overseers of the Bar for their handling of a revelation in 2010 that exposed a national mortgage-foreclosure crisis said Thursday that they were “shocked” and in “total disbelief” by what they learned.
The three lawyers, with the Portland law firm Drummond and Drummond, are accused of failing to take “reasonable” actions after learning that GMAC Mortgage was signing legal documents to support foreclosing on people’s homes without checking if they were true and without appearing before a notary of the public to have the papers authenticated.
The allegations against the lawyers, who represented GMAC, stemmed from their handling of Maine cases that brought attention to a national robo-signing crisis that caused temporary suspension of foreclosures by GMAC and other big mortgage lenders. The crisis led to congressional hearings and prompted all 50 states to enter a joint investigation into the mortgage industry practices.
The three appeared Thursday for the final day of a three-day hearing before a three-person grievance panel at the Augusta Civic Center. The first two days of the hearing were held in December.
One of the three accused attorneys, Paul Peck of Portland, testified at the hearing Thursday that when he learned in June 2010 that GMAC employee Jeffrey Stephan was signing 6,000 to 8,000 legal foreclosure documents a month without knowing whether the statements were true that he had never seen that kind of practice before.
“We were totally surprised that he testified that he didn’t read the affidavit,” Peck said. “We were shocked, total disbelief.”
Peck and the other two attorneys, Philip Mancini of Portland and Alexander Saksen of Pittsburgh, Pa., are accused of not doing enough under their ethical obligation to inform Maine courts in more than 100 foreclosure cases of the possible implications of the revelation.
After obtaining legal advice from an outside law firm, the lawyers sent a letter to the courts’ clerks with a revised and properly signed legal foreclosure documents.
Aria Eee, assistant bar counsel for the Maine Board of Overseers of the Bar, said in her closing arguments that Drummond and Drummond needed to file formal motions in each of the cases to make sure judges were notified of the robo-signing problem and not just the clerks.
“They failed to appreciate, and should have appreciated, the evidentiary bomb that was presented to them,” Eee said. “They did not take the problem seriously.
Attorneys for the three men argued that they did what was required under Maine’s ethics rules for lawyers, balancing proper representation of their clients and making full disclosure of the problem to the courts.
When Mancini, the ethics officer at Drummond and Drummond, learned about the robo-signing revelation on June 28, 2010, he consulted another ethics attorney, called a management meeting, arranged to hire an outside law firm for expert guidance and had that firm seek legal advice from the Board of Overseers of the Bar itself. He did all that “within days” of learning of the problem, his attorney, James Martemucci, said in closing arguments.
“Never once were they advised to file a motion,” Martemucci said.
News of robo-signing crisis became widespread on the Internet after a transcript of a June 7, 2010, deposition by a GMAC employee in Pennsylvania on his foreclosure practices was posted online.
Maine attorney Thomas Cox had questioned the GMAC employee at the deposition in connection with a foreclosure case against homeowner Nicolle Bradbury of Denmark in Oxford County. Cox represented her as part of a volunteer program for Pine Tree Legal Assistance.
Cox filed a grievance with the Board of Overseers of the Bar after he informed the law firm what he had discovered during Stephan’s deposition, claiming the firm failed to adequately disclose that it had filed Stephan’s unverified affidavits.
Members of the three-member grievance panel made no immediate ruling at the hearing and continued to ask questions of the attorneys throughout their closing arguments.
“The firm was dealing with a client with a national problem,” one of the panel members, Deputy Attorney General William Stokes, said to Eee. “Aren’t you holding this firm and these lawyers to a standard that is impossible to meet?”
After the revelations about GMAC’s practices came to light, attorneys general in all 50 states announced they would investigate the practices of GMAC, JPMorgan Chase Bank, Bank of America and other leading mortgage companies. The investigation focused in part on the “robo-signing” accusations.
Mancini, Peck and Saksen have denied any wrongdoing and have asked that the disciplinary petition be dismissed.
There is no set timetable for when the grievance panel will decide whether to discipline the three attorneys. Depending on what the panel finds, it could dismiss the petition, dismiss it with a warning, discipline them with a written reprimand or refer the case to a justice of the Maine Supreme Judicial Court with a recommendation for discipline ranging from suspension to disbarment.
Scott Dolan can be reached at 791-6304 or at: