A grievance panel for the Maine Board of Overseers of the Bar has disciplined one of three lawyers and warned another accused of mishandling the response to a 2010 revelation that led to a national mortgage-foreclosure scandal involving a practice called “robo-signing.”
The panel ordered that a written reprimand be placed on the record of attorney Paul Peck of the Portland law firm Drummond & Drummond. Peck failed to take “immediate and effective action,” the panel said, after learning that a GMAC Mortgage employee was signing thousands of legal documents to foreclose on people’s homes without checking first to see if the documents were accurate and without having the papers authenticated.
The grievance panel also ordered that the complaints against the other attorneys, Philip Mancini of Portland and Alexander Saksen of Pittsburgh, Pa., be dismissed, though it issued a warning against Saksen. It found that Mancini, who also works for Drummond & Drummond, acted quickly and did nothing wrong. Saksen, who no longer works for the firm, was found to have been involved only peripherally and his misconduct was found to be minor, with little or no injury.
The allegations against the lawyers, who represented GMAC, were part of the national attention focused on the practice of robo-signing, which led to the temporary suspension of foreclosures by GMAC and other big mortgage lenders across the country. The crisis led to congressional hearings and prompted all 50 states to enter a joint investigation into mortgage industry practices.
In December and January, the three lawyers appeared in Augusta for three days of hearings before the grievance panel, composed of attorney William Baghdoyan, Deputy Attorney General William Stokes and Milton Wright, who is not a lawyer. The panel issued its findings Thursday.
The robo-signing scandal erupted after Jeffrey Stephan, a GMAC employee in Pennsylvania, described his foreclosure practices in a June 7, 2010, deposition and the transcript was posted online.
Peck testified at the hearing that he was “shocked” when he learned in June 2010 that Stephan was signing 6,000 to 8,000 legal foreclosure documents a month without knowing whether the statements in them were true. Peck said it was a practice he had never seen.
Peck, Mancini and Saksen were accused of not doing enough to inform Maine courts in more than 100 foreclosure cases of the possible implications of that information – that people faced losing their homes based on documents with potentially inaccurate statements or debt figures.
After obtaining legal advice from an outside law firm, the lawyers sent a letter to the courts’ clerks with revised and properly signed affidavits.
“Attorney Peck had the knowledge of a very serious problem with the affidavits being used by his foreclosure group in motions for summary judgment but did not take immediate and effective action to prevent the continued use of false material evidence in multiple cases in several courts,” the grievance panel said in its decision.
The panel found that even after Peck became aware of the faulty affidavits, he continued to use them in subsequent foreclosure filings.
Peck is now deciding whether to appeal the grievance panel’s ruling to a single justice of the Maine Supreme Judicial Court, according to a statement issued by Andrew Sparks, another attorney at Drummond & Drummond.”
“We are surprised and disappointed and respectfully disagree with the grievance panel’s determination that attorney Peck, as head of the foreclosure department, did not act quickly enough in ceasing all foreclosure action after becoming aware of Mr. Stephan’s testimony,” Sparks said in a statement. “We believe that ceasing foreclosure actions on behalf of a national client (in) less than one week of receiving a transcript of such testimony was ethically appropriate under the Rules of Professional Conduct in these circumstances.”
Sparks, however, said the law firm was pleased that the panel recognized that Mancini, Drummond & Drummond’s ethics officer, took immediate action by making an inquiry to outside counsel, seeking formal advice from an outside firm and requesting informal advice from the Board of Overseers of the Bar itself.
Saksen’s attorney, Peter DeTroy, said his client was pleased the complaint against him had been dismissed with a warning.
The complaints were filed with the Board of Overseers of the Bar by Maine attorney Thomas Cox, who had questioned Stephan at the June 2010 deposition. At the time, Cox was involved in a foreclosure case representing homeowner Nicolle Bradbury of Denmark, in Oxford County, as part of a volunteer program for Pine Tree Legal Assistance.
Cox’s complaint said he informed Drummond & Drummond about what he had discovered during Stephan’s deposition, but the firm failed to adequately disclose that it had used Stephan’s unverified affidavits in court filings.
Correction: This story was updated at 12:30 p.m. on Tuesday, April 15 to clarify that the panel’s actions were imposed rather than recommended.
Scott Dolan can be contacted at 791-6304 or at: