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Thievin’ Miami Attorney Steals $386,000 and Not Only is He Not in Jail, He’s Still an Active Fl. Lawyer

In the first case attorney Cesar Dominguez stole $186,000 in escrow and in the second case he stole $200,000 from his law firm’s escrow account.

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Foreclosure Defense and Bankruptcy Lawyer Who Steals $386,000 is Not in Jail but Ready to Help Strugglin’ Homeowners

However, in a very recent Florida Bar complaint, Attorney Joseph Morburger is suspended for apparently pinchin’ only a net $19k.

Now, whether it’s $19k or $9, theft is theft.

But when it’s $386,000 and you are not suspended or reported for the crime of theft, then only one conclusion can be reasonable.

Clearly, it’s who you know again at the insidious Florida Bar which will determine your fate.

Attorney Morburger Suspended by Florida Supreme Court for $19k Theft.

APR 30, 2020 | REPUBLISHED BY LIT: JUN 19, 2021

COMPLAINT

The Florida Bar, Complainant, files this Complaint against Cesar J Dominguez, the respondent, pursuant to the Rules Regulating The Florida Bar and alleges:

1. Respondent is and was, at all times mentioned herein, a member of The Florida Bar, admitted on May 21, 1999, and he is subject to the jurisdiction of the Supreme Court of Florida.

2. Respondent resided and practiced law in Miami-Dade County, Florida, at all times material to this complaint.

3. The Eleventh Judicial Circuit Grievance Committee “A” found probable cause to file this complaint pursuant to Rule 3-7.4, of the Rules Regulating The Florida Bar, and this complaint has been approved by the presiding member of that committee.

THE FLORIDA BAR FILE NO. 2019-70,193

4. Respondent entered into an escrow agreement with LBTP Investments, LLC (seller) and Parcours Invest LLC (buyer) to hold $186,000.00 in escrow pending certain release conditions on or about July 15, 2016.

5. Respondent’s law firm, Law Offices of Dominguez and Associates, P.A., was listed as the escrow agent.

6. Respondent signed the agreement on behalf of the Law Office of Dominguez and Associates, P.A. acknowledging acceptance and receipt of the funds to be held in escrow in accordance with the terms and conditions of the Settlement Agreement and Escrow Agreement.

7. The release conditions required the $186,000.00 be held in escrow until the seller delivered one of the following:

a. A written and duly executed release and hold harmless instrument from Robert Ingham and his brokerage firm releasing Buyer and its agents from any and all liability related to any compensation, fees or commission and other monies that may be due Ingham under the Contract or related to the Property;

or

b. A final non-appealable Court Order declaring that Ingham and his brokerage firm is not entitled to a commission/fee or other compensation or monies related to the Property.

8. Respondent received $186,000.00 into his trust account on July 15, 2016.

9. A dispute arose with regard to the real estate contract and a lawsuit was filed over the $186,000.00 in brokerage fees held in escrow. The lawsuit was styled Distinguished Real Estate Services, LLC v. NRG Home Sale.com, Inc., Robert N Ingham, RI Law, P.A., (DISBARRED) and LBTP Investments, LLC, (REGISTERED AGENT IS DOMINGUEZ) case number 2017- 000139-CA-01.

10. Respondent entered an appearance in case number 2017-000139-CA- 01, on behalf of LBTP Investments, LLC (defendants), on or around June 7, 2017.

11. On September 5, 2017, a Final Summary Declaratory Judgment order was entered in case number 2017-00139-CA-01, directing that the $186,000.00 held in escrow be disbursed to “the Plaintiff in this action, as the Plaintiff is the only real estate broker entitled to any commissions under the Listing Contract.”

12. An appeal was filed on October 5, 2017, in the Third District Court of Appeal, case number 3D17-2201.

13. That appeal was not final until on or around September 23, 2018, when the mandate was issued in case number 3D17-2201.

14. Respondent represented to the court and parties involved that he would not distribute the escrow fees during the pendency of the litigation.

15. In a June 12, 2017, Memorandum of Law in Opposition to Defendant’s Motion to Direct Cesar Dominguez to Deposit $186,000 into Court Registry filed in the trial court, respondent stated that the $186,000.00 remained in escrow pursuant to the escrow agreement.

16. Nonetheless, respondent admits he improperly released the funds he was required to hold in escrow in violation of terms and conditions of the Settlement Agreement and Escrow Agreement.

17. In fact, respondent’s trust account statement shows a beginning balance of $6,065.87 and an ending balance of $3,065.84 for the month of June 2017.

18. Following the filing of a grievance with The Florida Bar, complainant informed The Florida Bar that he received a cashier’s check from respondent “for the compromised amount owed from his trust account” on or around October 24, 2018.

19. By reason of the foregoing, respondent has violated the following Rules Regulating The Florida Bar: 3-4.3 (Misconduct and Minor Misconduct); Rule 4-1.15 (Safekeeping Property); Rule 4-3.3(a) (Candor to the Tribunal; False Evidence; Duty to Disclose); Rule 4-4.1 (Transactions with Persons Other than Clients; Truthfulness in Statements to Others); 4-8.4(c) (A lawyer shall not engage in conduct involving dishonesty, fraud, deceit, or misrepresentation); 5-1.1 (Trust Accounts).

THE FLORIDA BAR FILE NO. 2019-70,477

20. Respondent was the escrow agent in connection with a real estate contract between Alexander and Bonnie Angueira (sellers) and Jesus Fernandez and Yunia Hernandez (buyers) for a property located at 10701 SW 62nd Avenue, Pinecrest, Florida 33158.

21. Pursuant to paragraph thirteen of the real estate contract, the escrow agent was to immediately deposit the funds held in escrow.

22. Respondent, however, never deposited the escrow proceeds into his into his trust account.

23. Respondent sent an escrow receipt verification to Josie Wang, Avatar Real Estate Services, Listing Broker, and Magnolia Isusi, Miami New Realty, Cooperating Broker, affirming that the initial $50,000.00 was received in escrow on February 20, 2017, pursuant to the real estate contract.

24. However, respondent’s trust account shows no such deposit for the month of February 2017. Rather, the ending account balance for the month was $6,465.87.

25. Respondent sent an escrow receipt verification to Josie Wang, Avatar Real Estate Services, Listing Broker, and Magnolia Isusi, Miami New Realty, Cooperating Broker, affirming that an additional deposit of $150,000.00 was received in escrow on March 6, 2017, pursuant to the real estate contract.

Therefore, respondent should have been holding in escrow $200,000.00.

26. However, respondent’s trust account shows no such deposit for the month of March 2017. Rather, the ending account balance for March 2017 was $465.87.

27. The closing on the property did not occur, and the sellers demanded the funds in escrow be released to them as a result of the buyer’s alleged breach of contract.

28. At all times material, respondent represented that he held the
$200,000.00 in escrow.

29. On or around March 19, 2018, the trial court entered a Final Judgment Against Defendants Jesus Fernandez Torna and Yunia Hernandez finding them jointly and severally responsible for the $200,000.00 based on their material breach of the contract without justification.

30. Respondent acknowledged before the trial court that he had returned the funds to the defendants in violation of his duties as escrow agent on or around March 5, 2018.

31. As a result, on or around March 23, 2018, respondent was added as a defendant in case number 2017-013348-CA-01, and he paid a portion of the judgment to the plaintiffs.

32. By reason of the foregoing, respondent has violated the following Rules Regulating The Florida Bar: 3-4.3 (Misconduct and Minor Misconduct); Rule 4-1.15 (Safekeeping Property); Rule 4-4.1 (Transactions with Persons Other than Clients; Truthfulness in Statements to Others); 4-8.4(c) (A lawyer shall not engage in conduct involving dishonesty, fraud, deceit, or misrepresentation); 5-1.1 (Trust Accounts).

WHEREFORE, The Florida Bar prays the respondent, Cesar J Dominguez, will be appropriately disciplined in accordance with the provisions of the Rules Regulating The Florida Bar as amended.

Keri T. Joseph,
Bar Counsel
The Florida Bar
Miami Branch Office
444 Brickell Avenue
Rivergate Plaza,
Suite M-100 Miami,
Florida 33131-2404
(305) 377-4445
Florida Bar No. 84373
kjoseph@floridabar.org

MANDATORY ANSWER NOTICE

RULE 3-7.6(h)(2), RULES REGULATING THE FLORIDA BAR, PROVIDES THAT A RESPONDENT SHALL ANSWER A COMPLAINT.

MIAMI FORECLOSURE DEFENSE, BANKRUPTCY & REAL ESTATE ATTORNEYS

The Law office of Dominguez & Associates regularly advises clients in foreclosure prevention & litigation strategies, Bankruptcy proceedings, and a variety of real estate matters including the purchase and sale of residential properties.

Mr. Cesar J. Dominguez, the principal lawyer of the firm, also earned a Master of Business Administration (MBA) degree.

His formal legal training and business education backed by years of practical business experience negotiating with banking institutions, real estate brokers, and mortgage companies provides the basis for his practice in foreclosure defense, Bankruptcy, and real estate transactions & litigation matters.

Foreclosure Defense

Reality of Foreclosure

We know what you are going through. You’ve had more than your share of difficulties the last few months. The good news is that you are not alone. The Law Office of Dominguez & Associates, P.A. can help. We understand that good people sometimes need a second chance. Most foreclosures are a result of an unexpected life event, such as:

Death in the Family
Difficult and costly Divorce
Lost a job or had to Change Jobs
Health problems with Expensive Medical Bills
Maybe you’re struggling with increased utility prices or fuel expenses or an adjustable rate mortgage (ARM) that is unbearable.
Maybe you’ve already had to file bankruptcy or get a forbearance and the repayment plan is not working out.
Maybe this is all a big mistake and the payments you’ve been sending were rerouted or lost because your mortgage has been sold or traded.

Foreclosure Process

The foreclosure process can be complicated and confusing. That is why having an experienced foreclosure attorney can aid in your ability to fully exercise your rights.

The foreclosure process starts with a notice of default. This begins a time period in which action may be taken to prevent the foreclosure. Once such time period expires, you will receive a notice of trustee sale. This gives an individual some time to stop the foreclosure.

That is where our experienced foreclosure lawyer can assist you. We know the system and how banks operate.

We will negotiate a Work-Out Agreement with your lender to reschedule your loan payments, modify payment terms by extending the original maturity, to lower the interest rate and so on.

We have many options available to you that can help you repay those arrearages without putting you in a financial pinch. We can specifically tailor a solution to best fit your financial needs, and negotiate such terms and conditions with your lender.

Bankruptcy

At the Law Office of Dominguez & Associates, our experienced foreclosure defense and Bankruptcy lawyer will work with your lender to reach an agreement regarding your loan.

Our clients appreciate the high-quality legal advice we provide and our practical approach to resolving their real estate and financial concerns.

However, if a Work-Out Agreement does not fit your needs, or if your lender rejects such agreement, then filing for Bankruptcy is the right option for you.

Chapter 7 Bankruptcy- Chapter 7 bankruptcy is a federal court procedure in which debtors are able to eliminate most types of unsecured debt. Chapter 7 Bankruptcy is often called the liquidation bankruptcy and aims to give individuals a fresh start.

Chapter 13 Bankruptcy- Chapter 13 bankruptcy is a federal court process in which debtors are able to repay all or some of their debts through an interest-free payment plan over a 3 or 5 year period. Chapter 13 bankruptcy is often called the reorganization or repayment bankruptcy.

While confidently handling many Chapter 7 bankruptcy and Chapter 13 bankruptcy matters, the Law Office of Dominguez & Associates, provides guidance and advice to clients regarding foreclosures and creditor harassment. We strive to help clients understand their rights and how to effectively deal with these issues.

Real Estate transactions and litigation

Our firm helps residential real estate clients develop and execute effective real estate agreements. We help people in purchases and sales of residential real estate and provide well-grounded legal guidance for clients. Our real estate attorney handles all types of transactions:

real estate purchase agreements – review and drafting of contracts; representing buyers, sellers, brokers, and investors
lease agreements – effective rental agreements for owners and renters; residential properties, office buildings, strip malls
1031 exchanges – like kind property exchanges to defer capital gains taxes
conveyances – transfer of real property, quit claims
construction agreements – between general contractors and homeowners

To learn more, please contact us to schedule your free initial consultation.

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Thank you for your trust, belief and support in our conviction to help Floridian residents and citizens nationwide take back their freedom. Your Donations and your Voice are so important.



Hendersonville Police arrest suspects targeting elderly residents, stealing more than $10K

JUN 16, 2021 | REPUBLISHED BY LIT: JUN 19, 2021

Hendersonville Police have recently arrested two suspects in connection with a scam targeting the elderly.

The suspects, a 42-year-old and 28-year-old from Miami, Fla, were arrested by Hendersonville detectives with the assistance of multiple agencies across state lines after an ongoing investigation that began on June 7.

Police began their investigation after they were told about a scam that resulted in more than $10,000 in cash being stolen from two older Hendersonville residents.

Details of the scam

Phone calls were made to one of the victims by someone impersonating their grandson, saying they were in jail then passing the phone to someone they claimed was their attorney, officials said.

“The attorney” then shared with the victim how their grandson had been in a car accident that led to another person’s death, resulting in the grandson’s being arrested and charged.

The scammer continued explaining how money was needed to pay the grandson’s bond and associated costs to lessen the sentence, and that a judge had placed a gag order on the case so the victim could not contact or discuss it with anyone.

Instructions on how to package the money were provided by one of the suspects, and a courier was arranged to pick up and deliver the cash from the victim’s home to a second location.

An investigation revealed the couriers that transported the money had no knowledge of the criminal activity and were working as Uber drivers.

Foot chase at the mall results in arrest
The suspects continued to contact the victim claiming another, much larger transaction was needed to help their grandson resolve his legal troubles.

Hendersonville detectives got involved and orchestrated a money drop to help identify and arrest those involved.

Police were led to the 100 Oaks Mall in Nashville on June 8, where the 42-year-old suspect, after taking possession of the money, was taken into custody in the parking lot following a brief foot chase.

The suspect has been charged with two counts of theft over $10,000, attempted theft over $10,000, two counts of Financial Exploitation of an Elderly Person and Attempted Financial Exploitation of an Elderly Person.

He is currently being held in Sumner County Jail under a $150,000 bond and is scheduled to appear in General Sessions Court on June 23.

The second suspect was caught the next day.

Hendersonville detectives coordinated efforts with the Florida Highway Patrol and the Broward County, Florida Sheriff’s Office for assistance in locating and arresting the 28-year-old suspect, who had fled from a Smyrna hotel and was headed back to South Florida.

He was taken into custody at the Ft. Lauderdale International Airport by the Florida Highway Patrol, and a large amount of cash was recovered at the time of his arrest.

He is currently being held in Florida, pending extradition back to Sumner County, and faces the following charges: two counts of theft over $10,000, attempted theft over $10,000, two counts of Financial Exploitation of an Elderly Person, and Attempted Financial Exploitation of an Elderly Person.

Police issue a word of caution

Phone calls that pressure an individual to stay on the phone, urge individuals to make immediate payment in cash or by electronic means or instruct individuals not to contact anyone before making payment are scams, officials say.

Police urge the public to be weary of suspicious calls, hang up the phone and contact local law enforcement to confirm the legitimacy of the call.

This investigation is ongoing.

Several more victims in other jurisdictions and other area Middle Tennessee Law Enforcement agencies who were victimized by this scam throughout Middle Tennessee have come forward.

Any victim of a similar incident should report that to their local law enforcement agency.

If anyone has any information about the case, they are asked to call Hendersonville Police Criminal Investigation Division at (615) 264-5303 or the Hendersonville Crime Stoppers at (615) 594- 4113.

Tips may also be submitted using the P3 Tips Mobile Application.

Acceleration

Rewind 2008: The Home Snatchers Stole Millions of Homes, Lives and Citizen’s Trust By Unimaginable Fraud

Wall Street and the Government decided, if they were to make it through the Greatest Depression, they’d have to spin their biggest lie in the history of the United States of America. It worked.

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Invasion of the Home Snatchers

How foreclosure courts are helping big banks screw over homeowners

NOV 10, 2010 | REPUBLISHED BY LIT: DEC 4, 2021

The foreclosure lawyers down in Jacksonville had warned me, but I was skeptical. They told me the state of Florida had created a special super-high-speed housing court with a specific mandate to rubber-stamp the legally dicey foreclosures by corporate mortgage pushers like Deutsche Bank and JP Morgan Chase.

This “rocket docket,” as it is called in town, is presided over by retired judges who seem to have no clue about the insanely complex financial instruments they are ruling on — securitized mortgages and laby­rinthine derivative deals of a type that didn’t even exist when most of them were active members of the bench.

Their stated mission isn’t to decide right and wrong, but to clear cases and blast human beings out of their homes with ultimate velocity. They certainly have no incentive to penetrate the profound criminal mysteries of the great American mortgage bubble of the 2000s, perhaps the most complex Ponzi scheme in human history — an epic mountain range of corporate fraud in which Wall Street megabanks conspired first to collect huge numbers of subprime mortgages, then to unload them on unsuspecting third parties like pensions, trade unions and insurance companies (and, ultimately, you and me, as taxpayers) in the guise of AAA-rated investments.

Selling lead as gold, shit as Chanel No. 5, was the essence of the booming international fraud scheme that created most all of these now-failing home mortgages.

Looting Main Street

The rocket docket wasn’t created to investigate any of that. It exists to launder the crime and bury the evidence by speeding thousands of fraudulent and predatory loans to the ends of their life cycles, so that the houses attached to them can be sold again with clean paperwork.

The judges, in fact, openly admit that their primary mission is not justice but speed.

One Jacksonville judge, the Honorable A.C. Soud, even told a local newspaper that his goal is to resolve 25 cases per hour.

Given the way the system is rigged, that means His Honor could well be throwing one ass on the street every 2.4 minutes.

Foreclosure lawyers told me one other thing about the rocket docket. The hearings, they said, aren’t exactly public.

“The judges might give you a hard time about watching,” one lawyer warned. “They’re not exactly anxious for people to know about this stuff.”

Inwardly, I laughed at this — it sounded like typical activist paranoia. The notion that a judge would try to prevent any citizen, much less a member of the media, from watching an open civil hearing sounded ridiculous.

Fucked-up as everyone knows the state of Florida is, it couldn’t be that bad. It isn’t Indonesia. Right?

Well, not quite.

When I went to sit in on Judge Soud’s courtroom in downtown Jacksonville, I was treated to an intimate, and at times breathtaking, education in the horror of the foreclosure crisis, which is rapidly emerging as the even scarier sequel to the financial meltdown of 2008:

Invasion of the Home Snatchers II.

In Las Vegas, one in 25 homes is now in foreclosure.

In Fort Myers, Florida, one in 35.

In September, lenders nationwide took over a rec­ord 102,134 properties; that same month, more than a third of all home sales were distressed properties.

All told, some 820,000 Americans have already lost their homes this year, and another 1 million currently face foreclosure.

Throughout the mounting catastrophe, however, many Americans have been slow to comprehend the true nature of the mortgage disaster. They seemed to have grasped just two things about the crisis:

One, a lot of people are getting their houses foreclosed on.

Two, some of the banks doing the foreclosing seem to have misplaced their paperwork.

For most people, the former bit about homeowners not paying their damn bills is the important part, while the latter, about the sudden and strange inability of the world’s biggest and wealthiest banks to keep proper records, is incidental.

Just a little office sloppiness, and who cares?

Those deadbeat homeowners still owe the money, right?

“They had it coming to them,” is how a bartender at the Jacksonville airport put it to me.

But in reality, it’s the unpaid bills that are incidental and the lost paperwork that matters.

It turns out that underneath that little iceberg tip of exposed evidence lies a fraud so gigantic that it literally cannot be contemplated by our leaders, for fear of admitting that our entire financial system is corrupted to its core — with our great banks and even our government coffers backed not by real wealth but by vast landfills of deceptively generated and essentially worthless mortgage-backed assets.

You’ve heard of Too Big to Fail — the foreclosure crisis is Too Big for Fraud.

Think of the Bernie Madoff scam, only replicated tens of thousands of times over, infecting every corner of the financial universe. The underlying crime is so pervasive, we simply can’t admit to it — and so we are working feverishly to rubber-stamp the problem away, in sordid little backrooms in cities like Jacksonville, behind doors that shouldn’t be, but often are, closed.

And that’s just the economic side of the story.

The moral angle to the foreclosure crisis — and, of course, in capitalism we’re not supposed to be concerned with the moral stuff, but let’s mention it anyway — shows a culture that is slowly giving in to a futuristic nightmare ideology of computerized greed and unchecked financial violence.

The monster in the foreclosure crisis has no face and no brain.

The mortgages that are being foreclosed upon have no real owners. The lawyers bringing the cases to evict the humans have no real clients. It is complete and absolute legal and economic chaos.

No single limb of this vast man-­eating thing knows what the other is doing, which makes it nearly impossible to combat — and scary as hell to watch.

What follows is an account of a single hour of Judge A.C. Soud’s rocket docket in Jacksonville.

Like everything else related to the modern economy, these foreclosure hearings are conducted in what is essentially a foreign language, heavy on jargon and impenetrable to the casual observer.

It took days of interviews with experts before and after this hearing to make sense of this single hour of courtroom drama. And though the permutations of small-time scammery and grift in the foreclosure world are virtually endless — your average foreclosure case involves homeowners or investors being screwed at least five or six creative ways — a single hour of court and a few cases is enough to tell the main story.

Because if you see one of these scams, you see them all.

It’s early on a sunny Tuesday morning when I arrive at the chambers of Judge Soud, one of four rotating judges who preside over the local rocket docket.

These special foreclosure courts were established in July of this year, after the state of Florida budgeted $9.6 million to create a new court with a specific mandate to clear 62 percent of the foreclosure cases that were clogging up the system.

Rather than forcing active judges to hear thousands of individual cases, this strategy relies on retired judges who take turns churning through dozens of cases every morning, with little time to pay much attention to the particulars.

What passes for a foreclosure court in Jacksonville is actually a small conference room at the end of a hall on the fifth floor of the drab brick Duval County Courthouse. The space would just about fit a fridge and a pingpong table.

At the head of a modest conference table this morning sits Judge Soud, a small and fussy-looking man who reminds me vaguely of the actor Ben Gazzara.

On one side of the table sits James Kowalski, a former homicide prosecutor who is now defending homeowners.

A stern man with a shaved head and a laconic manner of speaking, Kowalski has helped pioneer a whole new approach to the housing mess, slowing down the mindless eviction machine by deposing the scores of “robo-signers” being hired by the banks to sign phony foreclosure affidavits by the thousands.

For his work on behalf of the dispossessed, Kowalski was recently profiled in a preposterous Wall Street Journal article that blamed attorneys like him for causing the foreclosure mess with their nuisance defense claims.

The headline: “Niche Lawyers Spawned Housing Fracas.”

On the other side of the table are the plaintiff’s attorneys, the guys who represent the banks.

On this level of the game, these lawyers refer to themselves as “bench warmers” — volume stand-ins subcontracted by the big, hired-killer law firms that work for the banks.

One of the bench warmers present today is Mark Kessler, who works for a number of lenders and giant “foreclosure mills,” including the one run by David J. Stern, a gazillionaire attorney and all-Universe asshole who last year tried to foreclose on 70,382 homeowners.

Which is a nice way to make a living, considering that Stern and his wife, Jeanine, have bought nearly $60 million in property for themselves in recent years, including a 9,273-square-foot manse in Fort Lauderdale that is part of a Ritz-Carlton complex.

Kessler is a harried, middle-aged man in glasses who spends the morning perpetually fighting to organize a towering stack of folders, each one representing a soon-to-be-homeless human being. It quickly becomes apparent that Kessler is barely acquainted with the names in the files, much less the details of each case.

“A lot of these guys won’t even get the folders until right before the hearing,” says Kowalski.

When I arrive, Judge Soud and the lawyers are already arguing a foreclosure case; at a break in the action, I slip into the chamber with a legal-aid attorney who’s accompanying me and sit down. The judge eyes me anxiously, then proceeds.

He clears his throat, and then it’s ready, set, fraud!

Judge Soud seems to have no clue that the files he is processing at a breakneck pace are stuffed with fraudulent claims and outright lies.

“We have not encountered any fraud yet,” he recently told a local newspaper. “If we encountered fraud, it would go to [the state attorney], I can tell you that.”

But the very first case I see in his court is riddled with fraud.

Kowalski has seen hundreds of cases like the one he’s presenting this morning.

It started back in 2006, when he went to Pennsylvania to conduct what he thought would be a routine deposition of an official at the lending giant GMAC.

What he discovered was that the official — who had sworn to having personal knowledge of the case — was, in fact, just a “robo-signer” who had signed off on the file without knowing anything about the actual homeowner or his payment history.

(Kowalski’s clients, like most of the homeowners he represents, were actually making their payments on time; in this particular case, a check had been mistakenly refused by GMAC.)

Following the evidence, Kowalski discovered what has turned out to be a systemwide collapse of the process for documenting mortgages in this country.

If you’re foreclosing on somebody’s house, you are required by law to have a collection of paperwork showing the journey of that mortgage note from the moment of issuance to the present.

You should see the originating lender (a firm like Countrywide) selling the loan to the next entity in the chain (perhaps Goldman Sachs) to the next (maybe JP Morgan), with the actual note being transferred each time.

But in fact, almost no bank currently foreclosing on homeowners has a reliable record of who owns the loan; in some cases, they have even intentionally shredded the actual mortgage notes.

That’s where the robo-signers come in.

To create the appearance of paperwork where none exists, the banks drag in these pimply entry-level types — an infamous example is GMAC’s notorious robo-signer Jeffrey Stephan, who appears online looking like an age-advanced photo of Beavis or Butt-Head — and get them to sign thousands of documents a month attesting to the banks’ proper ownership of the mortgages.

This isn’t some rare goof-up by a low-level cubicle slave: Virtually every case of foreclosure in this country involves some form of screwed-up paperwork.

“I would say it’s pretty close to 100 percent,”

says Kowalski. An attorney for Jacksonville Area Legal Aid tells me that out of the hundreds of cases she has handled, fewer than five involved no phony paperwork.

“The fraud is the norm,” she says.

Kowalski’s current case before Judge Soud is a perfect example.

The Jacksonville couple he represents are being sued for delinquent payments, but the case against them has already been dismissed once before. The first time around, the plaintiff, Bank of New York Mellon, wrote in Paragraph 8 that “plaintiff owns and holds the note” on the house belonging to the couple.

But in Paragraph 3 of the same complaint, the bank reported that the note was “lost or destroyed,” while in Paragraph 4 it attests that “plaintiff cannot reasonably obtain possession of the promissory note because its whereabouts cannot be determined.”

The bank, in other words, tried to claim on paper, in court, that it both lost the note and had it, at the same time. Moreover, it claimed that it had included a copy of the note in the file, which it did — the only problem being that the note (a) was not properly endorsed, and (b) was payable not to Bank of New York but to someone else, a company called Novastar.

Now, months after its first pass at foreclosure was dismissed, the bank has refiled the case — and what do you know, it suddenly found the note. And this time, somehow, the note has the proper stamps.

“There’s a stamp that did not appear on the note that was originally filed,” Kowalski tells the judge. (This business about the stamps is hilarious. “You can get them very cheap online,” says Chip Parker, an attorney who defends homeowners in Jacksonville.)

The bank’s new set of papers also traces ownership of the loan from the original lender, Novastar, to JP Morgan and then to Bank of New York.

The bank, in other words, is trying to push through a completely new set of documents in its attempts to foreclose on Kowalski’s clients.

There’s only one problem: The dates of the transfers are completely fucked.

According to the documents, JP Morgan transferred the mortgage to Bank of New York on December 9th, 2008. But according to the same documents, JP Morgan didn’t even receive the mortgage from Novastar until February 2nd, 2009 — two months after it had supposedly passed the note along to Bank of New York.

Such rank incompetence at doctoring legal paperwork is typical of foreclosure actions, where the fraud is laid out in ink in ways that make it impossible for anyone but an overburdened, half-asleep judge to miss.

“That’s my point about all of this,”

Kowalski tells me later.

“If you’re going to lie to me, at least lie well.”

The dates aren’t the only thing screwy about the new documents submitted by Bank of New York.

Having failed in its earlier attempt to claim that it actually had the mortgage note, the bank now tries an all-of-the-above tactic.

“Plaintiff owns and holds the note,” it claims, “or is a person entitled to enforce the note.”

Soud sighs. For Kessler, the plaintiff’s lawyer, to come before him with such sloppy documents and make this preposterous argument — that his client either is or is not the note-holder — well, that puts His Honor in a tough spot.

The entire concept is a legal absurdity, and he can’t sign off on it.

With an expression of something very like regret, the judge tells Kessler,

“I’m going to have to go ahead and accept [Kowalski’s] argument.”

Now, one might think that after a bank makes multiple attempts to push phony documents through a courtroom, a judge might be pissed off enough to simply rule against that plaintiff for good.

As I witness in court all morning, the defense never gets more than one chance to screw up. But the banks get to keep filing their foreclosures over and over again, no matter how atrocious and deceitful their paperwork is.

Thus, when Soud tells Kessler that he’s dismissing the case, he hastens to add:

“Of course, I’m not going to dismiss with prejudice.” With an emphasis on the words “of course.”

Instead, Soud gives Kessler 25 days to come up with better paperwork.

Kowalski fully expects the bank to come back with new documents telling a whole new story of the note’s ownership.

“What they’re going to do, I would predict, is produce a note and say Bank of New York is not the original note-holder, but merely the servicer,” he says.

This is the dirty secret of the rocket docket

The whole system is set up to enable lenders to commit fraud over and over again, until they figure out a way to reduce the stink enough so some judge like Soud can sign off on the scam.

“If the court finds for the defendant, the plaintiffs just refile,” says Parker, the local attorney.

“The only way for the caseload to get reduced is to give it to the plaintiff. The entire process is designed with that result in mind.”

Now all of this — the obviously cooked-up documents, the magically appearing stamp and the rest of it — may just seem like nothing more than sloppy paperwork. After all, what does it matter if the bank has lost a few forms or mixed up the dates?

The homeowners still owe what they owe, and the deadbeats have no right to keep living in a house they haven’t paid for.

But what’s going on at the Jacksonville rocket docket, and in foreclosure courts all across the country, has nothing to do with sloppiness.

All this phony paperwork was actually an essential part of the mortgage bubble, an integral element of what has enabled the nation’s biggest lenders to pass off all that subprime lead as AAA gold.

In the old days, when you took out a mortgage, it was probably through a local bank or a credit union, and whoever gave you your loan held on to it for life.

If you lost your job or got too sick to work and suddenly had trouble making your payments, you could call a human being and work things out.

It was in the banker’s interest, as well as yours, to make a modified payment schedule.

From his point of view, it was better that you pay something than nothing at all.

But that all changed about a decade ago, thanks to the invention of new financial instruments that magically turned all these mortgages into high-grade investments.

Now when you took out a mortgage, your original lender — which might well have been a big mortgage mill like Countrywide or New Century — immediately sold off your loan to big banks like Deutsche and Goldman and JP Morgan.

The banks then dumped hundreds or thousands of home loans at a time into tax-exempt real estate trusts, where the loans were diced up into securities, examined and graded by the ratings agencies, and sold off to big pension funds and other institutional suckers.

Even at this stage of the game, the banks generally knew that the loans they were buying and reselling to investors were shady.

A company called Clayton Holdings, which analyzed nearly 1 million loans being prepared for sale in 2006 and 2007 by 23 banks, found that nearly half of the mortgages failed to meet the underwriting standards being promised to investors.

Citi­group, for instance, had 29 percent of its loans come up short, but it still sold a third of those mortgages to investors.

Goldman Sachs had 19 percent of its mortgages flunk the test, yet it knowingly hawked 34 percent of the risky deals to investors.

D. Keith Johnson, the head of Clayton Holdings, was so alarmed by the findings that he went to officials at three of the main ratings agencies — Moody’s, Standard and Poor’s, and Fitch’s — and tried to get them to properly evaluate the loans.

“Wouldn’t this information be great for you to have as you assign risk levels?” he asked them.

(Translation: Don’t you ratings agencies want to know that half these loans are crap before you give them a thumbs-up?)

But all three agencies rejected his advice, fearing they would lose business if they adopted tougher standards. In the end, the agencies gave large chunks of these mortgage-backed securities AAA ratings — which means “credit risk almost zero.”

Since these mortgage-backed securities paid much higher returns than other AAA investments like treasury notes or corporate bonds, the banks had no trouble attracting investors, foreign and domestic, from pension funds to insurance companies to trade unions.

The demand was so great, in fact, that they often sold mortgages they didn’t even have yet, prompting big warehouse lenders like Countrywide and New Century to rush out into the world to find more warm bodies to lend to.

In their extreme haste to get thousands and thousands of mortgages they could resell to the banks, the lenders committed an astonishing variety of fraud,

from falsifying income statements to making grossly inflated appraisals to misrepresenting properties to home buyers.

Most crucially, they gave tons and tons of credit to people who probably didn’t deserve it, and why not?

These fly-by-night mortgage companies weren’t going to hold on to these loans, not even for 10 minutes.

They were issuing this credit specifically to sell the loans off to the big banks right away, in furtherance of the larger scheme to dump fraudulent AAA-rated mortgage-backed securities on investors.

If you had a pulse, they had a house to sell you.

As bad as Countrywide and all those lenders were, the banks that had sent them out to collect these crap loans were a hundred times worse.

To sell the loans, the banks often dumped them into big tax-exempt buckets called REMICs, or Real Estate Mortgage Investment Conduits. Each one of these Enron-ish, offshore-like real estate trusts spelled out exactly what kinds of loans were supposed to be in the pool, when they were to be collected, and how they were to be managed.

In order to both preserve their tax-exempt status and deserve their AAA ratings, each of the loans in the pool had to have certain characteristics. The loans couldn’t already be in default or foreclosure at the time they were sold to investors.

If they were advertised as nice, safe, fixed-rate mortgages, they couldn’t turn out to be high-interest junk loans. And, on the most basic level, the loans had to actually exist.

In other words, if the trust stipulated that all the loans had to be collected by August 2005, the bank couldn’t still be sticking in mortgages months later.

Yet that’s exactly what the banks did. In one case handled by Jacksonville Area Legal Aid, a homeowner refinanced her house in 2005 but almost immediately got into trouble, going into default in December of that year.

Yet somehow, this woman’s loan was placed into a trust called Home Equity Loan Trust Series AE 2005-HE5 in January 2006 — five months after the deadline for that particular trust.

The loan was not only late, it was already in foreclosure — which means that, by definition, whoever the investors were in AE 2005-HE5 were getting shafted.

Why does stuff like this matter?

Because when the banks put these pools together, they were telling their investors that they were putting their money into tidy collections of real, performing home loans.

But frequently, the loans in the trust were complete shit. Or sometimes, the banks didn’t even have all the loans they said they had. But the banks sold the securities based on these pools of mortgages as AAA-rated gold anyway.

In short, all of this was a scam — and that’s why so many of these mortgages lack a true paper trail.

Had these transfers been done legally, the actual mortgage note and detailed information about all of these transactions would have been passed from entity to entity each time the mortgage was sold.

But in actual practice, the banks were often committing securities fraud (because many of the mortgages did not match the information in the prospectuses given to investors) and tax fraud (because the way the mortgages were collected and serviced often violated the strict procedures governing such investments).

Having unloaded this diseased cargo onto their unsuspecting customers, the banks had no incentive to waste money keeping “proper” documentation of all these dubious transactions.

“You’ve already committed fraud once,” says April Charney, an attorney with Jacksonville Area Legal Aid. “What do you have to lose?”

Sitting in the rocket docket, James Kowalski considers himself lucky to have won his first motion of the morning.

To get the usually intractable Judge Soud to forestall a foreclosure is considered a real victory, and I later hear Kowalski getting props and attaboys from other foreclosure lawyers.

In a great deal of these cases, in fact, the homeowners would have a pretty good chance of beating the rap, at least temporarily, if only they had lawyers fighting for them in court.

But most of them don’t.

In fact, more than 90 percent of the cases that go through Florida foreclosure courts are unopposed.

Either homeowners don’t know they can fight their foreclosures, or they simply can’t afford an attorney.

These unopposed cases are the ones the banks know they’ll win — which is why they don’t sweat it if they take the occasional whipping.

That’s why all these colorful descriptions of cases where foreclosure lawyers like Kowalski score in court are really just that — a little color.

The meat of the foreclosure crisis is the unopposed cases; that’s where the banks make their money. They almost always win those cases, no matter what’s in the files.

This becomes evident after Kowalski leaves the room.

“Who’s next?” Judge Soud says. He turns to Mark Kessler, the counsel for the big foreclosure mills. “Mark, you still got some?”

“I’ve got about three more, Judge,” says Kessler.

Kessler then drops three greenish-brown files in front of Judge Soud, who spends no more than a minute or two glancing through each one.

Then he closes the files and puts an end to the process by putting his official stamp on each foreclosure with an authoritative finality:

Kerchunk!
Kerchunk!
Kerchunk!

Each one of those kerchunks means another family on the street.

There are no faces involved here, just beat-the-clock legal machinery.

Watching Judge Soud plow through each foreclosure reminds me of the scene in Fargo where the villain played by Swedish character actor Peter Stormare pushes his victim’s leg through a wood chipper with that trademark bored look on his face.

Mechanized misery and brainless bureaucracy on the one hand, cash for the banks on the other.

What’s sad is that most Americans who have an opinion about the foreclosure crisis don’t give a shit about all the fraud involved. They don’t care that these mortgages wouldn’t have been available in the first place if the banks hadn’t found a way to sell oregano as weed to pension funds and insurance companies.

They don’t care that the Countrywides’ of the world pushed borrowers who qualified for safer fixed-­income loans into far more dangerous adjustable-rate loans, because their brokers got bigger commissions for doing so.

They don’t care that in the rush to produce loans, people were sold houses that turned out to have flood damage or worse, and they certainly don’t care that people were sold houses with inflated appraisals, which left them almost immediately underwater once housing prices started falling.

The way the banks tell it, it doesn’t matter if they defrauded homeowners and investors and taxpayers alike to get these loans.

All that matters is that a bunch of deadbeats aren’t paying their fucking bills.

“If you didn’t pay your mortgage, you shouldn’t be in your house — period,” is how Walter Todd, portfolio manager at Greenwood Capital Associates, puts it.

“People are getting upset about something that’s just procedural.”

Jamie Dimon, the CEO of JP Morgan, is even more succinct in dismissing the struggling homeowners that he and the other megabanks scammed before tossing out into the street.

“We’re not evicting people who deserve to stay in their house,” Dimon says.

There are two things wrong with this argument. (Well, more than two, actually, but let’s just stick to the two big ones.)

The first reason is: It simply isn’t true.

Many people who are being foreclosed on have actually paid their bills and followed all the instructions laid down by their banks. In some cases, a homeowner contacts the bank to say that he’s having trouble paying his bill, and the bank offers him loan modification. But the bank tells him that in order to qualify for modification, he must first be delinquent on his mortgage.

“They actually tell people to stop paying their bills for three months,” says Parker.

The authorization gets recorded in what’s known as the bank’s “contact data­base,” which records every phone call or other communication with a home­owner. But no mention of it is entered into the bank’s “number history,” which records only the payment record.

When the number history notes that the home­owner has missed three payments in a row, it has no way of knowing that the homeowner was given permission to stop making payments. “One computer generates a default letter,” says Kowalski. “Another computer contacts the credit bureaus.”

At no time is there a human being looking at the entire picture.

Which means that homeowners can be foreclosed on for all sorts of faulty reasons: misplaced checks, address errors, you name it. This inability of one limb of the foreclosure beast to know what the other limb is doing is responsible for many of the horrific stories befalling homeowners across the country.

Patti Parker, a local attorney in Jacksonville, tells of a woman whose home was seized by Deutsche Bank two days before Christmas. Months later, Deutsche came back and admitted that they had made a mistake: They had repossessed the wrong property.

In another case that made headlines in Orlando, an agent for JP Morgan mistakenly broke into a woman’s house that wasn’t even in foreclosure and tried to change the locks.

Terrified, the woman locked herself in her bathroom and called 911. But in a profound expression of the state’s reflexive willingness to side with the bad guys, the police made no arrest in the case. Breaking and entering is not a crime, apparently, when it’s authorized by a bank.

The second reason the whole they still owe the fucking money thing is bogus has to do with the changed incentives in the mortgage game.

In many cases, banks like JP Morgan are merely the servicers of all these home loans, charged with collecting your money every month and paying every penny of it into the trust, which is the real owner of your mortgage.

If you pay less than the whole amount, JP Morgan is now obligated to pay the trust the remainder out of its own pocket. When you fall behind, your bank falls behind, too. The only way it gets off the hook is if the house is foreclosed on and sold.

That’s what this foreclosure crisis is all about: fleeing the scene of the crime.

Add into the equation the fact that some of these big banks were simultaneously betting big money against these mortgages — Goldman Sachs being the prime example — and you can see that there were heavy incentives across the board to push anyone in trouble over the cliff.

Things used to be different.

Asked what percentage of struggling homeowners she used to be able to save from foreclosure in the days before securitization,

Charney is quick to answer.

“Most of them,” she says. “I seldom came across a mortgage I couldn’t work out.”

In Judge Soud’s court, I come across a shining example of this mindless rush to foreclosure when I meet Natasha Leonard, a single mother who bought a house in 2004 for $97,500.

Right after closing on the home, Leonard lost her job. But when she tried to get a modification on the loan, the bank’s offer was not helpful.

“They wanted me to pay $1,000,” she says. Which wasn’t exactly the kind of modification she was hoping for, given that her original monthly payment was $840.

“You’re paying $840, you ask for a break, and they ask you to pay $1,000?” I ask.

“Right,” she says.

Leonard now has a job and could make some kind of reduced payment. But instead of offering loan modification, the bank’s lawyers are in their fourth year of doggedly beating her brains out over minor technicalities in the foreclosure process.

That’s fine by the lawyers, who are collecting big fees.

And there appears to be no human being at the bank who’s involved enough to issue a sane decision to end the costly battle.

“If there was a real client on the other side, maybe they could work something out,” says Charney, who is representing Leonard.

In this lunatic bureaucratic jungle of securitized home loans issued by trans­national behemoths, the borrower-lender relationship can only go one of two ways: full payment, or total war.

The extreme randomness of the system is exemplified by the last case I see in the rocket docket.

While most foreclosures are unopposed, with homeowners not even bothering to show up in court to defend themselves, a few pro se defendants — people representing themselves — occasionally trickle in.

At one point during Judge Soud’s proceeding, a tallish blond woman named Shawnetta Cooper walks in with a confused look on her face.

A recent divorcee delinquent in her payments, she has come to court today fully expecting to be foreclosed on by Wells Fargo. She sits down and takes a quick look around at the lawyers who are here to kick her out of her home.

“The land has been in my family for four generations,” she tells me later. “I don’t want to be the one to lose it.”

Judge Soud pipes up and inquires if there’s a plaintiff lawyer present; someone has to lop off this woman’s head so the court can move on to the next case.

But then something unexpected happens: It turns out that Kessler is supposed to be foreclosing on her today, but he doesn’t have her folder.

The plaintiff, technically, has forgotten to show up to court.

Just minutes before, I had watched what happens when defendants don’t show up in court: kerchunk! The judge more or less automatically rules for the plaintiffs when the homeowner is a no-show.

But when the plaintiff doesn’t show, the judge is suddenly all mercy and forgiveness. Soud simply continues Cooper’s case, telling Kessler to get his shit together and come back for another whack at her in a few weeks.

Having done this, he dismisses everyone.

Stunned, Cooper wanders out of the courtroom looking like a person who has stepped up to the gallows expecting to be hanged, but has instead been handed a fruit basket and a new set of golf clubs.

I follow her out of the court, hoping to ask her about her case. But the sight of a journalist getting up to talk to a defendant in his kangaroo court clearly puts a charge into His Honor, and he immediately calls Cooper back into the conference room.

Then, to the amazement of everyone present, he issues the following speech:

“This young man,” he says, pointing at me, “is a reporter for Rolling Stone. It is your privilege to talk to him if you want.” He pauses. “It is also your privilege to not talk to him if you want.”

I stare at the judge, open-mouthed. Here’s a woman who still has to come back to this guy’s court to find out if she can keep her home, and the judge’s admonition suggests that she may run the risk of pissing him off if she talks to a reporter.

Worse, about an hour later, April Charney, the lawyer who accompanied me to court, receives an e-mail from the judge actually threatening her with contempt for bringing a stranger to his court.

Noting that “we ask that anyone other than a lawyer remain in the lobby,” Judge Soud admonishes Charney that “your unprofessional conduct and apparent authorization that the reporter could pursue a property owner immediately out of Chambers into the hallway for an interview, may very well be sited [sic] for possible contempt in the future.”

Let’s leave aside for a moment that Charney never said a word to me about speaking to Cooper.

And let’s overlook entirely the fact that the judge can’t spell the word cited.

The key here isn’t this individual judge — it’s the notion that these hearings are not and should not be entirely public. Quite clearly, foreclosure is meant to be neither seen nor heard.

After Soud’s outburst, Cooper quietly leaves the court.

Once out of sight of the judge, she shows me her file. It’s not hard to find the fraud in the case.

For starters, the assignment of mortgage is autographed by a notorious robo-signer — John Kennerty, who gave a deposition this summer admitting that he signed as many as 150 documents a day for Wells Fargo.

In Cooper’s case, the document with Kennerty’s signature on it places the date on which Wells Fargo obtained the mortgage as May 5th, 2010. The trouble is, the bank bought the loan from Wachovia — a bank that went out of business in 2008.

All of which is interesting, because in her file, it states that Wells Fargo sued Cooper for foreclosure on February 22nd, 2010.

In other words, the bank foreclosed on Cooper three months before it obtained her mortgage from a nonexistent company.

There are other types of grift and outright theft in the file.

As is typical in many foreclosure cases, Cooper is being charged by the bank for numerous attempts to serve her with papers.

But a booming industry has grown up around fraudulent process servers; companies will claim they made dozens of attempts to serve homeowners, when in fact they made just one or none at all. Who’s going to check?

The process servers cover up the crime using the same tactic as the lenders, saying they lost the original summons.

From 2000 to 2006, there was a total of 1,031 “affidavits of lost summons” here in Duval County; in the past two years, by contrast, more than 4,000 have been filed.

Cooper’s file contains a total of $371 in fees for process service, including one charge of $55 for an attempt to serve process on an “unknown tenant.”

But Cooper’s house is owner-occupied — she doesn’t even have a tenant, she tells me with a shrug.

If Mark Kessler had had his shit together in court today, Coop­er would not only be out on the street, she’d be paying for that attempt to serve papers to her nonexistent tenant.

Cooper’s case perfectly summarizes what the foreclosure crisis is all about.

Her original loan was made by Wachovia, a bank that blew itself up in 2008 speculating in the mortgage market. It was then transferred to Wells Fargo, a megabank that was handed some $50 billion in public assistance to help it acquire the corpse of Wachovia.

And who else benefited from that $50 billion in bailout money?

Billionaire Warren Buffett and his Berkshire Hathaway fund, which happens to be a major shareholder in Wells Fargo.

It was Buffett’s vice chairman, Charles Munger, who recently told America that it should “thank God” that the government bailed out banks like the one he invests in, while people who have fallen on hard times — that is, homeowners like Shawnetta Cooper — should “suck it in and cope.”

Look: It’s undeniable that many of the people facing foreclosure bear some responsibility for the crisis. Some borrowed beyond their means. Some even borrowed knowing they would never be able to pay off their debt, either hoping to flip their houses right away or taking on mortgages with low initial teaser rates without bothering to think of the future.

The culture of take-for-yourself-now, let-someone-else-pay-later wasn’t completely restricted to Wall Street. It penetrated all the way down to the individual consumer, who in some cases was a knowing accomplice in the bubble mess.

But many of these homeowners are just ordinary Joes who had no idea what they were getting into. Some were pushed into dangerous loans when they qualified for safe ones.

Others were told not to worry about future jumps in interest rates because they could just refinance down the road, or discovered that the value of their homes had been overinflated by brokers looking to pad their commissions.

And that’s not even accounting for the fact that most of this credit wouldn’t have been available in the first place without the Ponzi-like bubble scheme cooked up by Wall Street, about which the average home­owner knew nothing — hell, even the average U.S. senator didn’t know about it.

At worst, these ordinary homeowners were stupid or uninformed — while the banks that lent them the money are guilty of committing a baldfaced crime on a grand scale.

These banks robbed investors and conned homeowners, blew themselves up chasing the fraud, then begged the taxpayers to bail them out.

And bail them out we did:

We ponied up billions to help Wells Fargo buy Wachovia, paid Bank of America to buy Merrill Lynch, and watched as the Fed opened up special facilities to buy up the assets in defective mortgage trusts at inflated prices.

And after all that effort by the state to buy back these phony assets so the thieves could all stay in business and keep their bonuses, what did the banks do?

They put their foot on the foreclosure gas pedal and stepped up the effort to kick people out of their homes as fast as possible, before the world caught on to how these loans were made in the first place.

Why don’t the banks want us to see the paperwork on all these mortgages?

Because the documents represent a death sentence for them.

According to the rules of the mortgage trusts, a lender like Bank of America, which controls all the Countrywide loans, is required by law to buy back from investors every faulty loan the crooks at Countrywide ever issued.

Think about what that would do to Bank of America’s bottom line the next time you wonder why they’re trying so hard to rush these loans into someone else’s hands.

When you meet people who are losing their homes in this foreclosure crisis, they almost all have the same look of deep shame and anguish.

Nowhere else on the planet is it such a crime to be down on your luck, even if you were put there by some of the world’s richest banks, which continue to rake in record profits purely because they got a big fat handout from the government.

That’s why one banker CEO after another keeps going on TV to explain that despite their own deceptive loans and fraudulent paperwork, the real problem is these deadbeat homeowners who won’t pay their fucking bills.

And that’s why most people in this country are so ready to buy that explanation.

Because in America, it’s far more shameful to owe money than it is to steal it.

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Acceleration

Who is Presiding Judge Andrea Gundersen, Mortgage Foreclosure Division, Seventeenth Judicial Circuit?

Judge Gundersen presides over all foreclosures in Broward County. She has been referred to JQC, asking that she be removed from the bench.

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FL Honest Lending Report

REPUBLISHED BY LIT: JUL 5, 2021

After orchestrating one of the largest consumer frauds in American history, the banking industry continues the unethical and illegal servicing and foreclosure practices that were uncovered during the “robo-signing” scandal which eventually led to the $25b settlement with 49 State Attorneys General in 2012.

While some of the unethical practices regarding origination were curbed after the settlement, unethical servicing and fraudulent foreclosures continue to plague homeowners.

Floridians for Honest Lending (FHL) reviewed several hundred foreclosure complaints filed in 2019 by Bank of America, the Bank of New York Mellon, and JP Morgan Chase in the Eleventh and Seventeenth Judicial Circuit Courts that comprise Miami-Dade and Broward counties respectively. Upon that review, FHL found 369 foreclosure complaints were filed with rubber-stamped blank endorsements with signatures of David SpectorLaurie MederMichele Sjolander, and Cynthia Riley, whose names became synonymous with the robo-signing scandal. Of those, 325 were loans originated by Countrywide, the disgraced mortgage company that was bought by Bank of America in 2008.

In addition, FHL found that in Miami-Dade alone, 310 homes had been sold at auction since January 2019 that included these same rubber-stamped blank endorsements from these same rubber-stamped blank endorsements, 21 of which were sold during the COVID-19 pandemic.

The fraudulent rubber-stamped blank endorsements are used to establish standing and the banks’ right to foreclose on homeowners, the same homeowners that were sold predatory loans and pushed into foreclosure with unethical servicing practices.

This practice of filing false documents was documented by 60 Minutes in 2011 and was part of the complaint filed by the 49 State Attorneys General.

It was discovered after the $25b National Mortgage Settlement that Bank of America and JP Morgan Chase continued to submit forged documents, now relying on forgery and perjury, in foreclosures across the nation.

Unfortunately, the banks’ reckless greed left millions of properties with mortgages and promissory notes corrupted and the chain of title on those properties broken, putting trial court judges in an uncomfortable position of either taking the banking industry to task for these forged documents or kicking a family out of their home.

Unfortunately, with little scrutiny from the media, legislators, or regulators, our court system has heavily favored the latter.

In fact, FHL’s review found that in Broward county, 217 of the 219 foreclosure complaints filed in 2019 that included fraudulent rubber stamps were assigned to Judge Andrea Gundersen.

Of these cases assigned to Judge Gundersen, 126 of them have been closed, none of which were ruled in favor of the defendant.

Currently, Judge Gundersen presides over all foreclosures in Broward County.

She was reassigned from Family Court and does not have prior experience in foreclosure litigation.

Since her reassignment, defense attorneys have filed motions for judicial disqualification against Judge Gundersen for allowing attorneys for Bank of America to misrepresent the law and argue that “fraud on the court” is allowed in foreclosure because of a “litigation privilege” and ordering the defendant to pay the Bank’s attorney’s fees for challenging the fraud.

In April 2021, Judge Gundersen granted nineteen motions for disqualification in cases she presided over.

The clients have referred Judge Gundersen to the Judicial Qualifications Commission asking that she be removed from the bench.

These fraudulent foreclosures impact real people like Ana Rodriguez, an 82-year-old homeowner who was a former Cuban political prisoner, who now faces eviction because she was sold a predatory loan by Countrywide.

It impacts people like Mrs. Marie Williams-James who never missed a mortgage payment but Bank of America foreclosed on her anyway and Mr. and Mrs. Simpson who were working on a mortgage modification when the Judge refused the bank’s motion for continuance and forced the Simpsons into a fraudulent foreclosure judgment.

There is a new foreclosure crisis looming due to the economic effects of the COVID-19 pandemic. As we get the pandemic under control, the federal government will be under increased pressure from the banking industry to lift the FHFA moratorium for federally-backed mortgages from Fannie Mae and Freddie Mac.

That moratorium only protects borrowers who had strong enough credit scores to qualify for government-backed mortgages. The elderly, communities of color, and first-time homebuyers who took subprime mortgages are not protected by any moratorium and are still being evicted during the pandemic.

The issue of fraudulent foreclosures must be resolved before this new crisis begins. This is an issue that demands action at the local, state, and federal levels from legislators, regulators, and our judicial system.

We cannot continue to allow fraud in our justice system for the convenience of the banking industry and at the expense of homeowners’ American Dream.

Floridian for Honest Lending is a project of Opportunity For All Floridians, a 501c4 non-profit organization. We believe that our system will only work with transparency, honesty, and accountability. Our research can be found here.

Each complaint filed by the banks’ attorneys is linked in the second column. The forged rubber stamps can usually be found on the promissory notes that are included in the exhibits.

Below you can also find a sample of the varied David Spector signatures.

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Appellate Judges

This Latest 7th Circuit Result Materially Damages Conman Bill Erbey’s Claims

At the time this suit was filed, Ocwen was a limited liability company whose sole member was Ocwen Mortgage Servicing, a company incorporated in the U.S. Virgin Islands with its principal place of business there.

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…In His Ongoing St Croix Lawsuit

 “Defendants’ scheme was devious and unlawful: they secretly conspired to spread false accusations about and financially decimate Ocwen/Altisource.* Utilizing various nefarious tactics, including by improperly pressuring trustees and ratings agencies, Defendants first sought to prevent Ocwen from expanding its mortgage business…”

an extract from Bill Erbey’s lawsuit in St. Croix against Blackrock/PIMCO

*Bill Erbey’s $3 Billion dollar fined Ocwen/Altisource

7th Circuit Finds Insurer Has No Duty to Defend Mortgage Servicer Against Robocall Lawsuit

MAR 16, 2021 | REPUBLISHED BY LIT: MAR 17, 2021

A liability insurance carrier that excluded any violation of telecommunications laws from coverage had no duty to defend a loan servicer from a class-action lawsuit that accused it of making harassing robocalls to more than 1 million cell phones.

The 7th Circuit Court of Appeals on Friday affirmed a U.S. District Court’s declaration that Zurich American Insurance Co. did not have to defend Ocwen Mortgage Servicing from the lawsuit. Ocwen settled the action in June 2019 by agreeing pay $21.5 million in damages, plus about $4.7 million for the plaintiff’s attorney fees.

Tracee A. Beecroft says that after she discharged a mortgage debt through bankruptcy, Ocwen, headquartered in the Virgin Islands, called her cell phone 58 times, using an an automated dialing system for at least some of those calls. Beecroft claimed the constant calls were so stressful that she suffered a miscarriage.

In 2015, Beecroft filed a lawsuit in federal court in Minnesota on behalf of herself and other people who received robocalls from Ocwen on their cell phones. The suit was consolidated with another lawsuit filed in Illinois.

Eventually, a U.S. District Court certified a class consisting of the owners of 1,685,757 unique cell phone numbers. The suit alleged that Ocwen had violated the Fair Debt Collection Practices Act and the Telephone Consumer Protection Act.

The TCPA prohibits the use of recorded or artificial voices on calls that are placed to consumers’ cell phones, while the FDCPA bars any calls that are made with an intent to “annoy, abuse or harass.”

Zurich was well aware of those laws and the potential liability they can impose. The carrier excluded damages caused by any violations of the TCPA and the FDCPA from coverage in the commercial general liability policies it issued to Ocwen from 2010 to 2016.

Ocwen, regardless, asked Zurich to defend it shortly after Beecroft filed suit. Instead, Zurich filed a lawsuit seeking a court declaration that it had no duty to defend. U.S. District Judge Charles P. Kocoras ruled in Zurich’s favor.

On appeal, Ocwen argued that while some of the phone calls its agents made to Beecroft may have illegal, not all of them were. Some calls were made to her home phone. Also, prerecorded voices may have been used in some of the calls to Beecroft’s cellphone, but not all, the company’s lawyers argued.

Ocwen said that if there was no violation of law on some of the calls, Zurich had a duty to defend its policyholder against those allegations.

The 7th Circuit disagreed. The appellate panel said the evidence shows that Beecroft had asked Ocwen to stop calling her, meaning that any calls made to her after that were in violation of the FDCPA’s prohibition against harassment. The lawsuit mentions only calls that were in violation of the law, so any calls that were made that did not violate law are not relevant to the suit, the appellate court said.

“Because Zurich had no duty to defend based on the factual allegations in Beecroft’s complaint, we affirm the district court’s judgment,” the opinion concludes.

Ocwen was also accused of violating consumer-protection laws in 2013. The mortgage servicer entered into a consent order with the federal Consumer Financial Protection Bureau agreeing to refund $125 million to 185,000 borrowers whose homes were foreclosed upon and agreed to help underwater borrowers by reducing the principle owed on their loans by $2 billion, the CFPB said in a press release at the time.

More recently, 33 state attorneys general objected to a proposed settlement in a class-action lawsuit that would allow an Ocwen successor, PHH Mortgage Corp., to escape more serious penalties for allegedly collecting illegal fees from homeowners who used its online system to make mortgage payments.

The U.S. Attorney’s Office entered the fray this month, filing a motion on March 3 asking the U.S. District Court in Southern Florida to reject the proposed settlement because it is too generous to the plaintiff’s attorneys without fairly compensating consumers.

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Zurich Am. Ins. Co. v. Ocwen Fin. Corp., No. 19-3052

(7th Cir. Mar. 12, 2021)

Before EASTERBROOK, ROVNER, and WOOD, Circuit Judges. WOOD, Circuit Judge.

Thanks to the diversity jurisdiction, federal courts are often asked to decide questions of insurance coverage;

state law almost always provides the rule of decision in such cases. This is one of them.

Zurich American Insurance sold a policy to Ocwen Financial, a debt-collection company. After a disgruntled consumer sued Ocwen, it tendered the dispute to Zurich, but Zurich asserted that policy exclusions relieved it of any duty to defend. Zurich then asked a federal court to decide whether this was indeed the case. The district court issued a judgment declaring that Zurich had no duty to defend Ocwen in the underlying litigation, and Ocwen has appealed.

We agree with the district court’s reading of the policy and therefore affirm.

I

At the time this suit was filed, Ocwen was a limited liability company whose sole member was Ocwen Mortgage Servicing, a company incorporated in the U.S. Virgin Islands with its principal place of business there. Zurich is incorporated in New York and has its principal place of business in Illinois.

Since the parties were of diverse citizenship and the amount in controversy exceeds $75,000, the district court had jurisdiction under 28 U.S.C. § 1332(a).

Ocwen collects and services debts. In 2015, Tracy A. Beecroft sued Ocwen in federal court in Minnesota for its attempts to collect on a mortgage loan that Beecroft had discharged in bankruptcy. The bankruptcy discharge should have been the end of things, but it was not.

To Beecroft’s displeasure, Ocwen aggressively pursued her for this debt.

The effects were traumatic for Beecroft: she suffered emotional and physical distress, including a stress-induced miscarriage, and she was later denied a mortgage because Ocwen wrongly reported the alleged default to credit agencies. Counts I through III of her complaint relied on the Fair Debt Collection Practices Act (FDCPA) and the Telephone Consumer Protection Act (TCPA); Count IV alleged common-law defamation; and Count V alleged common-law invasion of privacy.

II

From September 2010 to September 2016, Zurich insured Ocwen under a series of commercial general liability policies—a type of policy that entitles the insured to indemnification for various types of tort claims brought against it. The policies were largely identical and covered all damages caused by both “bodily injury” and “personal and advertising injury.” But two provisions in the policies expressly excluded injuries resulting from conduct that violates certain laws.

The first exclusion, for “Recording and Distribution of Material or Information in Violation of Law,” precludes coverage for bodily injury and personal and advertising injury:

directly or indirectly arising out of or based upon any action or omission that violates or is alleged to violate:

The [TCPA] …

The CAN-SPAM Act of 2003 [Pub. L. No. 108-187] [and amendments] …

The Fair Credit Reporting Act [FCRA] … including the Fair and Accurate Credit Transaction Act; or

Any federal, state statute, ordinance or regulation other than the TCPA, CAN-SPAM Act of 2003 or FCRA and their amendments and additions, or any other legal liability, at common law or otherwise, that addresses, prohibits or limits the printing, dissemination, disposal, monitoring, collecting, recording, use of, sending, transmitting, communicating or distribution of material or

The second exclusion, for “Violation of Communication or In- formation Law,” is similar in scope. It excludes bodily injury, property damage, and personal and advertising injury:

resulting from or arising out of any actual or alleged violation of:

the [TCPA], [Driver’s Privacy Protection Act, or DPPA], or [CAN-SPAM Act]; or

any other federal, state, or local statute, regulation or ordinance that imposes liability for the:

Unlawful use of telephone, electronic mail, internet, computer, facsimile machine or other communication or transmission device; or

Unlawful use, collection, dissemination, disclosure or re-disclosure of personal information of any manner

by any insured or on behalf of any insured.

Soon after Beecroft filed her suit, Ocwen asked Zurich to provide a defense pursuant to the insurance agreement. Zurich refused; instead, it filed this declaratory judgment action against Ocwen, arguing that the policy exclusions just noted absolved it of any duty to defend or indemnify Ocwen in the Beecroft lawsuit. See 28 U.S.C. § 2201.

Ocwen counterclaimed that Zurich breached its duty to defend, and Zurich responded with a motion for judgment on the pleadings. In order to resolve that motion, the court had to compare the policy language with the allegations in Beecroft’s complaint.

Beecroft’s initial complaint alleged that Ocwen frequently attempted to contact her as part of a debt-collection effort that included “letters, billing statements and repeated robocalls to [her] cellular phone.” She alleged that Ocwen “made approximately 58 phone calls to [her] cellular telephone using an automated telephone dialing system.”

The complaint described each of those 58 calls with specificity, including the date, time, and the caller ID. On two occasions, Beecroft picked up the phone and told Ocwen to stop calling.

In her first amended complaint, Beecroft expanded the list of the collection methods to “letters, billing statements and repeated robocalls to [her] cellular and home telephone.” (Our emphasis.) Her initial and amended complaints asserted that Ocwen used an autodialer because, on the two times that Beecroft actually answered, there “was a significant delay be- fore an operator would come onto the line and ask for [her]”—an allegedly telltale sign that Ocwen was using an autodialer before connecting her with a live operator.

Beecroft’s second amended complaint added an allegation that “some or all of the call to [her] cellular phone, including but not limited to the [58] calls listed above, were made using:

(a) Premier Global Dialer; (b) an IAT Predictive Dialer; (c) a Davox Dialer; (d) Aspect Dialer; or (e) similar dialing system that has the requisite capacity pursuant to the TCPA.”

In each version of the complaint, Beecroft maintained that Ocwen’s actions “were done unfairly, unlawfully, intentionally, deceptively and absent bona fide error, lawful right, legal defense, legal justification or legal excuse.”

In other parts of the com- plaint, Beecroft alleged that:

Ocwen and its agents intentionally and/or negligently caused emotional harm to [Beecroft] by engaging in highly offensive conduct in the course of collecting this debt, thereby invading and intruding upon [her] right to privacy.

This conduct included over 58 phone calls to [Beecroft’s] cellular telephone and additional calls to Plaintiff’s home phone … .

To similar effect, she asserted that Ocwen

“intentionally and/or negligently interfered, physically or otherwise, with the solitude, seclusion and/or private concerns or affairs of this Plaintiff, namely, by repeatedly and unlawfully calling Plaintiff’s cellular telephone with equipment prohibited by federal law.”

After reviewing the insurance policy and Beecroft’s complaint, the district court concluded that all of the factual allegations in Beecroft’s complaint fell within the scope of the policy exclusions. To the extent that Counts I through III alleged conduct that violated the TCPA, it found that the policy exclusion’s “catch-all” clause swept in the FDCPA as an “other statute” that regulates the communication of information.

Because the FDCPA prohibits calls made with the “intent to annoy, abuse or harass,” the court concluded that even if some of Ocwen’s calls to Beecroft did not violate the TCPA, they still violated the FDCPA because they were made after Beecroft had asked Ocwen to stop calling.

Calling someone after being asked to stop, the court thought, indicated an intent to abuse, harass, or at the very least annoy. The court also held that the common-law claims in Counts IV and V (defamation and invasion of privacy) were excluded because they were based on conduct “arising out of” the same operative facts as the conduct that was alleged to have violated the enumerated statutes.

Based on these findings, the court held that Zurich had no duty to defend Ocwen in the Underlying Litigation.1

This appeal followed. Ocwen does not disagree with the district court’s analysis of Counts I through IV; it argues only that the policy exclusion should not have applied to the common-law invasion-of-privacy claim in Count V. Ocwen contends that the potential for covered liability exists because the Beecroft complaint includes the possibility that (1) some calls were made to Beecroft’s home phone using a live operator, and (2) some calls were not made with the intent to annoy, abuse, or harass. The first of these points would preclude TCPA liabil- ity, because that statute prohibits calls to landlines only if those calls use artificial or prerecorded voices.

The second is designed to knock out the FDCPA theory, because that law does not cover calls that were made negligently, rather than intentionally. According to Ocwen, the Beecroft complaint potentially alleges conduct that neither falls into the enumer- ated statutes nor “arises out of” conduct that is alleged to violate those statutes.

We evaluate a district court’s grant of a motion for judg- ment on the pleadings de novo, viewing “the facts in the com- plaint in the light most favorable to the nonmoving party.” ProLink Holdings Corp. v. Fed. Ins. Co., 688 F.3d 828 (7th Cir. 2012); Landmark Am. Ins. Co. v. Hilger, 838 F.3d 821, 824 (7th Cir. 2016). We may affirm “only if it appears beyond doubt that [Ocwen] cannot prove any facts that would support [its] claim for relief.” Landmark, 838 F.3d at 824. The parties agree that Illinois law applies.

1 Beecroft’s lawsuit was later consolidated with a class action, Keith Snyder v. Ocwen Loan Serv. LLC, No. 1:14-cv-8461, 2019 WL 2103379 (N.D. Ill. May 14, 2019). Final judgment (based on an approved settlement) was entered on July 1, 2019.

III A

A purchaser buys insurance to transfer risk onto an entity that is willing to bear it (for a price). Commercial general lia- bility insurance addresses the risk of tort liability: a commer- cial policyholder—the insured—sleeps easier knowing that if it should be sued in tort, the insurer will pay for its defense and, if need be, indemnify its losses.

An insurer has a duty to defend its insured “unless it is clear from the face of the underlying complaint that the facts alleged do not potentially fall within the policy’s coverage.”

G.M. Sign, Inc. v. State Farm Fire and Cas. Co., 18 N.E.3d 70, 77 (Ill. App. Ct. 2014) . “If any portion of the suit potentially falls within the scope of coverage, the insurer is obligated to de- fend.” Health Care Indus. Liab. Ins. Program v. Momence Mead- ows Nursing Ctr., 566 F.3d 689, 694 (7th Cir. 2009). It is “the factual allegations in the complaint, and not the legal labels a plaintiff uses,” that matter. Id. at 696. And factual allegations “are only important insofar as they point to a theory of recov- ery.” Id. (citing U.S. Fid. & Guar. v. Wilkin Insulation Co., 578 N.E.2d 926, 932 (Ill. 1991) (“[A]n insurer has a duty to defend its insured if any theory of recovery alleges potential cover- age.”)).

When considering whether the facts alleged describe po- tentially covered liability, Illinois courts “liberally construe[]” the policy terms and the allegations in the complaint in the insured’s favor. Pekin Ins. Co. v. XData Sols., Inc., 958 N.E.2d 397, 400 (Ill. App. Ct. 2011). XData added that “[t]his is true even if the allegations are groundless, false, or fraudulent, and even if only one of several theories of recovery alleged in the complaint falls within the potential coverage of the pol- icy.” Id. Accordingly, a decision to excuse an insurer’s duty to defend based on an exclusionary clause in the contract “must be clear and free from doubt.” Evergreen Real Estate Servs., LLC v. Hanover Ins. Co., 142 N.E.3d 880, 887 (Ill. App. Ct. 2019). Reasonable disagreement about the applicability of an exclu- sion must be resolved in favor of the insured. Id.

To prevail against Zurich, Ocwen needs to establish that there are factual allegations in the Beecroft complaint that the policy exclusions do not remove from coverage. Even a single covered factual allegation would suffice to trigger Zurich’s duty to defend. See Title Indus. Assurance Co. v. First Am. Title Ins. Co., 853 F.3d 876, 887 (7th Cir. 2017).

Some of the language in the Zurich policy is straightforward. For example, injuries resulting from violations of the TCPA, CAN-SPAM Act, and FCRA are not covered—full stop. But there is also a catch-all clause that sweeps in more. The “arising out of” language excludes the underlying con- duct that forms the basis of the violation of an enumerated law, even if liability for that underlying conduct might exist under a legal theory that is not expressly mentioned in the policy exclusion (e.g., common-law invasion of privacy).

Stated differently, the “arising out of” phrase presents a “but-for” inquiry: if the plaintiff would not have been injured but for the conduct that violated an enumerated law, then the exclusion applies to all claims flowing from that underlying conduct regardless of the legal theory used. See G.M. Sign, Inc., 18 N.E.3d at 78 (“‘Arising out of’ means ‘originating from,’ ‘having its origin in,’ ‘growing out of,’ and ‘flowing from.’”).

G.M. Sign dealt with an arrangement quite similar to the one before us. In that case, State Farm issued a liability policy that excluded injuries “arising directly or indirectly out of” con- duct that “violates or is alleged to violate” the TCPA, the CAN-SPAM Act, or any other law that regulates the commu- nication of information. Id. at 74. The insured sent unsolicited faxes and was sued for alleged TCPA violations, common-law conversion, and violations of the Illinois Consumer Fraud and Deceptive Business Practices Act. Id. at 73. Because all three counts in the complaint referred only to the factual allegations of faxes that were also alleged to have violated the TCPA, the court held that the common-law conversion claim fell within the policy exclusion. Id. at 79; see also Mesa Labs., Inc. v. Fed. Ins. Co., 436 F. Supp. 3d 1092, 1098–99 (N.D. Ill. 2020) (“[Plain- tiff’s] common law and TCPA counts derive from ‘the very same conduct,’ namely ‘the sending of unsolicited fax adver- tisements …’ triggering the Information Exclusion.”).

B

With these legal standards in mind, we are ready to turn to Ocwen’s three suggested constructions of Beecroft’s com- plaint. Any of these, it argues, allows it to avoid the policy exclusions.

1

The TCPA prohibits people from initiating “any telephone call to any residential line using an artificial or prerecorded voice.” 47 U.S.C. § 227(b)(1)(B). It does not address calls that do not use artificial or prerecorded voices directed to residential lines.

Ocwen stitches together two components of Beecroft’s complaint to support an argument that it may have placed non-prohibited calls to Beecroft’s home phone.

First, it points to the complaint’s description of its collection efforts, which “include[d]” calls to Beecroft’s home phone (in addi-tion to cellular calls, letters, and billing statements).

Second, it cites the factual allegation in the complaint that Beecroft “answered approximately two calls from Ocwen,” and after answering the phone, “there was a significant delay before an operator would come onto the line and ask for” her. If these two sets of phone calls have any overlap, Ocwen argues, they would establish the potential for alleged behavior that does not violate the TCPA.

Calls to Beecroft’s home landline using a live operator would support her common-law invasion of privacy claim while steering clear of the exclusions.

2

The TCPA also forbids making

“any call … using any automatic telephone dialing system [(ATDS)] or an artificial or prerecorded voice” to “any telephone number assigned to … a cellular phone service.”

47 U.S.C. § 227(b)(1)(A)(iii). A call to Beecroft’s cell phone without using an ATDS or artificial or prerecorded voices would not violate the TCPA.

Ocwen finds this scenario in the complaint by flipping Beecroft’s decision to answer two phone calls on its head. Although Beecroft inferred that Ocwen was using an ATDS because of the delay before an operator came on the line, Ocwen argues that this allegation of ATDS usage was “based on an assumption drawn from a limited sample size” of two out of the 58 alleged phone calls. Further, Ocwen declines to read Beecroft’s allegation that “some or all of the calls to [her] cell phone … were made using [the five specified ATDS systems]” as foreclosing the possibility that some of those calls used no ATDS. Because the conjunction “or” can impose an exclusive choice between “some or all,” and because “some” is not “all,”

Ocwen argues that there might be a residuum of cell phone calls placed with old-fashioned manual dialing, and any such calls did not violate the TCPA.

3

Even if all that were true, though, Ocwen would still have the FDCPA to worry about.

Setting aside the live-operator calls to Beecroft’s home and the manually dialed calls to her cell phone, and assuming that neither violated the TCPA, it remains true that if Ocwen caused “a telephone to ring … repeatedly or continuously with the intent to annoy, abuse, or harass any person at that called number,” it violated the FDCPA. 15 U.S.C. § 1692d(5).

The district court reasoned that because “Beecroft pleaded for the calls to stop … the FDCPA [is] applicable as Ocwen’s calls were meant to annoy or harass.” Zurich Am. Ins. Co. v. Ocwen Fin. Corp., 357 F. Supp. 3d 659, 672 (N.D. Ill. 2018).

Ocwen insists that such an inference is erroneous.

Beecroft’s complaints accuse Ocwen of “intentionally and/or negligently” invading her privacy. Seizing on the word “negligently,” Ocwen argues that this means that at least some calls were not made with the requisite intent for an FDCPA violation.

C

In Illinois civil practice, “[t]he pleader must state the facts essential to his cause of action.” Knox Coll. v. Celotex Corp., 430 N.E.2d 976, 984 (Ill. 1981). “A pleading which merely para- phrases the law, ‘as though … to say that (the pleader’s) case will meet the legal requirements, without stating the facts,’ is insufficient.” Id.

While the duty to defend is not dependent on a complaint’s ability to satisfy a jurisdiction’s pleading standards, Illinois has harmonized the principles animating its fact-pleading rules with those guiding the duty-to-defend inquiry.

When reviewing a complaint to determine whether it alleges covered liability, Illinois courts “give little weight to the legal label that characterizes the underlying allegations.” Lexmark Int’l, Inc. v. Transp. Ins. Co., 761 N.E.2d 1214, 1221 (Ill. App. Ct. 2001).

Even the Federal Rules of Civil Procedure, which use the more liberal notice-pleading standard, require more than “‘naked assertion[s]’ devoid of ‘further factual enhancement.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

Our job is to focus on the pleaded facts, not on the labels attached to those facts. See Momence Meadows Nursing Ctr., 566 F.3d at 696.

Fairly read, Beecroft’s complaint does not allege that Ocwen called her home phone using a live operator.

The best Ocwen can do is to point to Paragraph 17 of the complaint, in which Beecroft states that she answered two phone calls with a live operator on the other end, and link it to the complaint’s separate references to calls to her home. But the natural reading of the complaint precludes such a linkage.

In the paragraph immediately before Beecroft’s description of those two phone calls, she alleges:

16. Throughout the months from October 1, 2013, until February 1, 2014, Defendant Ocwen made approximately 58 calls to Plaintiff’s cellular telephone using an automatic telephone dialing system in an attempt to collect the al- leged balance due on the Loan from Plaintiff. The phone calls are detailed in paragraphs 37–95 of this Complaint. The phone calls violated the Telephone Consumer Protec- tion Act and were an invasion of Plaintiff’s privacy.

“The phone calls” identified in the final sentence are the same “phone calls” referenced in the preceding sentence: the 58 calls to her cell phone. Significantly, the complaint contains no other factual allegations of “phone calls” other than those mentioned in paragraphs 37–95. This is the setting against which paragraph 17 must be read. There is no basis for as- suming that the “two phone calls from Ocwen” that Beecroft answered (as alleged in paragraph 17) came from a source other than the set of calls addressed in paragraph 16.

Paragraph 17 confirms this interpretation: its point was not to establish that there was a live operator, but that “there was a significant delay before an operator would come onto the line,” and “[t]his delay indicated that Ocwen used an automated dialer to call Plaintiff.”

Automated dialers are relevant only for establishing TCPA liability for calls made to cellular phones.

Compare 47 U.S.C. § 227(b)(1)(A), with 47 U.S.C. 227(b)(1)(B). Thus, we decline to read paragraph 17 in tandem with the stray references to calls to Beecroft’s home.

Whether Ocwen on one or more occasions did call Beecroft’s “home phone” is not pertinent for the TCPA if Beecroft is not complaining about such a (hypothetical) call in her lawsuit.

And in our view, a fair reading of the complaint reveals that she is not.

Furthermore, it remains true that the complaint contains no factual allegations that would substantiate the existence of calls that Ocwen placed to her home phone.

Ocwen’s assertion that the complaint potentially alleges calls made to Beecroft’s cell phone without the use of ATDS also goes nowhere.

We agree with the point that a sample size of two tells us nothing from a scientific point of view. But the complaint alleges that “some or all” of the calls to Beecroft’s cell phone “were made using” one of four specified ATDS systems or a “similar dialing system that has the requisite capacity pursuant to the TCPA.”

That signals that Beecroft is complaining about the ATDS calls, not a stray direct call.

While Ocwen’s proffered rules of grammatical construction hold true in isolation—no one disputes that “or” is disjunctive and that “some” does not mean “all”— these rules do not override the text taken as a whole. And that text does not say “some but not all” of the calls were placed using an ATDS system. It says that “some or all of the calls to Plaintiff’s cell phone, including but not limited to the [58] calls listed above,” (our emphasis.) were made using the specified ATDS systems.

If the word “some” stood alone (without the “or all”), it would still expressly “includ[e]” all 58 calls made to Beecroft’s cell phone. “Some,” in this context, cannot be read impliedly to omit calls in the group that it specifically purports to classify.

More likely, the word “some” plays a distributive role in relation to the specified ATDS systems Ocwen was using. “Some” of the calls were placed using Global Dialer, “some” were placed using IAT Predictive Dialer, “some” were placed using a Davox Dialer, “some” using Aspect Dialer, and the rest used “a similar dialing system … .”

It is also possible that Ocwen used only two or three of those systems. Either way, the reference to “some” calls serves only to distribute the group of 58 among the five options.

Finally, even if there were calls to Beecroft’s home or cell phone that did not violate the TCPA, Ocwen must still deal with the FDCPA.

Because the FDCPA requires an intent to annoy, abuse, or harass, Ocwen seeks refuge in Beecroft’s vague references to negligent conduct in Count V, where she says that Ocwen “intentionally and/or negligently” invaded her privacy by calling her repeatedly. But these are precisely the types of “legal labels” that Illinois courts refuse to credit without factual elaboration. See G.M. Sign, 18 N.E.3d at 79 (where a complaint is “so bereft of factual allegations” and is so vague that “myriad unpleaded scenarios could fall within its scope,” it cannot trigger a duty to defend).

Count V expressly incorporates by reference the 58 calls to Beecroft’s cell phone (and potential calls to her home). It was from this set of calls that the district court inferred Ocwen’s intent to “annoy or harass” when it continued to call Beecroft after she asked it to stop. “[T]here is no bright line rule for how many calls are sufficient to support an inference of an intent to harass, oppress or abuse.” Holliday v. Virtuoso Sourc- ing Grp., LLC, No. 11-CV-314-JPG-PMF, 2011 WL 5375062, at *2 (S.D. Ill. Nov. 4, 2011). The inference depends on the circumstances. Id.

Several district courts have found the requisite intent when the caller continues to call after being requested to stop. See Light v. Seterus, Inc., 337 F. Supp. 3d 1210 (S.D. Fla. 2018);

Masuda v. Citibank, N.A., 38 F. Supp. 3d 1130 (N.D. Cal. 2014);

Holliday, 2011 WL 5375062, at *2; Arteaga v. Asset Acceptance, LLC, 733 F. Supp. 2d 1218, 1227 (E.D. Cal. 2010) (discussing Fox v. Citicorp Credit Servs., Inc., 15 F.3d 1507 (9th Cir. 1994)) (“[A]a debt collector may harass a debtor by continuing to call the debtor after the debtor has requested that the debt collector cease and desist communication.”);

Chiverton v. Fed. Fin. Grp., Inc., 399 F. Supp. 2d 96, 104 (D. Conn. 2005).

The district court did not err in drawing a similar inference from Ocwen’s persistence in the face of Beecroft’s requests that they stop calling her.

IV

Because Zurich had no duty to defend based on the factual allegations in Beecroft’s complaint, we AFFIRM the district court’s judgment.

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