The CA State Bar’s Task Force, the OC District Attorney’s Office, Storm Trooper Tactics and Loan Modifications

Imagine this… You’re at your suburban home with your wife and young children on a Friday afternoon.  You look outside and see what appears to be dozens of police cars gathering in front of your home.  You’re arrested in front of your children and neighbors, put in handcuffs, and taken to jail, charged with 118 felonies.  If convicted, you face 70 years in prison.

There’s nothing you can do until Monday, but when you get to see a judge, the prosecutor argues that you are a threat to the public and bail is set at over a million dollars.  Your banks accounts are frozen and there’s no way you can make bail.

You’re a lawyer who has been practicing law for 14 years without incident, but the newspapers are now referring to you as a scammer.  You sit behind bars for roughly a month, but finally the date of your preliminary hearing arrives, and because it’s a preliminary hearing, all the prosecutor has to establish is “probable cause,” the lowest level of proof.

But at the preliminary hearing the judge dismisses 60 of the felony counts, saying that he’s heard no evidence to support them, none… asd in zippo.  Then the District Attorney prosecuting the case dismisses another 50 felony counts.  He actually had offered evidence on those counts, but it was so insufficient he moved to dismiss them himself, apparently in an effort to spare the judge the work involved in having to do it.  Now you’re charged with eight counts, as opposed to 118.

You just spent a month behind bars, with 7-figure bail, facing 70 years in prison… referred to as a threat to the public… but now as it turns out, you’re charged with only eight counts, and you’re attorney will be moving to have those dismissed as well.  One day you’re a serial killer, the next you’re a minor league thief..  A month in a cage without any findings of guilt, or even substantiation of the charges… it’s nothing short of appalling.

If you want to know what that experience is like, you might try asking Christopher Diener, an Orange County attorney who is living through that exact scenario.  I wrote about Diener for the first time on the Friday he was arrested.  I wrote about him again last week after 94% of the charges were dropped.

I’m writing about it again now, because the story just keeps getting worse, and it’s reached the point where it’s become constitutionally offensive, and should be horrifying to every citizen of these United States, and certainly to every resident of Orange County, California.

Diener’s attorney is Lisa Bethune.  I spoke with Lisa about the case, and although there were certain things she could not share, as the case is ongoing, she was candid about others.  I was also able to review several documents related to the case as well.  Nothing was good.

I found Lisa to be an exceptionally smart, hard charging experienced attorney, by the way.  She was a prosecutor in Lake County, near Napa Valley, California, and she used to be a Deputy District Attorney in the Orange County DA’s office, in addition to having been a Public Defender with the OC Public Defender’s Office.  So, she’s definitely lived on both sides of the fence as it were.

The Orange County District Attorney, like any prosecutor, is responsible for reviewing evidence, and making a good faith determination that the evidence is sufficient to prove that the defendant has committed a crime or crimes.  And it’s a clear abuse of prosecutorial discretion to file charges that are not supported by admissible evidence.

In this case, the veteran prosecutor George McFetridge never even tried to prove 60 of the counts he had charged Diener with, and that’s not my opinion… that’s according to the judge in this case.  His evidence on the other sixty was so pathetic he moved to dismiss them himself.

The District Attorney is responsible for filing the criminal charges.  But DA’s normally get their evidence from policemen, or other trained law enforcement investigators.  So where did our intrepid DA’s office get its “evidence” in this case?

Well, I’m not privy to the investigative files, but from speaking with Diener’s defense attorney, Lisa Bethune, it appears that the investigation was conducted in large part by two of the State Bar’s investigators who were acting as a part of the Joint Task Force on Loan Modification Fraud, which consists of the state’s Attorney General, the FTC, and local District Attorneys.  Both of these guys provided testimony at the preliminary hearing, along with two of the investigators… or perhaps I should call them “investigating telemarketers,” from the Orange County District Attorney’s office.

Here’s how the team if investigators breaks down from what I was able to learn from my sources:

One of the two bar investigators, Tom Layton, is a retired LA County Deputy Sheriff who was with the department for 14 years… he’s worked in LA County Jail, narcotics, and with gang violence, making him ideally prepared to investigate loan modification fraud.  He’s been an investigator with the State Bar for the last ten years, but regardless, he should know what a criminal case looks like.

The other, John Noonan, has only worked as a State Bar investigator, and has never before investigated a criminal case.

The Lead Investigator for the District Attorney’s Office was Grant Gulickson, who I hear is a good guy, and he worked with Investigator Holford, who I know nothing about, but have no reason to believe he’s anything less than a good guy.

Part of their investigation included a telemarketing campaign during which the DA’s investigators contacted Mr. Diener’s clients and, using a SCRIPT, taken from (where else) the same script used by the State Bar investigators… sounded something like this:

“Hi, I’m calling from the Orange County District Attorney’s office.  We’ve arrested Christopher Diener for scamming homeowners and I’m calling to ask if you thought you might have been scammed by him?”

Okay, I’m kidding about that, but I think I made my point.  Some of the actual questions were:

“Hi, I’m calling from the Orange County District Attorney’s office.  I’d like to talk to you about your loan modification.  Did you hire Christopher Diener to get a loan modification?  Did you pay the Diener Law Firm?  Did you get your loan modification?  How much did you pay?”

And I can only imagine where the conversation might have gone from there.

Some of the witnesses that had complained to the State Bar about Diener did report getting a loan modification, but weren’t at all happy with the terms of the modification they received.  Apparently, they wanted principal reductions, and nothing else would do.  Others that complained to the State Bar said that although they did get a loan modification after hiring Diener, they felt that they had done the lion’s share of the work involved, and therefore deserved a full refund.

Look, I understand that homeowners aren’t happy about much of anything when at risk of losing their homes.  And I’m more than aware of the difficulties involved in obtaining a loan modification from a lender or servicer.  And I’m certainly no fan of the HAMP program, as anyone that’s ever read me knows all too well.  But people… please.  You don’t complain about your attorney because the bank wouldn’t give you a principal reduction.  And you don’t get to say you want your money back because you hade to do some of the work involved too.

Still, this crackerjack team of investigators went through hundreds of seized files, contacted Diener’s clients, and through all of that they found nothing that might have led them to believe that perhaps some of the charges were, shall we say, a tad weak?  Did they even know what they were looking at, or did they just flip through folders, like I do when someone hands me something I don’t have any intention of reading.

And just to make sure we add insult to injury… the District Attorney executed a search warrant and seized hundreds of boxes of files and other materials from Diener’s offices.  Roughly 100 of those seized boxes were never looked at, and that’s according to the District Attorney who admitted this l on the record.

Obviously, the goal here was plainly to send a message to attorneys helping homeowners with loan modifications.  Combine inadequately prepared investigators, with an overzealous District Attorney, add a State Bar that has no clue what’s going on and you have a poisonous brew.

The Orange County DA has made no secret of its desire to step hard on foreclosure scams. In July of 2009, around the time the DA obtained a search warrant for Diener’s office, Assistant District Attorney Elizabeth Henderson, McFetridge’s superior, was quoted by the OC Register as saying about loan mod scammers:

“We’re putting people in jail.  Someone’s going to end up in prison for this.  The issue is not just that someone might lose $2,000 or more, but that his or her house proceeds to foreclosure while waiting for help that never comes.”

Was she talking about arresting bankers when she said that?  Because that I would understand completely.

So, I realize that sending people to jail is what DA’s are supposed to do, but they are also supposed to at least attempt to send the right people to jail.  As the Diener case shows, the power of the prosecutor is immense: the power to arrest, charge, ask for high bail, threaten with jail, ruin lives… very serious stuff.  And we should all hope that we have very serious people with seriously good judgment to fulfill such a role in our society.

Unfortunately, the people involved in this case were seriously inept.  Their behavior in this case makes them clowns, in my eyes.  Dangerous, scary clowns to be sure, but clowns nonetheless.

Before the Storm Troopers arrived, Diener’s firm, according to his attorney, had successfully gotten hundreds of modifications for clients.  Not only did the District Attorney incarcerate Diener on very little, if any, evidence for roughly a month, but the Task Force took all of his client files, and effectively prevented him from working the files to prevent the foreclosures he was hired to prevent.  What happened to Henderson being oh so concerned about homeowners “waiting for help that never came”?  In this case, she was just fine with stopping the help from coming.

State Bar Chief Howard Miller is on record excoriating loan mod lawyers, claiming the field is full of scammers.  He clearly believes that helping with loan modifications does not constitute the practice of law, but the renegotiation of a contract sounds like it might involve some aspect of the law, no?  His level of understanding and knowledge of the situation is embarrassingly inadequate, and while one might have forgiven him two years ago as the foreclosure crisis began, it is unforgivable today, especially in California, one of the hardest hit of all states.

Mr. Miller should be mortified.  In the immortal words of Joseph Welch during the Army – McCarthy hearings:  “Have you no sense of decency, sir?”

I wonder how many other of the lawyers whose names were trashed on the Bar’s “scarlet lawyer list,” as I referred to it in my article last summer, in point of fact are factually innocent.  It would be nice if the crack State Bar Task Force investigators could tell us, but clearly… these clowns couldn’t investigate their way out of a paper bag.

Conviction first. Trial later.  The Un-American way.

Look… I don’t know Christopher Diener, I’ve never met him, and I don’t know anyone who has hired his firm to help with a loan modification.  But here’s what I do know… if he’s guilty of some crime, then the people involved in prosecuting Diener should be ashamed.  And if he’s not, then those involved should be fired.

I hope everyone reading this will now take the time to read slowly and carefully the following quote, because it exemplifies all that is good about our government, our society and our ideals as Americans.

Here’s Supreme Court Justice Sutherland on the role of the prosecutor in our system of justice.  I hope the Orange County District Attorney’s Office will read it twice… no, perhaps three times… and slowly.

“The United States Attorney is the representative not of an ordinary party to a controversy, but of a sovereignty whose obligation to govern impartially is as compelling as its obligation to govern at all; and whose interest, therefore, in a criminal prosecution is not that it shall win a case, but that justice shall be done.

As such, he is in a peculiar and very definite sense the servant of the law, the twofold aim of which is that guilt shall not escape nor innocence suffer.  He may prosecute with earnestness and vigor—indeed, he should do so.  But, while he may strike hard blows, he is not at liberty to strike foul ones.

It is as much his duty to refrain from improper methods calculated to produce a wrongful conviction as it is to use every legitimate means to bring about a just one.”

Berger v. the United States


Page Rank