The State Bar of California has taken over the law firm of Mitchell Roth, who had, in partnership with convicted felon Paul Noe II, convinced more than 2,000 troubled homeowners to fall for an apparent "foreclosure assistance" scam.
The apparent swindle, fist described in the September, 2008 SF Weekly
column "Facing foreclosure? Con man Paul Noe II has a deal for you,
" involved a boiler room of agents who would contact Spanish-speaking homeowners behind on their mortgage payments. Roth's canvassers would convince apparent victims they might save their homes by entering into a business deal with convicted con artist Noe, scion of a legendary con artist dynasty. Under the terms of the deal, Roth's employees would offer a complex contract to prospective clients. The deal required the client to pay monthly fees to a Noe-formed company. That company -- which happened to be partially owned by Roth's wife -- would in turn hire Roth as counsel for the client, supposedly to fend off foreclosure via lawsuits.
In 1989 Noe was convicted on felony fraud charges for his role in a
scheme to buy an insurance company using forged financial instruments.
The '89 scheme was hatched by Noe's uncle Clifford, who, along with
Paul Noe's father, Paul Sr., masterminded a 1960s con spree that
included looting a bank in Texas and attempting to fraudulently
purchase a bank in England. The swindles became the subject of the 1973
book The Fountain Pen Conspiracy, reissued as The Super Swindlers.
After his 1989 fraud conviction, Paul Noe, Jr. set up an operation
in California known as a "trust mill," aimed at systematically
convincing senior citizens to hand over their assets to Noe's financial
advisers in the name of "estate planning." Noe was subsequently
sanctioned by the California Department of Insurance in connection with
a series of shell companies he set up as part of the trust mill scheme.
Noe set up the aforementioned company, in partnership with his longtime attorney Roth,
aimed at luring homeowners facing foreclosure into paying thousands of
dollars based on the promise that the convicted con man and his lawyer
would keep bankers at bay
At the heart of the scheme was a
promise by Roth and Noe to sue mortgage lenders, based on the theory
that the lender might not have the legal title to the client's home.
According to transcripts from hearings presided over by Judge Manuel Real of
the U.S. District Court for the Central District of California, Roth
filed multiple lawsuits in various jurisdictions, then repeatedly
failed to appear in court -- allowing the suits to be summarily
dismissed en masse.
Roth claimed in an interview with SF
Weekly that he was providing a valuable service to troubled homeowners.
Attorneys now suing him on behalf of former clients say the scheme
involved Roth stringing homeowners along long enough to collect thousands of
dollars in fees, then months later claiming to have lost the lawsuit,
despite his best efforts.
After attorneys representing mortgage lenders encountered the SF Weekly story on the Internet, they explained in court the nature of Roth's apparent business partnership with Noe.
declared Roth a vexatious litigant, and said he would urge federal and
state law enforcement agencies to investigate this scheme. An FBI agent
contacted SF Weekly in April relating to the September story about Roth
and Noe's scheme.
According to the Bar Association, Roth and
Noe bamboozled more than 2,000 such clients. Given the thousands of dollars
in fees Roth and Noe demanded of each client, the scheme could have
netted tens of millions of dollars.
Roth, the Bar Association reported, was hospitalized due to depression.