Former Los Angeles attorney Mitchell Roth has agreed to settle charges that he allegedly collected fees from 2,000 debt-entrenched homeowners with promises of foreclosure relief, but only filed "frivolous and phony" lawsuits, according to the California attorney general's office.
Roth has agreed to pay $1 million in restitution to homeowners plus $125,000 in penalties, according to the settlement reached Tuesday. He did not admit to any wrongdoing as part of the settlement.
Roth's suits did not result in foreclosure relief, but instead "left 2,000 desperate homeowners in even greater debt," Atty. Gen. Jerry Brown said in a statement.
The settlement brings to a close the state's charges against Roth. However, his former business partner, Paul Noe, is still in litigation on the charges, said Evan Westrup, a spokesman for the attorney general's office.
Roth resigned from the state bar in April 2009 and now resides in Florida, Westrup said. Neither Roth nor Noe could be reached for comment.
The complaint was filed last year against Roth, Noe and Noe's company, United First, Inc., based in Nevada. Noe had previously been convicted of wire fraud, Westrup said.
According to the complaint, Roth and Noe told homeowners that if they worked with United First and hired Roth to file suits on their behalf, they could lower or eliminate their mortgage debt and save their homes.
Homeowners paid $1,800 in upfront fees and at least $1,250 more each month, according to court documents. The homeowners also agreed to pay 50% of the cash value of any settlement Roth was able to reach, the documents said.
After collecting upfront fees, Roth filed lawsuits on behalf of the homeowners, arguing that the borrowers' loans could be deemed invalid. The mortgages had been bought and sold so many times on Wall Street, the suits said, that the true ownership of the loan could not be determined, according to court documents.
Once the lawsuits were filed, Roth often failed to appear at court hearings or file other required paperwork on time, but he and Noe continued to collect monthly fees from homeowners, the complaint said.
None of the suits Roth filed ended in victory judgments for the homeowners, according to the complaint.