Colorado Attorney General Sues Two Big Foreclosure Law Firms for Fraud

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Colorado Attorney General John Suthers sued two of the state's biggest foreclosure law firms on Tuesday alleging massive fraud. The AG's office sued The Castle Law Group and Aronowitz & Mecklenburg alleging their lawyers had engaged in a multi-million dollar scheme to defraud thousands of homeowners along with investors, banks and taxpayers. The lawsuits allege violations of Colorado's Fair Debt Collection Practices Act, the state's Consumer Protection Act and its Anti-Trust Act.

According to Denver Post, principals of the Aronowitz firm agreed already to settle the case for $10 million and they are expected to either close or sell their Denver-based practice within the next six months. The Castle Law Group is expected to contest the matter. Attorneys for Aronowitz said the law firm had settled without any admission of guilt, and decided it was preferable to immediately address the issues and move forward.



Since 2006, the two firms have handled more than 150,000 foreclosures across the state. The investigation into the modus operandi of the law firms began in May 2012 and in response to a series of stories published on Denver Post regarding the foreclosure process.

The allegations against the law firms state that the firms exploited every step in the foreclosure process from colluding to fix rates on process services fees to inflating fees charged to homeowners who moved to save their homes from seizure. The total amount of illegitimate profits made by such collusion conducted over a decade may exceed $97 million.

The lawsuits allege the "Defendants got away with this extensive fraud by taking advantage of the inherent lack of oversight in the foreclosure process ..."

Denver Post reported Suthers saying, "These inflated costs were passed on to homeowners trying to save their homes from foreclosure, successful bidders for properties at foreclosure sales, and to investors (banks) and taxpayers."

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John Suthers      Colorado      Denver      Suthers      Aronowitz      Castle Law Group      Foreclosure      Fraud     

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