Editorial: A job for the state's top cop: If fraud is an issue, attorney general should
have power to probe


10/08/2010 © Palm Beach Post

Florida Attorney General Bill McCollum should appeal the ruling by Palm Beach County
Circuit Court Judge Jack S. Cox that the attorney general's office lacks the authority to
investigate law firms suspected of fraudulent foreclosure practices.
On Monday, Judge Cox granted a request by Shapiro & Fishman to quash a subpoena for
information from the Boca Raton firm, saying that the Florida Bar is responsible for
investigating allegations of misconduct by attorneys. Shapiro & Fishman is one of four firms
under investigation for allegedly doctoring foreclosure documents to get quick judgments on
behalf of lenders. The fraud scandal has forced the nation's biggest banks to halt foreclosures
in 23 states, including Florida. On Tuesday, judges in Palm Beach County canceled half of the
150 scheduled foreclosure auctions.
In his ruling, Judge Cox took a circuitous route to conclude that the attorney general's
office must back off. The investigation centered on Shapiro & Fishman's legal representation of
lenders in foreclosure matters. The office initiated the investigation under the state's
Deceptive and Unfair Trade Practices Act. Judge Cox noted that the activities of entities
regulated by the Office of Financial Regulation, such as banks, are exempt under that law.
"The enumerated list of exempted activities does not specifically include attorneys, law
firms or any person or entity that is regulated by the Florida Bar," Judge Cox wrote. "However,
the Legislature knew that the authority to regulate and discipline the conduct of attorneys has
been exclusively reserved to the Supreme Court."
The Florida Constitution does give the Supreme Court exclusive authority to admit
attorneys into the practice of law and to discipline them. That authority, however, does not
preclude law enforcement from investigating allegations of illegal conduct. The attorney
general is the state's chief legal officer.
To cite one extreme example, the Florida Supreme Court didn't take down Ponzischeming Fort Lauderdale lawyer Scott Rothstein, who defrauded investors out of $429
million. Nor did The Florida Bar. The U.S. Attorney's office did. The Florida Supreme Court
disBarred Rothstein, at his request, while he was under investigation. Further, the state Office of Financial Regulation does not regulate national institutions
such as Bank of America, JPMorgan Chase, and Ally Financial, on whose behalf the law firms
are alleged to have filed fraudulent documents. Maryanne Downs, president of the Florida Bar,
said her organization does not investigate complaints against law firms, just individual attorneys.
So if the state's top cop can't investigate, who can? Florida's courts have issued thousands of foreclosure judgments, many in recent weeks after the Legislature last spring appropriated $9.6 million to expedite the cases. Defense attorneys say many of those foreclosures were the result of falsified documents.
Lenders have halted foreclosures while they try to correct the paperwork. That delay is
making it harder for Florida to get through the foreclosure backlog and revive the real estate
market. No one, however, should be defrauded out of a home. Florida should be able to go
after those who have gamed the system and tried to profit from a crisis.

Rhonda Swan, for The Palm Beach Post Editorial Board.