State AG says Denver judge was wrong in foreclosure lawsuit

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The Denver judge, who last spring ruled that former foreclosure king Larry Castle and his law firm did not violate state laws designed to protect consumers against fraudulent charges, was biased and made several missteps during the three-week bench trial leading up to his decision, the Colorado attorney general’s office asserts in its appeal of the verdict.

In a 68-page argument filed with the Colorado Court of Appeals over why a new trial should be granted, the state says District Judge Morris Hoffman disregarded an earlier state Supreme Court decision in the case that said costs and fees that are openly disclosed to clients are not absolved from being deceptive. Hoffman, the state says, never budged on his belief that the fees Castle charged bank clients — and ultimately consumers — to handle foreclosures could not be deceptive as long as they were disclosed.

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The state sued Castle and others, saying the fees were intentionally bloated in order to cash in on the nation’s foreclosure crisis.

The state also says Hoffman wrongly allowed two witnesses — foreclosure lawyer Stacey Aronowitz and her sister, Kelly Chopin, who ran a business that posted foreclosure notices for the Aronowitz law firm — to avoid appearing in court by asserting their Fifth Amendment right against self-incrimination instead of assessing whether that right was properly invoked.

The state said Castle and Aronowitz conspired to balloon the costs of posting court notices on foreclosed properties higher than was the typical cost.

Though Castle lost on a single claim in the state’s case — that his firm did not properly tell government mortgage insurers of an affiliation he had with a process service company — he won on all other counts and, Hoffman ruled in April, is entitled to recover his attorneys fees, which could run into the millions of dollars. A hearing on that amount is scheduled for February.

Castle has said in court papers that he will appeal that portion of the verdict that he lost.

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