Advent Talk
Issues & Concerns Category => 3ABN => Topic started by: Bob Pickle on December 15, 2013, 06:08:16 PM
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The "other site" has drawn attention to a lawsuit in Massachusetts filed by the Attorney General against several non-profits and five individuals. I can't say that I know all that much about it, having just discovered the same, I think last week.
What I can say is that Gailon quite some time back told me about some financial irregularities perpetrated by someone connected with one of these non-profits, and about the lengths he took to try to rectify the matter. I think that person is one of the ones who got sued.
It seems puzzling that the Attorney General would sue Gailon over the matter if he was trying to rectify the irregularities.
Another thing that seems puzzling is why the Attorney General would accuse the parties of practicing law without a license given how many times Gailon told me about lawyers they were hiring and using. While we haven't conversed all that much in recent times, we conversed quite a bit up through 2011, the year we appealed to the U.S. Supreme Court. There were many times that he told me about this lawyer or that lawyer, or spoke of the law firm he was working with.
It will certainly be interesting to see how things develop.
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Can Gailon explain this: http://www.mass.gov/ago/news-and-updates/press-releases/2013/2013-10-15-foreclosure-pi.html (http://www.mass.gov/ago/news-and-updates/press-releases/2013/2013-10-15-foreclosure-pi.html)
AG Coakley Sues Alleged Foreclosure Relief Groups for Soliciting Illegal Fees, Taking More Than $350,000 From Homeowners
Preliminary Injunction Prohibits Businesses from Soliciting Clients for Foreclosure Related Services and Taking Illegal Advance Fees
BOSTON – A group of businesses that advertised themselves as non-profit foreclosure prevention organizations was sued for allegedly soliciting and spending more than $350,000 in illegal advance fees from distressed homeowners, Attorney General Martha Coakley announced today.
“We allege these defendants targeted and took money from homeowners facing foreclosure, promising to help them stay in their homes, but instead used that money for personal expenses,” AG Coakley said. “Through our HomeCorps program, our office has obtained direct relief and free services for homeowners, and we will continue our efforts to combat deceptive foreclosure rescue schemes that take advantage of struggling borrowers.”
Suffolk Superior Court Judge Frances McIntyre granted a preliminary injunction Thursday against the defendants, preventing them from soliciting or advertising for any foreclosure-related services or improperly charging advance fees.
The complaint, filed in Suffolk Superior Court, alleges that since 2009 a group of five individuals operated a series of organizations claiming to offer financial and legal services, including foreclosure-related services, to distressed homeowners in Massachusetts. Those named in the lawsuit include the Alliance for Affordable Housing (AFAH) and the Global Advocates Foundation Inc., both located in Everett as well as the Alliance for Hope Network, Inc., in Framingham. Individual defendants include Obeilson Roosevelt Matos of Framingham, Gailon Arthur Joy of Boylston, Pricila Trancoso Silva of Revere, John Charles Schumacher of Lancaster, and Paula Carvalho of Framingham.
The defendants allegedly portrayed themselves as tax-exempt, non-profit organizations, but operated like for-profit businesses, seeking financial gain for their officers and directors. The complaint also alleges that the defendants, who are not attorneys or law firms, engaged in the unauthorized practice of law.
According to the complaint, the defendants required homeowners to give deposits of up to 25 percent of their gross monthly incomes, claiming the deposits were necessary to be eligible for federal and other mortgage relief programs. The complaint alleges that between March 2010 and October 2012, the defendants collected and spent more than $350,000 in deposits that they received from homeowners and claimed would be placed in escrow for the homeowners to use to help mitigate their pending foreclosure. The complaint alleges, however, that the defendants never properly accounted for the use of the funds and allegedly used the funds for personal expenses including residential housing costs, car insurance fees, car repairs and vehicle excise payments.
In 2007, the AG’s Office issued regulations that prohibit soliciting or accepting an advance fee in connection with foreclosure-related services, or advertising services without disclosing exactly what is offered to avoid foreclosure, among other unfair practices.
If you are facing foreclosure, or the foreclosure has already occurred, the Attorney General’s HomeCorps may be able to help by offering access to a variety of foreclosure prevention or recovery services. Contact the HomeCorps Hotline at 617-573-5333.
This case is being handled by Assistant Attorneys General Mychii Snape, Colleen Nevin, and Gillian Feiner, and paralegal Krista Roche, of AG Coakley’s Consumer Protection Division, with assistance from Investigators William Mackay and Jody Quartarone of the Civil Investigations Division.
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Silence from Gailon? Now that is interesting...
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Silence from Gailon? Now that is interesting...
He may not be checking here.
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The defendants allegedly portrayed themselves as tax-exempt, non-profit organizations, but operated like for-profit businesses, seeking financial gain for their officers and directors. The complaint also alleges that the defendants, who are not attorneys or law firms, engaged in the unauthorized practice of law.
1. So were the organizations tax-exempt, non-profit organizations, or not? That should be easy to determine. Whether they were run properly is another question.
2. Repeatedly, Gailon told me about the lawyers who were working for these organizations (and I wrote one of them as well), so when did they practice law without a license?
3. My question remains: If Gailon tried to rectify the financial irregularities he found, which he told me about at the time, why was he sued along with the others?
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Number 3 is a big IF. Why doesn't Galion speak for himself? I assume he has not been banned from here. Where is the AU Reporter with all his facts?
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Number 3 is a big IF. Why doesn't Galion speak for himself? I assume he has not been banned from here. Where is the AU Reporter with all his facts?
It isn't that big of an IF, since he told me at the time about the irregularities, and what he was doing to rectify them. It would be different if he had never said a word at the time about them.
I doubt he checks here all that often.
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Sister,
When you pasted in that press release from the Mass. AG, the link to the cited regulations was lost: http://www.mass.gov/ago/government-resources/ags-regulations/940-cmr-2500.html
Here's the relevant quote from those regulations regarding fees:
25.02 Prohibition on Foreclosure Rescue Transactions and Advance Fees for Foreclosure- Related Services
(a) It is an unfair or deceptive act in violation of M.G.L. c. 93A, § 2(a) to, for compensation or gain or for potential or contingent compensation or gain, whether at the time of the transaction or in the future, engage in, arrange, offer, promote, promise, solicit participation in, or carry out a Foreclosure Rescue Transaction in the Commonwealth or concerning residential property in the Commonwealth. Nothing in this subparagraph (a) shall be interpreted to prohibit Foreclosure Rescue Transactions that are not carried out for compensation or gain or for potential or contingent compensation or gain, including, by way of example, such transactions engaged in between or among family members or arranged by a non-profit community or non-profit housing organization.
(b) It is an unfair or deceptive act in violation of M.G.L. c. 93A, § 2(a) to solicit, arrange, or accept an advance fee in connection with offering, arranging or providing Foreclosure-Related Services; provided, however, that this subsection shall not prohibit a licensed attorney from soliciting, arranging or accepting an advance fee or retainer for legal services in connection with the preparation and filing of a bankruptcy petition, or court proceedings, to avoid a foreclosure. Provided further, however, that a licensed attorney accepting an advance fee or legal retainer must comply with all applicable laws and regulations pertaining to such fees, including the Massachusetts Rules of Professional Conduct, specifically Rules 1.5 and 1.16. For purposes of this section, an advance fee is any money or consideration paid in advance of actually receiving services. If the Foreclosure-Related Services at issue concern the offer, arrangement or placement of a residential mortgage loan by a licensed mortgage broker or licensed mortgage lender, then this section (b) shall not prohibit the solicitation, payment or acceptance of a loan application fee provided that the fee conforms with all applicable laws and regulations, including any rules or regulations of the Commissioner of Banks.
So the regulations provide certain exceptions for non-profits and lawyers. So if the non-profits are non-profits, and if there were lawyers involved, what went wrong?
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Sister,
Let's muddy the waters just a little bit more, shall we? The AG's press release stated:
The complaint, filed in Suffolk Superior Court, alleges that since 2009 a group of five individuals operated a series of organizations claiming to offer financial and legal services, including foreclosure-related services, to distressed homeowners in Massachusetts. Those named in the lawsuit include the Alliance for Affordable Housing (AFAH) and the Global Advocates Foundation Inc., both located in Everett as well as the Alliance for Hope Network, Inc., in Framingham. Individual defendants include Obeilson Roosevelt Matos of Framingham, Gailon Arthur Joy of Boylston, Pricila Trancoso Silva of Revere, John Charles Schumacher of Lancaster, and Paula Carvalho of Framingham.
Now read http://legalbiscuit.wordpress.com/2013/10/30/case-blurb-u-s-bank-v-edna-and-john-schumacher/
U.S. Bank National Association v. Edna and John Schumacher is scheduled for oral arguments in front of the Supreme Judicial Court (SJC) on Thursday, November 7th. ...
Mr. Schumacher was originally represented by the Alliance for Affordable Housing. When Mr. Schumacher appealed, he obtained legal representation with Harvard Law School’s Legal Services Center. ...
In addition to the appellant and appellee briefs that were filed, several amicus briefs were submitted in support of both sides. ... For the Defendant/Appellant Mr. Schumacher, Community Legal Aid, the National Consumer Law Center, and the Massachusetts Attorney General’s Office submitted three separate briefs.
Amazing, isn't it? If AFAH was "practicing law without a license" as the AG's press release indicates, how did AFAH represent Schumacher in the lower court before Schumacher appealed? There must have been some lawyers involved somewhere at some point.
Did the AG's office file its amicus brief in support of John Schumacher before or after the same AG's office sued the same John Schumacher?
Certainly the AG's office has raised some serious issues, ones we have looked at before in connection with 3ABN, such as private inurement. There were irregularities. The questions will be: Who perpetrated them? Were there any lawyers?
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Only Gailon can answer these questions...all you and I could do is surmise.
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Only Gailon can answer these questions...all you and I could do is surmise.
Like I said before, he already told me about a bit of this stuff long before the AG ever filed suit. There were lawyers involved with these organizations. Like I said before, I even wrote one of them.
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Sorry, missed this!!!
The most appropriate response would be to simply post the response to complaint and a subsequent Motion to Add Parties and we shall do that. Should clarify the issues.
The problem is that the AG seems intent upon elimination of the concept of non-profit "Community Legal Services" organizations based on any fee for service other than "pro bono". These organizations based fees on income and expenses and many cases were, in fact, pro bono. There was also a strong belief that those who wanted to save their homes should contribute some monthly fee to encourage a timely payment history during the foreclosure prevention or recovery and prior to the bank modification.
The issue is whether you can create a community based non-profit fee for service for low and middle income wage earners that is substantially less than the $250/hr and up law firm fees. The model was "community medical clinics" that provide a wide range of medical services for all income levels without based on ability to pay. And hospitals now charge enormous fees
for medical services and still maintain a 501-c-3 status. Why could not a community legal services clinic do the same?
I will post both the answer and the Motion to Add Essential parties later. However, it is noticeable that several elements of the AG's complaint already have failed and quite noticeable that non they did not enjoin any of the lawyers either on boards or that served as General Counsel or Staff attorneys. We will go there as we answer and move forward through the case.
It is the concept that must be preserved to get lower and middle class income earners affordable legal services!!! And break the fee setting of the Bar Associations.
Gailon Arthur Joy
AUReporter
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Thank you Gailon, I look forward to more information.
Sister
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It sounded a little strange to me how the AG's press release offered her office's services, which sounded almost like she was trying to wipe out her competition.
Is she running for governor?
I'm all for keeping legal expenses low.
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Commonwealth of Massachusetts
Suffolk, SS Superior Court
Civil Action No 13-3459
Commonwealth of Massachusetts
Plaintiff
V
Gailon Arthur Joy, Et al
Defendants
Defendant Gailon Arthur Joy's Answer to Complaint
1. Denied
2. Plaintiff is left to their proof and otherwise denied:
a.Denied;
b.Denied;
c.Denied;
d.Denied;
e. Denied.
3.Plaintiff's assertion as to the deposition content of GailonArthur Joy is grossly misrepresented and the conclusion is without basis in fact and therefore denied.
4. Plaintiff has not produced, nor would they find, any bank records of Gailon Arthur Joy to support this allegation and therefore denied.
5. Plaintiff is left ot it's proof and therefore denied.
6. Plaintiff is left ot it's proof and therefore denied.
7. Plaintiff is left to it's proof and therefore denied.
8. Plaintiff is left to it's proof and therefore denied.
9. Plaintiff is left to it's roof and therefore denied.
10. Plaintiff is left to it's proof and therefore denied.
11:The Directors of Alliance for Hope, Inc., at a special meeting requested from the Defendant, Gailon Arthur Joy, Ordered an Audit in June 2011 and then adopted a Motion of Dissolution in July of 2011 and the assets of the 501 C-4 corporation were ordered to be distributed to the Tax Exempt 501-c-3 “Center for Social and Economic Justice, Inc,” but, upon information and belief, were absconded by a for profit Lawfirm formed by Attorneys' Jonathan Babcock, Rebecca Lawlor and former AHN director and clerk, Washington Carvalho, spouse of Defendant Paula Carvalho, a/k/a Advocates for Hope, LLC, and therefore the Plaintiff is left to it's proof and otherwise denied.
12. Defendant is not certain as to the current status of the Alliance for Affordable Housing, Inc having ended his voluntary service status in early May, 2012 and resigned as an officer and director on August 18, 2012 to defend the allegations of the US Trustee as to Gailon Arthur Joy, personally, and therefore the Plaintiff is left to it's proof.
13. Plaintiff is left to it's proof, otherwise, as to Defendant Gailon Arthur Joy, denied.
14. Plaintiff's allegation is in conflict with it's press release on the subject matter, and the Defendant reasserts that directors of Alliance of Hope Network, Inc ordered a dissolution in 2011, therefore Defendant Gailon Arthur Joy would assert that the Public Record does not accurately reflect the corporate record, therefore, there should be no officers or directors of the Alliance for Hope Network, Inc; and as to Gailon Arthur Joy, the public record does not accurately reflect the close of voluntary employment at AFAH in 2012 nor the written and accepted resignation of Gailon Arthur Joy in August 2011, therefore, Plaintiff's are left to their proof and otherwise denied.
15. Plaintiff's allegation notwithstanding, the public record does not accurately reflect the status of Ms Transcosa as she served as an officer and director in form only and was, to the best of the knowledge of the Defendant, Gailon Arthur Joy, never given access to the books and records, despite several requests, until the Board specifically ordered that Paula Carvalho of AHN turn over a copy of the books for audit in June, 2011, and asked Ms Trancosa to complete an audit and report, whereupon AHN was ordered dissolved; And, Defendant Trancosa was not a signatory to any accounts at AHN until the defendant Joy discovered AHN was “out of trust” upon complaint of Defendant Matos and specifically requested the Treasurer establish a separate trust account for the Everett office in the summer of 2011; Upon recollection and belief, when AFAH was formed to assume the responsibility of the old Global clients she briefly served as treasurer and resigned about six months later; Therefore, Plaintiff is left to it's proof and otherwise denied.
16. Plaintiff is left to it's proof, however, upon recollection and belief, Mr Schumacher served in form only, had no access to books and records as Treasurer, did preserve Directors Meeting Minutes, did perform some very insignificant part-time clerical work but also resigned upon the order of dissolution by the AHN Board, therefore the Plaintiff is left to their proof and otherwise denied.
17. Plaintiff is left to it's proof and otherwise admitted in part.
18. Plaintiff is left to it's proof, otherwise admitted.
19. Plaintiff's allegation is not supported by the public record as the only entity formed in 2009 was Global Advocates Foundation, Inc, a community legal services entity, and Defendant Gailon Arthur Joy was neither an officer or Director until the merger of AHN with Global in December, 2011; and the Plaintiff has noticeably not named essential parties to the formation and directorate of the foundation, who were in fact essential parties to this litigation, and the Plaintiff has deliberately ignored the fact the the entity was in fact a non-profit with staff and/or contract attorneys, therefore, Plaintiff is left to their proof and otherwise denied.
20. Plaintiff is left to it's proof, denied as to “ informally” merged and in fact the proposal was adopted by both Boards in December of 2010, otherwise, admitted in substance.
21. Plaintiff is left to their proof, for as far as this defendant is aware, AHN aka Alliance, referred credit repair, did not do “credit counseling” in the conventional definition, referred out loan modifications to other entities, referred out “short-sales” to licensed realtors of the client's choosing, did maintain several staff and/or contract attorney's to provide “competent legal representation”, otherwise denied.
22. Plaintiff is left to their proof, otherwise denied as to substance and fact.
23. Plaintiff is left to their proof, however, Defendant Gailon Arthur Joy asserts that upon information and belief the legal teams at AFAH did, in fact, succeed and reverse several post foreclosures, has referred some cases for appeals, coordinated several litigation casework with home modification professionals for a final resolution, have obtained injunctive relief, have “stopped foreclosure sales”, and have utilized housing courts as a foundation to “fight eviction” and reverse invalid foreclosures, therefore denied as to “purported”.
24. Plaintiff is left to their proof, however, Defendant Gailon Arthur Joy would assert, based upon information and belief, that the public corporate records are not accurately reflective of actual status and the Plaintiff's “chart” is insufficient in breadth and accuracy, clearly fails to identify several key officers and directors (including founders), noticeably and very specifically the attorney's that served in several capacities, including Directors and General Counsel as well as staff attorney positions, and therefore represents a fraud upon the honorable court, therefore denied.
25. Plaintiff is left to their proof, otherwise denied.
26. Plaintiff's “investigation” is woefully incomplete and upon information and belief AFAH held a 501-c-3 status with it's “informal” merger with the Center for Social and Economic Justice in August of 2010, had applied for a separate 501-c-4 with the IRS Cleveland office, AFAH has also applied for it's own 501-c-3 status with the IRS Cleveland Office, therefore denied.
27. Plaintiff is left to their proof, otherwise admitted.
28. Plaintiff is left to their proof, otherwise admitted.
29. Plaintiff's are left to their proof, otherwise denied.
30. Denied as to context of the statement asserted by Matos.
31. Plaintiff is left to their proof and otherwise denied.
32. Plaintiff's out of context reference is to payment caps established and based upon current tax returns that rarely accurately reflected “real total income” [many banking victims worked in an underground economy based upon immigration status receiving “under the table income”] and was clearly designed to specifically cap and limit litigation expenses to affordable levels (note that the housing ratios nearly always exceeded 50% of real income, resulting in default in a collapsing income economy, and the loan had been based upon “stated income” all too frequently inserted in the application without the affirmation or permission of the borrower, best defined as “consumer fraud” committed by banking organizations. to expand loan production irrationaly. Therefore, denied as to context and motive.
33. Plaintiff is left to their proof, however, upon information and belief, defendant asserts that many clients were served without any payment requirement or were granted minimal payments for various reasons; many developed or had exigency issues that precluded payments and legal services continued; some clients were required to pay use and occupancy and payments were suspended pending pursuit of various alternative options; many were paid back by order of the US Bankruptcy Trustee because of bankrupt estate issues; but all clients received services regardless of ability to pay; Defendant is not aware of any clients that maintained a sufficient payment history to utilize as “alternative payment history” for use in financing options, including Boston Community Capital purchase buyback programs. And, some clients were paid back excess funds where resolutions were achieved via modification or other agreements. Therefore denied as to context and motive.
34. Plaintiff is left to their proof to identify specific statements to support this general allegation and Defendant Gailon Arthur Joy denies as to context, motive and substance.
35. Plaintiff is left to their proof and otherwise denied.
36. Plaintiff is left to it's proof and Defendant, Gailon Arthur Joy, is not aware of any transfers from any “non-profit” to any corporation, business or other entity owned by this defendant, Gailon Arthur Joy, and therefore denied.
37. Denied.
38. Plaintiff is left to their proof as to how this allegation applies to Defendant Gailon Arthur Joy, therefore, denied.
39. Plaintiff is left to their proof as to how this allegation applies to Defendant Gailon Arthur Joy, therefore, denied.
40. Plaintiff is left to their proof, but in fact Defendant Gailon Arthur Joy ended his employment in late April, 2011 and continued as a director until the dissolution by the board at AHN aka Alliance in July. Defendant Gailon Arthur Joy became aware of the escrow issue when Defendant Matos complained the escrow account was too low in April and asked why the books had still not been made available to the Treasurer, Pricila Trancosa in April, 2011. Defendant Joy followed specific corporate governance, first taking the issues to a special meeting of officers, which included corporate General Counsel, attorney Jonathan Babcock ( member of the Mass Bar), an essential party to this action, whereupon Defendant Joy specifically called for the resignation of the President, and included remedially the trimming of staff (including Defendant Joy), and then called for a special board meeting to address a number of issues;
Defendant Joy identified specific issues to the directorate that included three Attorneys to the Mass Bar, all essential parties to this complaint, one having been the first Asst Atty General to the Consumer Fraud Division under AG Quinn in the 1970's; It became clear the chair and General Counsel had determined to support the president, despite a clear set of issues and Defendants proposal ran into significant resistance, however the board did agree that an audit was appropriate and asked the treasurer, heretofore having no access to corporate records, to do an internal audit and report to the directors. The directors made it clear they wanted to handle the issues internally and resolve the issues with the premise that the officers were compelled “to all get along together” and see this through. Deft Joy wrote a preliminary report to the directors in July and the directors decided it best to dissolve AHN, send the Global clients not in litigation with the AHN legal team back to Everett and upon motion adopted to return Global Advocates Foundation back to Everett while the assets of the AHN were to be given to the Center for Social and Economic Justice, Inc with a new President and CEO, Jason Wheeler.
If anyone was incumbent to report any issues to “law enforcement” it would have been the three members of the Mass Bar on the board, but in fact, to the amazement of the Defendant, President Jason Wheeler reported to Defendant Joy that former General Counsel Jonathan Babcock and staff Attorney Rebecca Lawlor, in concert with the Carvalho Family, had transferred all the assets of AHN to a new lawfirm identified as Advocates for Hope, LLC and asked for Joy's intervention. At that point I informed Mr Wheeler they could file a complaint with the AG and sent a warning e-mail to Atty Babcock that the transfer to the for-profit lawfirm was problematic; I have no recollection of a response from Mr Wheeler or Mr. Babcock and reasonably assumed they had resolved the issue. Therefore, denied.
41. The Plaintiff is left to their proof, however, Defendant Joy's purported “conduct” at AFAH is presumptuous and unsupported from the record and draws conclusions that are unsupported by any documentation or investigative inquiry and therefore denied in context, substance and motive and therefore Denied.
42. Plaintiff is left to their proof and asserts this is a mis-application of CMR 940 25.02(2) and questions the constitutional basis for misapplication of this regulation, particularly a non-profit specifically exempted, therefore denied.
43. See Answer to 42, therefore denied.
44. See Answer to 42, therefore denied.
45. The non-profits had members of the Mass Bar available at all times either on staff and/or contracted, and conduct was in fact compliant, therefore denied.
46. Denied.
47. Defendant asserts that the several attorneys not enjoined are essential parties and clearly not so enjoined to deliberately mislead the honorable Court on substance and motive and represents a significant effort to subvert justice, therefore defendant asserts it represents an abuse of process, per se.
48. Plaintiff is left to their proof as ALL documents, which Counsel for the AG can plainly determine, having access to PACER and having attended Bankruptcy Court hearings, that were submitted to any court, were drawn and submitted by members of the Mass Bar and therefore allegation is Denied. FURTHER, the deliberate misuse and mis-charaterization of the data input by Mr Schumacher
on behalf of Atty Sam Rodriguez were known or should have been known to be delivered to Mr Rodriguez for review, completion, and submission and represents a proper and legal support role and again deliberately mis-characterized and represents a fraud upon the court as well as further abuse of process.
49. Denied
50. Plaintiff is left to it's proof and therefore denied.
51. Plaintiff is left to it's proof and therefore denied.
52. Denied.
Prayer for Relief: To find the Plaintiff's Claims as Without Merit and Deny Relief or other judgment as the Honorable Court shall conclude from the evidence.
Affirmative Defenses:
Defendant Gailon Arthur Joy prays the court to allow the Defendant to amend answers pursuant to the Mass Rules of Civil Procedure on Motion as appropriate.
Counter-claims:
Defendant Joy Prays the Honorable Court to preserve the defendants right to counterclaims pursuant to the Mass Rules of Civil Procedure as appropriate.
Defendant Gailon Arthur Joy demands a trial by a jury of his peers.
Respectfully Submitted,
Gailon Arthur Joy,
Defendant, Pro Se
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Commonwealth of Massachusetts
Suffolk, SS Superior Court
Civil Action No 13-3459
Commonwealth of Massachusetts
Plaintiff
V
Gailon Arthur Joy, Et al
Defendants
Motion to Add Indispensable Parties
Background:
Throughout the decade from 1995 to 2007 the American Banking Sector introduced and then securitized ever larger portfolios of Sub-prime, Alt-A, No Income – No Asset, Piggy-back 1st and 2nd No money down loans, and last but not least, the infamous Hybrid known as the Pay Option Arm loans that the Fed Chairman Alan Greenspan hailed as a solution to “irrational exuberance” housing bubble prices.
These products were always sold with a starter rate that seemed affordable but always step rated buyers into virtual bankruptcy. Pragmatic mortgage bankers saw these “No-Doc or Low-Doc” instruments as an insidious banking scheme to steal accelerating equity in markets that all too frequently saw double digit growth in housing values as demand demonstrated “irrational exuberance” based upon a premise that EVERYONE should be able to purchase a home. FHA full doc loans (allowed “scratch and dent” payment history with explanations) went from 35% of market share in the mid-90's to a mere 3% in the 2006 market year, largely replaced by sub-prime that zoomed to better than 30% of Real Property Financing by the end of 2006.
As the market accelerated, Defendant Joy began to refer victims of these schemes to a hand-ful of available public interest lawyers willing to tackle “predatory lending” in it's various forms and even provided law enforcement investigators with lists of predators and evidence in various forms. BUT, it was a mere finger in the proverbial dyke. Foreclosures and equity theft accelerated largely unabated.
The Supreme Judicial Court's decision in Commonwealth vs Fremont clearly defining the lending of money without regard to the borrower's ability to repay, doing so in anticipation that equity inflation would cover potential losses, was, in fact, predatory lending and a violation of MGL 93-A, opened the door to consumer lawyers to defend against foreclosures and get injunctive relief, at least temporarily. In 2009 loan modification reached a new peak with the introduction of Obama's HAMP modification program, establishing a clear pathway for modification process and procedure, albeit poorly executed, particularly by the Mega Banks that controlled nearly 80% of residential mortgage servicing. But, few consumer lawyers in the Commonwealth really took up the battle in 2009.
Community Legal Services entities were largely under-staffed and were prevented from accepting cases with assets, and houses, albeit over-leveraged, were deemed assets and clients were declined representation. Private Counsel Law firms were requiring large retainers and charged $150 - $300/hour to defend defaulted home loans, all too frequently in-effectively. Max Gardner began to promote his “Bankruptcy Bootcamps” that taught BK lawyers how to use “proof of claim” as a valid challenge to banks and force modifications, etc.. Yet again, Bankruptcy lawyers wanted retainers from $3,000 to $4,500 to open a case and only two “Bootcamp Graduates” can be found in New England.
Given the growth in demand a group of former banking marketers combined their talent and market penetration to find and work with law-firms that would take “Payment Plans” and combine litigation with Mortgage Modification to achieve a resolution to struggling homeowners. It became quite apparent that even $150/hr was not the best interest of homeowners as it ate through monthly payments leaving them heavily indebted to lawfirms that would all to frequently end representation, particularly for foreclosure victims with “construction trades” incomes that slowed or evaporated winters during the depths of the recession from 2007 through the current period. And, private lawfirms were clearly reluctant or refused to take pro-bono cases involving foreclosure litigation. And even if they did take them, the files noticeably did not get good attention.
In 2009, Land Court Justice Keith Long ruled that many foreclosures were so badly short-cut that the foreclosure had not been accomplished and opened yet another more potent foreclosure reversal process that gave victims of bad faith modifications resulting in foreclosure yet another fighting chance. And foreclosure reversals became yet another legal process to restore equity and press banks to achieve reluctant Mega Bank modifications.
It became clear there was a middle market need to provide affordable community legal services with consumer interest lawyers that received adequate salaries and would not alter representation based on the balance in the clients' accounts. Global Advocates Foundation, Inc of Everett, Mass was organized in the fall of 2009 to clearly move in a direction to achieve just such a community legal clinic specializing in foreclosure defense or foreclosure reversal and refer the modifications process to other entities. A key organizer was a Hispanic public interest lawyer in tandem with Brazilian Community religious and business leaders to develop a potent foreclosure defense mechanism, utilizing initially a combination of bankruptcy reorganization plans and bankruptcy adversarial cases.
In early 2010 plans were laid to form yet another community legal service focusing on foreclosure defense and reversal in the Framingham area but in Commonwealth “Courts of Equity” and at the same time began to look at finding an entity to work with in the South Shore and stumbled into Mr Healy and the Center for Social and Economic Justice, Inc. In mid 2010 the Alliance for Housing Network, Inc was formed and combined with the Center for Social and Economic Justice, Inc. to begin the formation of a Community Legal Services entity to provide affordable and competent legal services and yet again to refer modifications to other entities. The board would be chaired by an accomplished bankruptcy lawyer and a legal team was developed around General Counsel and Attorney Jonathan Babcock composed of inside counsel and outside contract counsel.
FACTS:
On Saturday, August 8, 2009 a group met at the Conference Room of GNP Law to discuss the formation of a non-profit community legal services group to provide affordable legal services to struggling homeowners and a committee was formed with Attorney Carmenelisa Perez-Kudzma, a bankruptcy lawyer, as chair.
On December 28, 2009 Global Advocates Foundation, Inc was formed on Broadway, in Everett, Mass with Exec Director Obeilson Matos, Treasurer Pricila T. Silva, Clerk/Secretary Sondra Souto, General Counsel Carmenelisa Perez-Kudzma, and Directors Obeilson Matos, Pricila T Silva, Sondra Souto, Atty Miguel Oppenheimer, Pr. Wellington Silva, Atty George Piandes (GNP Law) and Saulo Sampiao.
The Global Advocates Foundation opened at 391 Broadway, Everett, Mass on the same date.
Global Advocates Foundation hired Attorney Daniel Hyman as their first Public Interest lawyer to do Adversarial Complaints in Bankruptcies and Court of Equity Complaints to include Summary Process Defense and he reported directly to Carmenelisa Perez-Kudzma, a Bankruptcy Attorney and GC.
In the late spring of 2010 a group met at the offices of Attorney John Morrison in Worcester, Mass regarding the formation of a Non-profit Legal Services entity pursuant to 501 c-4 of the Internal Revenue Code to provide affordable services to Foreclosure victims in the Commonwealth.
At that Meeting, Attorney John Morrison agreed to work with such an entity.
At a Subsequent meeting in the conference room of the Law Office of Attorney John Morrison the steps for the formation of the Alliance for Hope Network, Inc was formally adopted and milestones agreed to. Attirney John Morrison was elected the Chair of the Board of Directors.
In May 2010 they opened discussions with the Center for Social and Economic Justice and with the assent of the only surviving Director, Mr Healey, the office was moved to 62 Union Ave, Framingham, Massachusetts in July, 2010 and new officers and directors were appointed to revive the largely inactive tax exempt 501-c-3 affordable housing CDC and to work with the Hope for Homeowners initiative.
On July 26, 2010, the initial and only President, formed and recorded online the Alliance for Hope Network, Inc. with the initial officers and Directors.
Within a week thereafter the entity hired Attorney Jonathan Babcock with a resume' that included working with Harmon Law and desiring to seek “redemption”. He was hired as General Counsel to build and lead a team of social justice/public interest lawyers, initially to focus on foreclosure defense and reversal as appropriate.
At or about the same time the President and Clerk prepared a package seeking exemption under the IRS code as a 501-c-4 Social Justice entity and transmitted the Package to IRS Cleveland Office.
The initial Officers were Paula Carvalho, President; Washington Carvalho, Secretary/Clerk; John Charles Schumacher, Treasurer; Gailon Arthur Joy, Vice President; Attorney Jonanthan Babcock was added shortly thereafter in early August as General Counsel.
The initial Directors were Attorney John Morrison, Celsa Moreno Barker, Jose Natal Goncalves, G.Arthur Joy and John C. Schumacher.
At the Annual Meeting in October, 2010 for the Center for Social and Economic Justice, Inc, new officers and directors were appointed and the negotiations for a new office across from the Plymouth Superior Court began in Brockton, Mass.
About the same time, in October, 2010, the Executive Director of Global Advocates approached AHN (the Alliance) regarding combining resources and developing economies of scale. This discussion lead to a merger of the two entities in early December 2010. The two boards were combined and new officers were elected to move the combination forward into a cohesive community legal services based on affordability, including a “fair share” contribution based upon documented income and offset by periods of unemployment and other lost income issues, assuring specialized foreclosure defense and recovery without concerns that services would be interrupted by clients cash flow problems.
A key issue had been resolved in the merger in that Pricila Trancosa Silva of Capital Tax Services, a book-keeping and Tax Preparation service, was elected treasurer. While Schumacher was on record as the treasurer, in fact AHN had a serious problem with President-Treasurer-itis as Paula Carvalho and her husband, Washington Carvalho, were doing most of the book-keeping, deposits, paid expenses and controlled the check books at ALL TIMES.
The firm did not generate monthly balance sheets, despite the use of Quick-books and repeated requests for monthly and quarterly financial summaries were simply not available by declaration of being “too busy” by Mrs Paula Carvalho and Mr. Washungton Carvalho.
At the end of the first quarter of 2011 this defendant was notified by Mr Matos that the treasurer still did not have the corporate books.
Defendant Joy made inquiry and was told by the President that the treasurer had told her she would do so after tax season, April 15. When I asked if the books had been transferred after April 15 I was told that the President did not trust the treasurer. I then insisted she find an outside book-keeper she trusted until we could take up the matter with the Board.
A local book-keeper was identified but the books were not transferred and Ms Carvalho and her husband, Washington Carvalho, still controlled the books of accounts and the check books.
During April 2011 this defendant discovered there was a secret plan to eliminate the Everett office (formerly Global Advocates) and the three staffers there with the intent to open another office for our General Counsel and his staff, Atty Matthew Ilacqua, Attorney Allison MacLellan, and/or Atty Rebecca Lawlor.
In fact defendant Paula Carvalho and indespensible defendant and General Counsel admitted they were about to eliminate the Everett team that had merged in good faith in December, including the treasurer, and coincidentally steal all their clients, firing the entire Everett office staff.
In late April I was told by the former Executive Director of Global, Obeilson Matos, the trust account was clearly out of balance and also discovered from clients that the President was having checks made payable to her, personally, and utilizing the corporate account as compensating balance for bounced checks.
In fact, one such check for $2,000 was returned against a company account that, based upon information and belief, had been cashed by Mrs Carvalho and had bounced.
Defendant Joy also discovered AHN (Alliance) had collected checks from clients for third party securitization audits but nearly two dozen audits had not been ordered, including that of John Charles Schumacher.
Defendant Joy also began to receive complaints regarding incorrect charges to accounts, especially the Global Advocate Accts that had been transferred into AFAH client journals, and discovered balances forward were entered repeatedly as debits rather than credits.
A meeting of the officers was called and the issues were discussed and Defendant Joy moved to ask that Mrs Carvalho resign the presidency. General Counsel John Babcock refused to support the call and she refused to resign, leaving the officers badly split.
At the same managers meeting Mrs Carvalho again refused to transfer the books of accounts to the treasurer for an audit. On Motion of the Defendant Joy, Payroll was cut significantly to eliminate the deficit. Defendant Joy took a position as a voluntary staffer.
Following the failed attempt to achieve GAAP accounting I ordered the Treasurer, Pricila T. Silva, to establish a new set of books, and establish new trust accounts for all the sums coming into the Everett Office until the directors met to resolve the impasse.
A summary of issues was prepared by the defendant Joy and a special directors meeting was called for June, 2011 and Defendant Joy was locked out of the AHN (Alliance) offices.
At the Special Board meeting the Chair and General Counsel made it clear they did not support the call for resignation or other solutions and the issues were heavily debated for more than five hours, finally simply settling on an audit by the treasurer and an order for the President to produce a copy of the books to the Treasurer for audit. They did not give the treasurer control of all the book-keeping, did not order the surrender of the new Escrow Account in Everett, but did call for us to resolve the issues internally and “all get along”.
During the Special Meeting, the votes opposing the removal of the President were blocked by the use of proxy votes by the President, General Counsel and the Chair to void any substantial reformation for absent Directors Moreno, Costa and Goncalves.
At the follow-up meeting in July a preliminary report was rendered and the board elected to undo the merger, returning all but the litigation clients to the Everett Office and returning Global Advocates to Everett with the accounts; It was also agreed that AHN would be dissolved and the assets turned over to the Center for Social and Economic Justice, Inc and their new Pres and Exec Director, Jason Wheeler. The vote was unanimous.
A couple months later I received a call from the President of CSEJ telling me that the board and the SOC site had been altered without a directors meeting; Washington Carvalho, the General Counsel, Mr. Babcock, and Staff Attorney Rebecca Lawlor had formed a new FOR PROFIT - Advocates for Hope, LLC-, a lawfirm and transferred all clients and assets to the new LLC.
I promptly contacted Mr Babcock and advised that a transfer of the assets to a for-profit was very problematic and warned that if this was not corrected then there would have to be a complaint to the AG. Mr Wheeler agreed to follow-up and that was the last I heard from anyone at the Alliance.
Later I discovered that Mr Babcock had left and Rebecca had taken control of the LLC, renamed it Law Office of Rebecca Lawlor, LLC. The clients had clearly been moved, however, this defendant is still not certain what happened to the assets of AHN (Alliance).
In August of 2011 the Alliance for Affordable Housing, Inc was formed and took Global as a DBA. A new directorate was established and a new General Counsel had already been hired, Atty Uri Strauss.
Mr Strauss did a review of the new AG Regs and statutes and did a clear written discussion of compliance issues and what we had to do to be compliant. Counselor Strauss also consulted with Tax Exempt Legal Specialists and the concept was assured to be appropriate.
AFAH had also hired other staff attorneys, (Sebastion Korth and Adam Sherwin), and utilized several outside consulting or referral attorneys (Atty Sam Rodriguez, Atty Helene Gerstle, Atty Heather Ward) offering substantial discount to distressed homeowners to deal with the client legal issues.
Wherefore, Defendant Joy would move to add the following indespendible parties that are clearly specific parties that must be added pursuant to rule 19 for the proper adjudication of Justice, specifically other trustees and attorneys upon whose judgment the management term relied:
1. Washington Carvalho, clerk/secretary and spouse of President Paula Carvalho;
2. Attorney John Morrison, Chair and Director, Alliance for Hope Network;
3. Attorney Jonathan Babcock, Director and General Counsel to Alliance for Hope Network,Inc;
4. Attorney Rebecca Lawlor, Partner on Advocates for Hope, LLC;
5. Attorney Carmeneliza Perez-Kudzma, Director and General Counsel to Global Advocates;
6. Attorney Uri Strauss, General Counsel, Alliance for Affordable Housing, Inc.
7. Director Celsa Barker
8. Director Jonatan Della Costa
Respectfully Submitted this ____ day of November, 2013
__________________________
Gailon Arthur Joy, Pro Se
Certificate of Service: I hereby certify that a true copy of the above document was served upon The Mass Asst Attorney General Mychii Snape, Obeilson Matos by his Atty, Pricila Trancosa, Pro Se, John Charles Schumacher, Pro Se, and Paula Carvalho by her Attorney of record, for each party by mail on this 22nd Day of November, 2013.
___________________________
Gailon Arthur Joy, Pro Se
Commonwealth of Massachusetts
Suffolk, SS Superior Court
Civil Action No 13-3459
Commonwealth of Massachusetts
Plaintiff
V
Gailon Arthur Joy, Et al
Defendants
Memorandum of Law in support of Defendant Joy's Motion to add Indispensable Parties pursuant to MRCP Rule 19: for joinder of additional indispensable parties needed for just adjudication:
MRCP Rule 19 (a) declares “(a) Persons to Be Joined if Feasible. A person who is subject to service of process shall be joined as a party in the action if (1) in his absence complete relief cannot be accorded among those already parties, or (2) …..
The Mass Rule 19 clearly allows Joinder of parties but does not affect the substantive rights of the parties involved. It allows joinder where the rights and liabilities arose from the same transactions or occurences and include common questions of law and fact.
The list of proposed Indispensable Parties are essential as they all were critical participants in the same transactions or occurences as alleged, correctly ot incorrectly, by the Commonwealth of Massachusetts complaint against the already identified parties.
The Federal Version of the Rule gives better clarity and definition to the same conclusion:
FRCP 19 (a) Persons Required to Be Joined if Feasible. (1) Required Party. A person who is subject to service of process and whose joinder will not deprive the court of subject-matter jurisdiction must be joined as a party if:
(A) in that person's absence, the court cannot accord complete relief among existing parties; or
(B) that person claims an interest relating to the subject of the action and is so situated that disposing of the action in the person's absence may:
(i) as a practical matter impair or impede the person's ability to protect the interest; or
(ii) leave an existing party subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations because of the interest.
Wherefore, Defendant Joy would Pray the Honorable Court to allow the following Indispensable Parties to be served and added as defendants pursuant to MRCP Rule 19.
Director and Chair, Alliance for Hope Network, Inc
Attorney John Morrison, of 27 West Mountain
27 WEST MOUNTAIN STREET
WORCESTER, MA 01606 USA
27 WEST MOUNTAIN STREET
WORCESTER, MA 01606 USA
12/31/2011
Director and General Counsel of Alliance for Hope Network, Inc
and
Managing Founder of Advocates for Hope, LLC
Attorney Jonathan Babcock
Counsel for Alliance for Hope, LLC and
Managing Founder; Advocates for Hope, LLC
Clerk- Secretary and Director for;
Alliance for Hope Network, Inc,
Center for Social and Economic Justice, Inc
and Managing Founder of
Advocates for Hope, LLC
Washington Carvalho
Director and General Counsel,
Global Advocates Foundation, Inc,
Attorney Carmenelisa Perez-Kudzma
Alliance for Hope, Inc: Absentee Proxy voters:
DIRECTOR CELSA MORENO BARKER
8 ALDER WAY
LUNENBURG, MA 01862 USA
DIRECTOR JOSE NATAL GONCALVES
603 WINTER STREET
FRAMINGHAM, MA 01701 USA
Director Jonatan Della Costa
Framingham, Ma 01701
Alliance for Affordable Housing, Inc
General Counsel and Director;
Attorney Uri Strauss
Commonwealth of Massachusetts
Suffolk, SS Superior Court
Civil Action No 13-3459
Commonwealth of Massachusetts
Plaintiff
V
Gailon Arthur Joy, Et al
Defendants
Proposed Order for Motion to Add Indispensable Parties
Pursuant to Rule 19 of MRCP, the Motion of Defendant Joy requesting the addition of Indispensable
Parties is granted and the Plaintiff is ordered to amend the defendants to include said list and to have all
indespendable parties served prior to the December 29, 2013 deadline for service pursuant to the Courts
Prior Scheduling Order in this Matter.
____________________________
Presiding Justice, Suffolk Superior
Court
Dated: ______________________
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Very informative, thank you Gailon.
Sister
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During the Special Meeting, the votes opposing the removal of the President were blocked by the use of proxy votes by the President, General Counsel and the Chair to void any substantial reformation for absent Directors Moreno, Costa and Goncalves.
Is there a typo here, Gailon? Which votes were blocked? The ones opposing the removal of the president, or the ones calling for the removal of the president?
I think it would be helpful if we could see the complaint too.
In your answer, ¶ 12 says you resigned in August 2012, and ¶ 14 says you resigned in August 2011. Which date is correct?
Steffan,
Much of what Gailon has posted above, he told me about at the time it was occurring. I didn't know about the AG's lawsuit until the time I said I did, which I discovered using Google when looking for an obituary for (or other news about) Gailon, since a mutual friend called me wondering if he had died, since he couldn't get a hold of him. As you can see from what Gailon posted, he tried to remedy the irregularities.
Stan,
I think Steffan and company ought to do a little research before making the accusations that they do.
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Gailon:
I think it would be beneficial if you would post a link for all to see these court filings, than to just copy and paste.
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The federal court system makes most non-sealed filings available on the internet via PACER. Unfortunately, a lot of state courts do not. So I don't think there is any link that can be provided.
If Gailon could forward all the filings to me, perhaps we could find a place for them somewhere online.
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During the Special Meeting, the votes opposing the removal of the President were blocked by the use of proxy votes by the President, General Counsel and the Chair to void any substantial reformation for absent Directors Moreno, Costa and Goncalves.
Is there a typo here, Gailon? Which votes were blocked? The ones opposing the removal of the president, or the ones calling for the removal of the president?
I think it would be helpful if we could see the complaint too.
In your answer, ¶ 12 says you resigned in August 2012, and ¶ 14 says you resigned in August 2011. Which date is correct?
Steffan,
Much of what Gailon has posted above, he told me about at the time it was occurring. I didn't know about the AG's lawsuit until the time I said I did, which I discovered using Google when looking for an obituary for (or other news about) Gailon, since a mutual friend called me wondering if he had died, since he couldn't get a hold of him. As you can see from what Gailon posted, he tried to remedy the irregularities.
Stan,
I think Steffan and company ought to do a little research before making the accusations that they do.
I resigned and left the firm in April 2012. My resignation was not acted upon by the full board until it's meeting in August, 2012. Haste makes waste!!!
Alliance used purported proxy votes to block the motion to remove the President. In fact, I now have a letter from one proxy where he resigned in writing prior to the board meeting!!! C'est la vie!!
Gailon Arthur Joy
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Gailon:
I think it would be beneficial if you would post a link for all to see these court filings, than to just copy and paste.
Unfortunately, because of my limited role, and the Mass rules do not require that we be served all filings, I do not have a complete set of filings here...a clear advantage of the Federal Pacer system. The AG has done a ton of discovery and I have yet to receive a single document coming from nearly a dozen subpoena duces teacum, mostly for a plethora of bank accounts by the various parties and five companies. They even subpoenaed my lonely old single account with the Credit Union I have had for over twenty years.
The only element they still have, based on the real evidence, is the issue of "Private Inurement" and I have never been a signatory on any company accounts for any of the non-profits. I don't even have checks for the personal account and Ann has the only debit card. Point is, even that element will fail as it pertains to me, personally!!! However, I do suspect there are problems with signatories on some corporate accounts.
And then we have the "conversion" of non-profit assets to a for profit LLC headed by the General Counsel, JB, a member of the Mass Bar that the AG conveniently failed to enjoin!!! I must refile an ammended Motion to Add Essential Parties and my guess is the Judge will opt to add several directors, including several attorneys. It is now imperative since the corporations failed to answer the complaint and the AG has filed defaults. They will have to add all directors that did not resign, unless they can prove were fraudulently added...good luck on that one!!!
Given that the entities were done as non-profits, the key elements become invalid and subject to a Motion for Summary Judgment. If they were non-profits, the key issue of attempting to force repayments is moot. The only remaining element of Private Inurement will remain and there is likely substantial proof for some account signatories, and one very clear issue for the Alliance General Counsel...not very bright to convert the assetts to non-profits after the board clearly ordered them turned over to a 501-c-3 non-profit!!! He will rue the day!!!
Gailon Arthur Joy
AUReporter
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I will scan in the original complaint and exhibits. I probably should send exhibits compiled in defense of this case as well...the e-mails, all dated and verifiable, giving an excellent history of the issues raised internally. I presume at some point it will occur to the AG to request them...to bad they did not investigate first and charge later!!!
Won't be the first AG that shot from the hip and then investigated, C'est la vie!!!
Gailon Arthur Joy
AUReporter
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Following this with great interest.