Christopher Lee Diener, 42, Irvine, California, an attorney in Orange County, California, is the first attorney in the state to be arrested for illicit loan modification activities. Diener must stand trial, but faces far fewer charges than prosecutors originally filed. Diener was ordered to stand trial on eight felonies – six counts of grand theft from individual complaining witnesses, one count of grand theft of a credit card processing company and one count of conspiracy to commit grand theft. He originally was charged with 118 felonies and faced up to 70 years in state prison if convicted.
Prosecutors accused Diener of defrauding more than 400 victims in a $1.25 million loan modification scam that targeted distressed homeowners. After taking their money, law enforcement charged, Diener did no work for the clients. He spent a month in custody before bail was reduced and he was released.
But during a three-week preliminary hearing, Orange County, California, Superior Court Judge Salvador Sarmiento and Deputy District Attorney George McFetridge dismissed 100 of the charges. Sarmiento said he heard no evidence on 60 counts and McFetridge said he dismissed some counts “in light of the evidentiary rulings.” Two non-lawyer co-defendants, originally charged with 98 counts, now face only four counts each.
“This is so outrageous,” said Lisa Bethune, Diener‘s attorney. “I think the bottom line is, I don’t believe he’ll be found guilty of any crime. To have no sufficient evidence at the end of the preliminary hearing, where the standard of proof is the lowest there is – think about that.” Bethune said she would attempt to have the remaining charges against her client dropped the April 20, 2010, arraignment. She estimated the total amount involved in the eight charges at less than $60,000.
Two State Bar investigators were permitted to testify during the preliminary hearing under Prop 115, which permits law enforcement officers who are properly trained and qualified under the Penal Code to offer hearsay statements. But Bethune said the testimony was based on evidence gathered for a bar disciplinary case, not the criminal matter. McFetridge said he believed the judge ruled correctly, because bar investigators are in fact tasked with enforcing the law.
McFetridge said he did not know if the district attorney will re-file the charges against Diener.
Diener, whose law license was lifted by the California State Bar in October 2009, is charged with 80 counts of misconduct in 24 matters. He is one of more than 400 lawyers under investigation by a bar task force that has received more than 1,600 complaints. The vast majority of complaints come from distressed homeowners who paid advance fees to attorneys to seek a loan modification but then failed to provide any services to their clients.
Diener and his co-defendants also have been sued civilly by Attorney General Jerry Brown, who is seeking civil penalties, restitution and an injunction, and the Department of Real Estate issued a cease and desist order a year ago related to soliciting clients.
The bar has abated Diener‘s case pending the outcome of the criminal matter. Bethune said her client has lost his ability to make a living. “This is a lawyer with no previous record who really was setting out to help people with the best of intentions,” she said. “He lost a month of his life in custody.”
In another foreclosure-related development, Attorney General Jerry Brown announced his office shut down two fraudulent foreclosure assistance businesses whose legal counsel was Orange attorney Adrian Pomery. Brown secured a court judgment against Pomery and two executives prohibiting them from working in the real estate industry and providing more than $1 million in restitution to victims who paid upfront fees for non-existent services.
In July 2009, Brown, the Federal Trade Commission and the state of Missouri, sued Pomery, George Escalante and Cesar Lopez, two executives of U.S. Foreclosure Relief Corp. and H.E. Servicing Inc., accusing them of scamming distressed homeowners into paying advance fees for loan modification services that included reductions in principal and lower interest rates. Brown also amended the complaint last month to include Santa Ana attorney Brandon L. Moreno and his law firm, Cresidis Legal, as defendants. An Orange County lawyer – the first attorney in the state to be arrested for illicit loan modification activities – must stand trial, but faces far fewer charges than prosecutors originally filed. Moreno served as the legal affiliate for H.E. Servicing after Pomery left.
The State Bar announced last September 2009, that it was investigating both Pomery and Moreno as a result of receiving a significant number of complaints about both men. No charges have been filed against either attorney.