AP: Lawyers accused of scam in bank suits

COSTA MESA, Calif. – Aug. 19, 2011 – California prosecutors sued several lawyers and call center operators for allegedly duping desperate homeowners across the country into paying thousands of dollars to join dubious lawsuits against big banks.

The complaint unsealed Thursday in Los Angeles County Superior Court accuses prominent foreclosure attorneys Philip Kramer and Mitchell Stein and at least 17 other individuals and businesses of ensnaring borrowers in a scheme that falsely promised a cut of future settlements.

The lawsuit portrays the defendants as the most recent in the chain of mortgage-related scammers who helped fuel the housing bubble and have cashed in on its collapse. The defendants previously worked in the fraud-ridden loan modification industry, in which lawyers offer to negotiate better mortgage terms on behalf of troubled borrowers in exchange for a fee.

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