Briggs Lawsuit, Land Deal End Badly For Family
BEHIND THE STORY
Cory Briggs is an environmental lawyer in San Diego. He’s known as a champion of the little guy, taking governments and developers to court. He’s an advocate for transparency and accountability. During the past nine months, inewsource has investigated real estate transactions, business practices and conflicts of interest involving Briggs that counter that reputation.
inewsource has attempted — largely unsuccessfully — to speak to more than a dozen people in four Southern California counties who have entered into deeds of trust with Briggs. These deals range in value from $15,000 to $1.5 million.
Seven experts — a deputy district attorney, real estate authors, mortgage professors, fraud litigators and legal ethicists from around the country — have contributed to the ongoing investigation. All have found problems, legally and ethically, with some of Briggs Law Corp.’s real estate deals.
In response to the investigation, Briggs published an open letter saying he uses liens to guarantee payment of attorneys fees. Gonzalo and Gabriela Arteaga — recipients of one of those liens — came forward in March to share a very different story.
During the Great Recession, families across the country were losing their homes, reeling from predatory lending in the subprime mortgage crisis. Gonzalo Arteaga, his wife and four children were among them, with $100 in the bank and more than half a million dollars in debt.
Arteaga said he turned to Cory Briggs, a high-profile San Diego lawyer, who said he’d help for free. In the end, the only one who walked away with anything of value was Briggs.
“Instead of him helping me,” Gonzalo said, “he put me in the ground.”
inewsource interviewed the Arteagas, who remain confused and angry with how Briggs handled their case. He won their lawsuit, but they lost their house and never recovered a $281,000 judgment. Briggs felt bad, according to the Arteagas and Robert Ruffini, Gonzalo’s boss at the time. Ruffini said Briggs had a house in Victorville and was looking for tenants. Briggs then lent the Arteagas money to buy that house only to seize it three years later and sell it to his partner.
The Arteagas ultimately complained to the State Bar of California.
Linda Fisher, who teaches at Seton Hall University School of Law in New Jersey and specializes in foreclosure and mortgage fraud, reviewed the case and land records at the request of inewsource. She said the Arteagas were in a dire financial position, and Briggs took advantage of their desperation and lack of understanding.
“It’s pretty apparent to me that there is a serious attorney ethics violation here,” she said.
Briggs did not respond to an interview request for this story.
A referral from the boss
Arteaga was working for a garage door company in Upland in 2006, when he said he learned his mortgage broker falsified loan documents for his house on Bluegrass Place in Victorville. He said his monthly payments on the $380,000 home ballooned from $1,400 a month to $3,000.
Ruffini, Arteaga’s boss at the time, told inewsource he got a “verification of employment” request from a mortgage company.
“It showed that he made like $200,000 a year,” Ruffini said, significantly more than what Gonzalo actually earned. “That flew up a red flag.”
“It really got my ire up,” Ruffini said. “I was so angry about it — here is this wonderful sweet family, and they’re being taken advantage of.”
Ruffini told Arteaga he knew a lawyer who could help — Briggs — who took the case.
They were acquainted through the West End Executives Association, a club based in San Bernardino County where Briggs grew up. The association exchanges “good business referrals that produce continuing and expanding business success,” according to its website. Ruffini said Briggs “became our business attorney and my personal attorney.”
Briggs, his father, his cousin and Ruffini are all associates of West End.
So are members of the Wolfinbarger family. Randy Wolfinbarger, from Chino, and James Wolfinbarger, from Diamond Bar, each entered into $1.5 million deeds of trust with Briggs in 2013 against their homes, which experts said made no commercial sense. The Wolfinbargers have refused to talk about the deeds.
A bit of background
It was a complex mortgage problem, but Arteaga’s situation was common in 2006, when the case began and companies around the country were being sued for predatory lending practices and subprime loans. Arteaga’s mortgage company Saxon Mortgage Services Inc., a subsidiary of Morgan Stanley, specialized in subprime loans.
Although Briggs is known in San Diego as an environmental attorney, Briggs Law Corp. provides services ranging from business formation and estate planning to asset protection and civil litigation, according to its website.
Mortgage fraud litigation is not on the list of practice areas.
Briggs filed a “checkbox complaint” in his lawsuit against Arteaga’s broker, Rafael Hernandez. He later added Saxon. The simplified form is usually used by people who are representing themselves. He sought $5 million in punitive damages.
“These are deep waters, and they’re complicated,” said John Campbell, a trial lawyer, mortgage fraud expert and professor at the University of Denver Sturm College of Law, about mortgage litigation.
“The idea that you can just dabble in them with a checkbox complaint doesn’t strike me as right,” he said.
“In all of the cases, everybody who’s complained, every attorney who’s been involved, I’ve never seen a simple checkbox,” said Richard Hagar, who specializes in real estate and mortgage fraud compliance and trains attorneys general and other law enforcement agencies across the country in detecting predatory lending and fraud.
Filing the lawsuit
During the 24-month case, according to the Arteagas, Briggs instructed them to continue paying their mounting mortgage. Gonzalo said he maxed out his credit cards and borrowed nearly $30,000 from Ruffini, portions of which were taken out of his paycheck for repayment. These payments contributed to him ending up more than $600,000 in debt just a few years later.
Experts told inewsource this advice is unheard of.
“I’ve never had a client continue to pay on a mortgage while we were suing about mortgage-related issues,” Campbell said, adding that the money should instead be deposited into an escrow account.
Near the end of the case, in June 2008, Briggs recommended to the judge that Saxon, the mortgage company, be dropped as a defendant. Arteaga said Briggs assured him that they’d win the judgment against the broker.
This was a big mistake, according to the experts inewsource interviewed.
The reason, they said, was that a mortgage company can be liable for its brokers — in this case, Hernandez — because during the years leading up to the recession, mortgage companies were incentivizing their brokers to lie, boosting profits for both parties.
Hagar said companies like Saxon might have carried insurance policies on their brokers to reimburse harmed borrowers, and questioned whether Briggs knew about this potential avenue.
Ultimately, Briggs won the judgment against Hernandez but by default because Hernandez was nowhere to be found.
Hernandez’s lawyer, Lance Green, had removed himself from the case a year prior in 2007.
The $281,727 judgment was bittersweet.
“He knew that I was never going to be able to recover the money,” Arteaga said about Briggs. “Why didn’t he tell me right there in the first place?”
What happened next?
Arteaga said Briggs told him afterward he felt bad about how things turned out and wanted to help. Briggs had just received $200,000 in another case, Arteaga recalled the lawyer saying, and offered to lend the family money and sell them a house.
“Cory told me,” Arteaga said, “ 'I can purchase a house, sell it to you, that way when the house goes up, you make a little equity in the house, you know, you get a little bit of your money back’…. That’s when he sold me the house.”
Ruffini recalled a similar sequence of events: “He (Briggs) had a house he had purchased up in Victorville that he was going to rent out, and he gave it to him (Arteaga).”
The deed, however, shows Standard Pacific Homes, a homebuilder based in Irvine, sold the Arteagas the property, not Briggs. Standard Pacific could not provide clarification by publication.
Campbell, the Denver law professor who reviewed the case at the request of inewsource, said it has “all the markings of a straw buyer.”
In real estate, a straw buyer is a person solicited to purchase a house on behalf of the actual buyer. It can be done for various reasons such as concealing poor credit, laundering money or hiding ownership.
Also, the rules of professional conduct for the State Bar of California and the American Bar Association discourage attorneys from lending clients money in most scenarios to avoid conflicts of interest and protect the clients.
Arteaga said Briggs told him, “I’m your lawyer, I’m not supposed to lend you the money,” but did anyway.
“It’s precisely the reason why these rules are there — to protect clients from what seems to have happened here,” said Fisher, the law professor from New Jersey.
Right after they won the case, Arteaga said, Briggs told them they had to move out of their home on Bluegrass and the best next step was to declare bankruptcy.
Arteaga said he saw no option other than taking the loan.
“I have no house and I already went to bankruptcy,” he said.
A new house
The Briggs Law Corp. loaned Arteaga and his wife, Gabriela, $202,500 about two months after they won the case against the broker and were hundreds of thousands in debt. They bought a four-bedroom house on Deborah Place in Victorville in 2008. It was a new subdivision, one that today sits partially developed with empty lots next to new two-story homes.
For the bankruptcy, Briggs pointed the Arteagas to an attorney in Chino. The attorney shares the same name as a member of CREED, a nonprofit Briggs often uses to sue government agencies, including the city of San Diego.
According to the filing, Arteaga had $100 in his checking account, two trucks, $1,000 worth of household furnishings and $500 in jewelry. No retirement account, stocks or bonds. He and his family continued living in the house, but it wasn’t long before money became an issue again.
“In the contract that he made us sign,” Gabriela Arteaga said, Briggs “specified that if in any case we need a refinance — either to lower the payment or for any reason — he will be able to.”
inewsource asked the Arteagas to provide these records for verification, but they did not respond.
But when they approached Briggs, Arteaga said, he told them if they couldn’t pay they would have to get out of the house in a month or less.
In the summer of 2011, Briggs took the home in a “deed in lieu of foreclosure.” After dropping off their keys to Briggs’ Upland law office, the Arteagas said, they never saw him again.
Selling the property
One week after taking over the property, the Briggs Law Corp. sold the Arteagas’ home to Bancroft Apartments, a limited liability company owned by Briggs’ personal and professional partner, Sarichia Cacciatore, who is also a longtime vice president of the Briggs law firm. Bancroft paid $75,000 for the home, which at the time was less than half its value, according to Zillow.com.
Campbell said it’s possible Briggs did this to claim to the Internal Revenue Service that he took a $125,000 loss on the property that year.
Bancroft still owns the house, and neighbors told inewsource two women with children rent it.
Campbell, Fisher and Hagart, the expert who trains attorneys general, found all of Briggs’ major decisions indefensible.
“For the attorney to lend money on something like that,” Hagar said, “where he just effectively gave them advice to keep making their mortgage payment, buried them in debt, and then took their house? That’s just ... No way. No way should that happen.”
Arteaga said he filed a complaint against Briggs with the State Bar of California, a judicial arm of the California Supreme Court that regulates attorney conduct in the state. inewsource could not verify Arteaga’s statement because a spokeswoman for the State Bar said attorney complaints and investigations are confidential. Briggs has no public disciplinary record.
Arteaga said the State Bar sent someone to see him in Victorville, and he handed over stacks of documents, but the investigator said he only had one day to review the case.
“And,” Arteaga said, “the next day they closed my case.”
Brooke Williams is an inewsource correspondent and journalism fellow at Harvard University. Follow her on Twitter @reporterbrooke