Mass.gov
   
Mass.Gov home Mass.gov  home get things done agencies Search Mass.Gov


Commonwealth of Massachusetts

NO. BD-2009-083

IN RE: ALEC G. SOHMER

S.J.C. Judgment of Resignation As A Disciplinary Sanction entered by Justice Cordy on September 28, 2009.1

SUMMARY2

This matter came before the Board of Bar Overseers upon the respondentís affidavit of resignation filed by him pursuant to S.J.C. Rule 4:01, ß15. The respondent acknowledged that there was then pending formal proceedings arising from allegations that he had been guilty of misconduct as set forth in an amended petition for discipline filed with the board on June 22, 2009. The respondent filed an answer to the amended petition setting forth his defenses.

The respondent admitted in his affidavit that bar counsel could prove the following facts by a preponderance of the evidence and that the Supreme Judicial Court could conclude that he violated the disciplinary rules set forth below.

The respondent operated a business through which he arranged foreclosure rescue transactions that he called ďThe Real Estate Trust With Beneficiary Purchase OptionĒ plan. The plan targeted homeowners who were at risk of losing their homes through foreclosure. The respondent operated the plan through Timeless Funding Co., a Nevada corporation of which he was the sole director and sole shareholder. In 2005 and 2006, at least twenty-five homeowners participated in the plan and transferred title to their homes to the respondent, or a member of his family, or a trust that he controlled. The respondent financed the properties he acquired with an interest-only mortgage loan. He did not make any cash contribution to the purchase. The homeowners were given contractual rights to occupy the property for a period of time, typically three years, with a right of re-purchase if not in default. During their occupancy, the homeowners were required to pay to the respondent the amount of his mortgage payments plus real estate taxes and other expenses associated with home ownership. The homeowners also paid all of the closing costs of the sale, both on the buyerís and sellerís side of the ledger. The respondent received a fee, typically $15,000, for his services.

For each closing under the plan, a HUD-1 settlement statement was prepared by a settlement agent and forwarded to the lender after the closing. The statements did not accurately describe the financial aspects of the transactions in at least the following particulars:

  1. The statements stated a purchase price that was never actually paid,
  2. The statements stated that the buyer made a payment at the closing toward the purchase price ranging from approximately $68,000 to $140,000 when in fact no such payment was made at any of the closings,
  3. The statements stated that net sale proceeds were paid to the seller-homeowner when in fact no such payment was made at any of the closings,
  4. The statements stated that the various settlement costs were allocated to the seller or the buyer when in fact all those costs were paid by the seller-homeowner, and
  5. The respondentís fee was not disclosed.
The respondent signed each statement as borrower, or directed members of his family to sign the statement as borrower, knowing that the statement did not accurately reflect the true nature of the financial transaction. The respondentís conduct in knowingly signing or causing to be signed false and misleading HUD-1 settlement statements was in violation of Mass. R. Prof. C. 8.4(c) and (h).

The respondent stated in his affidavit that he submitted detailed addenda to the statements to the settlement agent to clarify the actual disposition of the net proceeds, but did not take adequate steps to confirm that the addenda were submitted to the proper lenders. The respondent acknowledged in his affidavit that bar counsel would have contested this claim if the matter were litigated.

On August 17, 2006, the respondent appeared in the United States Bankruptcy Court in opposition to a motion for injunctive relief brought by one of the twenty-five homeowners. The judge asked the respondent a series of questions and, in response, the respondent denied that he was a principal of Timeless Funding and denied that he knew who the principals were. The respondent did not subsequently correct the false statements. The respondentís false statements of fact to the court and his subsequent failure to take appropriate remedial measures was in violation of Mass. R. Prof. C. 3.3(a)(1) and Mass. R. Prof. C. 8.4(c) and 8.4(d).

In another matter, the respondent purchased a clientís home. The terms on which the respondent purchased the home were not fair or reasonable to his client and the terms were not fully disclosed and transmitted in writing by the respondent to his client in a manner that she could reasonably understand. The documents the respondent had his client sign were complicated, ambiguous, misleading and inconsistent, and the documents could not reasonably be understood by a lay person of ordinary intelligence and sophistication and were not understood by the client. The respondentís conduct of entering into an improper business transaction with a client was in violation of Mass. R. Prof. C. 1.7(b) and 1.8(a). Although the respondent believed that he gave his client the opportunity to avail herself of independent counsel, he acknowledged that a conflict was inherent in the transaction.

Finally, the respondent engaged in conduct that was in contempt of court in violation of Mass. R. Prof. C. 3.4(c) and 8.4(d) and (h). Specifically, the Suffolk Superior Court entered a judgment of contempt by consent against the respondent based on an allegation that he had violated a temporary restraining order when he participated in a cash-out refinance transaction and used the proceeds to make various mortgage loan payments.

On September 14, 2009, the board voted to recommend to the Supreme Judicial Court that the respondentís affidavit of resignation be accepted as a disciplinary sanction. On September 28, 2009, the Court entered a judgment accepting the affidavit of resignation as a disciplinary sanction effective immediately.


FOOTNOTES:

1 The complete Order of the Court is available by contacting the Clerk of the Supreme Judicial Court for Suffolk County.

2 Compiled by the Board of Bar Overseers based on the record filed with the Supreme Judicial Court.



BBO/OBC Privacy Policy. Please direct all questions to webmaster@massbbo.org.