LAS VEGAS (Legal Newsline) - Nevada Attorney General Catherine Cortez Masto is defending her decision to hire a private law firm to sue a loan processing company.

Friday, Masto filed a lawsuit against Lender Processing Services, an outfit she accuses of fraud in its execution of foreclosure documents - so-called "robo-signing." LPS, however, said no one has been harmed by any of its alleged actions.

It added that its pre-lawsuit discussions with Masto were "frustrated" when she decided to hire Washington, D.C., plaintiffs firm Cohen Milstein Sellers & Toll. The company called an "apparent violation of Nevada law."

Masto e-mailed the Las Vegas Review-Journal to insist that isn't the case, calling the claim "groundless."

"The spurious allegations by LPS are yet another example of LPS' complete disregard for its fraudulent conduct in Nevada and across the country," Masto told the paper "Instead of acting responsibly, LPS chooses to deflect its nefarious actions with groundless allegations."

LPS said Friday that it cooperated with Masto's office during a 14-month investigation.

"The complaint highlights misconceptions about LPS and seeks to sensationalize a variety of false allegations in a misleading manner," it said.

Masto's lawsuit against LPS alleges that the company engaged in a pattern and practice of forging, falsifying and/or fraudulently executing foreclosure related documents, which resulted in countless foreclosures that were predicated upon incomplete documentation, fraudulently notarized documents without making sure that the notary did so in the presence of the person who was signing the document and made it a requirement that employees execute and/or notarize up to 4,000 foreclosure related documents every day.

In addition, the lawsuit alleges that LPS implemented a pervasive scheme to forge signatures on key documents, to make certain that speed and volume quotas were met, improperly controlled and/or directed the work of foreclosure attorneys by imposing arbitrary and inappropriate deadlines that forced attorneys to work through foreclosures at a rate that sacrificed accuracy for speed, concealed the severity and scope of the document execution fraud by misrepresenting that the problems were limited to clerical errors, improperly blocked communication between foreclosure attorneys and their clients and demanded a referral fee/kickback from foreclosure firms for each case referred to the firm by LPS allowing this fee to be misrepresented as "attorney's fees" on invoices passed on to consumers of Nevada and/or submitted to Nevada courts.

The misconduct by LPS was confirmed through testimony of former employees, interviews of servicers and other players in the industry as well as an extensive review of more than 1 million pages of relevant documents, Masto says. Former LPS employees and industry players allegedly described the company as an assembly-line sweatshop in which documents and foreclosures are churned out as fast as new requests came in. The company also allegedly punished network attorneys who failed to keep up the pace. LPS is the nation's largest provider of default mortgage services, processing over 50 percent of all foreclosures annually.

Mastro's office recently indicted Gerri Sheppard and Gary Trafford as part of a criminal inquiry into the conduct of an alleged robo-signing scheme that she says resulted in the filing of tens of thousands of fraudulent documents between 2005-2008 with the Clark County Recorder's Office.

From Legal Newsline: Reach John O'Brien by e-mail at

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