2010-00088873-CU-BT

The People of the State of CA vs. US Loan Auditors Inc

Nature of Proceeding: Application for Asset Freeze

Filed By: Kurtz, Sarah E.

The Order to Show Cause re Preliminary Injunction is DISCHARGED and the People’s
motion for preliminary injunction is GRANTED.

This is civil enforcement action brought by the Attorney General on behalf of the
People of the State of California. The People allege that the defendants, including
attorney and defendant herein Sharon L. Lapin (“Lapin”), unlawfully offered loan
modification services under the guise of forensic loan audits and related legal services.
According to the People, the defendants’ unlawful and misleading practices generated
a litigation mill resulting in few meritorious cases or favorable settlements, on the one
hand, while extracting substantial fees from unwitting, distressed homeowners, on the
other. The People’s Seventh Cause of Action for Violation of B&P Code § 17200
contains allegations that Lapin violated her professional duties as an attorney as well
as rules of conduct governing attorney-client relations. Among other thing, the People
allege that non-attorneys controlled the relationships with the paying homeowners,
“referred” these clients to Lapin for a monthly fee per case, and conditioned Lapin’s
involvement in the operation upon her “non-interference” with the relationships. Lapin
allegedly did not disclose to the clients her fee arrangement with the non-attorneys and
never met with or contacted the clients before accepting the referrals. (See Compl., ¶¶ 71-73.) This year, Lapin was disbarred for her misconduct. (See Turner Decl., Exh.
1.)

On October 1, 2013, and pursuant to B&P § 17203 and Government Code § 12527(g),
the court granted the People’s ex parte application for a TRO prohibiting Lapin from
dissipating real or personal property without prior court approval, with the exception of
$5,000 per month for Lapin’s reasonable living expenses. The court also issued its
OSC and set the motion for preliminary injunction for hearing on today’s date.

Government Code § 12527(g) provides:

“If the court determines that the Attorney General has a reasonable
probability of prevailing on the merits at trial in establishing that the
defendant obtained real or personal property by unlawful means but that
the appointment of a receiver is not requested or that the conditions for
the appointment of a receiver described in subdivision (b) have not been
shown, the court shall issue any necessary orders to assure that the
defendant does not transfer or encumber any property which may be
used to satisfy a judgment in the action.”

Based on the evidence submitted, the court concludes that there is a reasonable
probability that the People will prevail against Lapin at trial. The court further finds
that, to prevent dissipation assets that could otherwise be used to satisfy a judgment
against Lapin, the court should enter a preliminary injunction freezing Lapin’s assets
pending trial or other final disposition. Lapin’s assertion that some of the assets to be
frozen were obtained through inheritance does not alter the court’s conclusion.

No later than October 24, 2013, the People shall lodge a formal order for the court’s
signature. The formal order shall track the language in the TRO, including the
allowance for dissipation of up to $5,000 per month for reasonable living expenses.
The court will not sign the proposed order submitted with the Reply; that order contains
mandatory injunctive provisions that are outside the scope of the moving papers and
which are not merely responsive to arguments in the Opposition.

No bond is required. (CCP § 529(b)(3).)

Because the court’s 10/01/13 order temporarily sealing records has expired, the Clerk
of the Court is directed to file the documents designated in that order for sealing
and make them available for public viewing.

The notice of motion does not provide notice of the Court’s tentative ruling system, as
required by Local Rule 1.06(D). Counsel for moving party is directed to contact
counsel for opposing party forthwith and advise counsel of Local Rule 1.06 and the
Court’s tentative ruling procedure. If counsel for moving party is unable to contact
counsel for opposing party prior to hearing, counsel for moving party shall be available
at the hearing, in person or by telephone, in the event opposing party appears without
following the procedures set forth in Local Rule 1.06(B).