Collapse of an Evil Empire! PART II

Part II begins as Part I ended, with a reminder that the accusations referenced in this series of articles (Read Part I here) until proven true, are only allegations made by various parties including the Florida Bar in its petition to suspend Scot Strems license to practice law.

Part I as Prologue–The Florida Supreme Court’s emergency suspension against Scot Strems alleged he “… sits at the head of a vast campaign of unprofessional, unethical, and fraudulent conduct that now infects courts and communities across the state.”

Strems fought back with a subsequently filed motion  to “Dissolve” the Bar’s emergency suspension of his license which would allow him to practice law while the matter is fully adjudicated.  (See NOTE #1 below).

This was predicate for a panoramic and riveting remote hearing (via zoom) with more than 500 viewers all over Florida, including: trial lawyers, defense attorneys, independent adjusters, public adjusters, water remediation vendors, insurer CEO’s, Strems’ employees and others–over the course of three full days.

Eleventh Judicial Circuit Judge Dawn Denaro refereed as lawyers for both sides interrogated, Scot Strems, Strems’ litigation manager John Drake (a surprise witness) and the two Circuit Judges who first petitioned the Florida Bar.

As presiders over hundreds of Strems’ cases, Judges Gregory Holder and Rex Barbas, recounted their experience with the firm and its’ litigation manager John Drake.  Especially damning was their assertion that other judges were also aware the Strems firm violates the Rules of Professional Responsibility in… “virtually every case where he and his firm enter an appearance.”   Supporting documents provided 17 examples from different judges, of admonishments, including monetary sanctions against the firm.  Judge Holder specifically stated that during one in-chamber meeting John Drake told him Scot Strems instructed him to file cases without proper support, to allege damages not supported by evidence or the insurance contract, to refuse to allow plaintiffs to participate in EUO’s or depositions and to refuse to cooperate with the insurer in basic discovery.

Decision–In the end Judge Denaro concurred with both judges and with the Florida Bar in recommending “… that the Supreme Court of Florida deny ‘Respondent’s [Strems] Motion to Dissolve Order of Suspension Dated June 9, 2020 and that the Emergency Suspension Order continue in full force and effect.”

As Judge Denaro also concluded that the Bar has “…satisfied the burden of establishing a likelihood of prevailing.”, Scot Strems will no doubt consider his next step very, very carefully.  Should he choose to have one, his trial before the Supreme Court is set for September.  See Denaro’s full decision.

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The Puppet Masters–With Judge Denaro’ s ruling and my separate investigations it’s more apparent that the Strems case is a looking glass to Florida’s property litigation problem—fortified by nefarious pursuits of way too many public adjusters (PA’s) and their posers, including corrupt water remediation firms and rebuild contractors.

Frankly, the story line I’m hearing elevates PA’s from mere puppets in someone else’s grand scheme, to puppet masters in a diabolical plan of their own concoction. (See NOTE #2 below)

There are several sources for this emerging opinion.

First, a June 9th   suit by Citizens requesting a jury trial on matters involving the Strems firm, Scot Strems personally, Contender Claims Consultants of South Miami (CCC) and its president Guillermo Saavedra; and All Insurance Restoration Services (AIR’s) of Miami and its president Cesar Guerrero and operations manager, Derek Parsons. All allegedly profiting from interlocking relationships to circumvent attorney fee sharing prohibitions and statutory fee caps for public adjusters.

Citizens allegations are similar, if not identical, to the allegations by the two judges during the Strems hearing, including the filing of different lawsuits to avoid consolidation and to maximize fees to the Strems firm and its “feeders.”  (See NOTE #3 below)

Keep in mind, PA’s can knock on doors but can’t control the litigation. Attorneys can control the litigation but can’t knock on doors. This hand-in-glove begs the question: did the circle of corruption begin with an attorney looking for doorknockers  or  a public adjuster looking for a bigger piece of the action?

One trial lawyer, specializing in 1st party homeowner claims, argues that Florida’s problem stems from “…fraud…routinely perpetrated through unscrupulous ‘arrangements’ between corrupt public adjusters and attorneys.” And, he specifically referenced a scheme involving global settlements. (See NOTE #5 below)

The Scheme of Global Settlements–Simply, a global settlement is when an insurer writes one big check to settle a controverted claim, leaving the allocation of funds entirely to the plaintiff attorney. Often the attorney firm itself required the global approach. Other times insurers, like Citizens for example, routinely acquiesce, or may even demand a global settlement. It’s easier to allow (or force) the opposing attorney to perform the calculations necessary to allocate settlement funds to the various parties: a PA, a homeowner, a mortgagee, an AOB vendor, an insurance counselor and the attorney firm for fees and costs. (See NOTE #4 below)

Feeding the Feeders–On the downside, global settlements are often designed to enable a PA to receive more than the statutorily permissible fee cap of 20% “of insurance claim payments.”  The feeders need to be fed and in some instances they get more than the entire indemnity paid to the homeowner.  “Ethical lawyers,” my attorney friend says… “generally attempt to bifurcate the indemnity from the fees and costs in order to properly compensate the public adjuster. Unethical lawyers push for ‘global’ settlements in order to control the disbursement and overcompensate the public adjuster (who is the referral source to the attorney).”  (See NOTE #5 below)

It gets worse! According to the trial attorney who wished to remain anonymous…

Having had a number of public adjusters boldly show up at my office and unashamedly solicit our firm to participate in “the global settlement arrangement” disgusts me. Time and again we have heard “I can refer you guys all the claims you want if and only if you promise to settle the claims globally.” It was just as shocking to read what was recently alleged against Strems and his partner. Again, all this illicit activity that is poisoning the first-party property insurance market has to be stopped.  (See charts and the  entire original redacted email)

To keep a fresh supply of claims flowing, other sources told me that some trial lawyers actually “prop up” PA firms.  A Miami public adjuster said…

Your anonymous source is 100% correct. There are litigation firms doing that and also recruiting new young people, training them, supporting them until they obtain a PA License then the new PA starts knocking on doors to get new claims, frivolous claims.  (See Redacted Source email)

Epilogue–And so… the circle of corruption spirals outward to more parts of the state, to more homeowners (both unsuspecting and complicit) and to more hungry feeders needing to be fed.

And Florida’s rates climb in lockstep!

And, my question is still unanswered…Did the corruption begin with an attorney looking for doorknockers or  a public adjuster looking for a bigger piece of the action?

IMPORTANT: I need your thoughts on a few questions I’ll be addressing in PART III.    PLEASE, scroll below to “Speak Your Mind” which requires you to log in. If you are not a subscriber please enter your email where indicated above.

Now, here are the questions…

  • Why do some insurers routinely send global settlements to attorney firms when doing so only contributes to the litigation and fraud overrunning their operations?
  • Why does the Florida Bar allow attorneys to share fee’s with unlicensed persons in apparent violation of its own ethical standards?
  • Should the Department of Financial Services (DFS) issue an advisory clarifying that public adjuster remuneration from global settlements exceeding 20% of their clients indemnity violates Fs. 854(10).

Stay tuned for “Collapse of an Evil Empire! PART III”

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NOTE #1:  Strems Petition to Dissolve concludes: “The Florida Bar’s Petition for Emergency Suspension does not meet the requirements of Rule 3-5.2 of “clearly and convincingly” proving Respondent appears to be “causing great public harm.” The Petition references numerous discovery violations which are dated, and affidavits rife with conclusory allegations by two Thirteenth Circuit Court judges who possess little, if any, personal knowledge of matters upon which they opine. The vast majority of the allegations cannot be attributed to the Respondent, but to subordinate lawyers scattered across the state. While the totality of the allegations may justify Bar scrutiny, they fall woefully short of justifying emergency suspension.”

NOTE #2: According to Citizens complaint, CCC marketed itself as a public adjusting company but would also present unsuspecting homeowners with a contingency fee agreement for Strems.  Afterward, CCC’s adjusters would “transform into loss consultants” retained by Strems, while they continued to adjust the claim.  Again, according to Citizens… “This fiction was carried on to avoid statutory limitations on public adjusters’ recovery and to claim their fees as part of litigation costs rather than being paid out of proceeds from the recovery by the homeowners.”

NOTE #3: Contender Claims Consultants (CCC) was also who Sonia Ortiz called to inspect her home.  Something she did on at least two occasions, the second time specifically requesting CCC to not hire Strems to litigate the claim.  CCC hired Strems anyway and thus a suit was filed (Ortiz v Strems Law Firm).

NOTE # 4: Keep in mind what Strems associate, Greg Saldamando, was alleged to be doing. According to the Bar’s Complaint against him he never advised his client of a $157,000 global settlement offer from American Integrity before accepting it.  Then, he kept the entire “additional” amount above the indemnity of $100,000 for himself and/or his firm.  That’s the allegation. Saldamando stated, in writing, that this was standard practice for the entire firm.  Read more in paragraph 9 of Part I.

NOTE #5: After speaking with him by phone my trial lawyer source sent an email explaining how the “global settlement arrangement” works.  You can check out the charts and learn how the PA can make more than the indemnity by reading that email yourself.    I took time to send his redacted email to some public adjusters, another trial attorney, a Miami PA and others.  I could find no one who doubted the legitimacy of “The Scheme of Global Settlements” allegation.

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