Collapse of an Evil Empire! PART V–Guilty as Charged!

I’ve now listened to all eighteen plus hearings (or portions thereof) regarding the disbarment proceedings against Scot Strems. You can learn about this landmark case and my perspectives beginning with Part I here, Part II here, Part III here, Part IV here and Part IV ½  here(See NOTE #1 below)

According to the referee, Judge Dawn Denaro in her Oral Ruling on September 23rd, The Florida Bar has proven that Scot Strems violated fourteen rules enumerated in The Bar’s June 5th Petition For Emergency Suspension.  (See NOTE #2 below).

My layman’s view is that many key allegations are now facts, albeit those likely to be contested by the defendant–if not in a tribunal then certainly in his court of public opinion. My opinion, however, is this ugly saga has finally morphed from finger pointing to proven “contumacious” behavior.

Next up…sentencing. 

It was no surprise when Bar Counsel, Derek Womack, requested “permanent disbarment” for Scot Strems. He said the injuries he inflicted were “serious” and showed a clear and convincing “pattern of neglect” and that there was “no meaningful prospect of reformation.”  And Womack correctly asserted that Strems defense “… didn’t offer a single witness that wasn’t tied to him by money!”

Womack is right, in my opinion–not just because of the “facts” he meticulously presented but because they dovetailed with my own research–none of which could convict anyone of anything but all of which is rendered credible by the Bars exhaustive and professional investigations yielding essentially the same conclusions.  (See NOTE #3 below)

All of this, and the documents, depositions and testimonies in Part’s I thru IV ½, are still not as convincing, however, as two remaining factors: one, the last minute introduction by the Bar of “aggravating factors” from a six year old case (Gandul vs. Olympus) sanctioning Strems, and; two, the desperate defense strategy of attacking the Bar, its’ motivations and its’ sources, (including two sitting judges), by claiming all were pandering to an insurance industry fed up with Mr. Strems’ successful litigation against it.  (See NOTE #4 below)

Now, what about Gandul vs. Olympus? This was a 2014 suit not previously available in the disbarment proceedings presumably because a motion to dismiss and sanction the Strems firm was still pending. That changed September 27th when the Broward County 17th Circuit announced monetary sanctions against the Strems firm for “Bad Faith Conduct” stemming from “Concealment of Fraud.”

This case, in my opinion, confirms the worst fears of what’s really been going on in Florida’s property insurance marketplace.

The courts’ “findings of fact and conclusions” reveal the following:

In 2012 Erick Valdes was hired by the Strems firm as a “Loss Consultant.”  This, at approximately the same time he was on “supervised release” from federal prison where he served 33 months for “conspiracy to commit fraud.” Valdes had previously surrendered his Public Adjuster (PA) license for failure to comply with CE requirements but, in his deposition he testified that he performed the same duties as a loss consultant for Strems as he would’ve performed under his PA license working for the policyholder. 

The court said Strems knew all of this and also knew Valdes had a “troubled financial condition”.  Strems paid Valdes a flat fee, not a percentage of the claim payment, perhaps to allow for the lack of a PA license which carries a statutory fee cap of 20% or perhaps because he didn’t have a license.  Either way, this was important, according to the court, because it meant that only the Strems firm would benefit from a fraudulently inflated estimate.

In his deposition, Valdes testified that he “intentionally exceeded the true cost of repairs by 20%” making the estimate “false and fraudulent,” according to the court.

Then, on the eve of Valdes’ deposition, where he admitted to inflating his estimate, Strems offered to withdraw him as an expert in exchange for Olympus cancelling the deposition. When that didn’t happen, Strems did not appear at the deposition.

Final note:  Strems hired a different expert who valued the loss $55,000 less than Valdes. Thus, Strems had many opportunities to know the Valdes estimate was fraudulent but, according to the court he… “nonetheless proceeded with the claim.” (See NOTE # 5 below)

On a personal note, I simply don’t have words to express my feelings at this point. Certainly some vindication was present when I first began to hear the Strems empire may unravel—especially when I  read the Bars’ documents supporting its petition.  It was, after all, what I’d been uncovering and writing about, in varying degrees, going back a half dozen years.

IN SUMMARY–The Strems case confirms the following in my opinion: attorneys are sharing fee’s with unlicensed individuals;  loss consultants are performing the same functions as Public Adjusters but without a license; homeowner’s (often chosen because they don’t speak English) are duped into signing contingency agreements for damage they often didn’t even know they had;  PA’s are transforming into Loss Consultants to violate statutory fee caps;  PA’s, both licensed and unlicensed, are inflating losses by 20% in violation of state law; Attorneys are using subterfuge to extend litigation to increase their fees; Attorneys are divvying up global settlements among themselves, their loss consultants and PA’s, everyone, except their own clients whom they kept in the dark.

I’m sad to say the commission of these acts by some appears indisputable. They are facts. They are crystalline. The only question(s) now is who is doing it and how often. And, of course, what are the solutions?

I’ve been gathering recommended cures from every corner and will present them to you and to Florida lawmakers.  Consumers need to be protected from the abuses exhumed in the Strems case–prime among them is having to pay America’s highest property insurance rates to support greedy and fraudulent behavior by wealthy attorneys in cahoots with public adjusters and/or so called “loss consultants”.

Next up, Strems final sentencing recommendation due by October 8th.

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NOTE #1: If, for some reason, you’d also like to listen to these proceedings you can do so (at least for the time being) at the 11th Circuit Court of Appeals YouTube site.    Each of the 18-plus hearings, some with nearly 3,000 views, are currently available.

NOTE #2:  Among the 14 violated rules were those governing criminal or fraudulent conduct, misconduct, candor toward the tribunal, meritorious claims and contention, and fairness to opposing counsel.

NOTE #3: Strems’ defense asked for a 90-day suspension, followed by three years of probation. His attorneys argued that a major part of the Bar’s case was unproven, that Strems tried to make things right, that disbarment is not supported by case law and the whole thing was brought on by the insurance industry trying to stop someone who was successfully litigating against it. Strems said he takes responsibility for everything even if he wasn’t the lawyer personally involved and will take steps necessary to see it doesn’t happen again.

NOTE #4: You can read more on the Strems case in reports from Raychel Lean at LAW.COM reporting on behalf of the Daily Business Review.  Especially see: Anatomy of an Insurance Scam: Citizens Property, Florida Bar Detail a Florida Lawyer’s Alleged Fraud. Also, Allegations Mount against South Florida Lawyer Accused of Cheating Insurers: “Something Else Going on Here”

NOTE #5: Introduction of the Gandul vs Olympus Insurance Company sanctions decision by the 17th Circuit was entered by Bar Counsel, Derek Womack, at the 1:16 mark of Part 15 of the Strems hearing here.

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