[Cite as Disciplinary Counsel v. Foreclosure Alternatives, Inc. , 127 Ohio St.3d 455, 2010-Ohio6257.]

D ISCIPLINARY C OUNSEL v. F ORECLOSURE A LTERNATIVES , I NC ., ET AL . [Cite as Disciplinary Counsel v. Foreclosure Alternatives, Inc. , 127 Ohio St.3d 455, 2010-Ohio-6257.] Unauthorized practice of law — Managing th e defense of clients in foreclosure actions and negotiating with the le nders on behalf of the clients — Injunctions issued and civil penalties imposed. (No. 2010-1495 — Submitted October 13, 2010 — Decided December 23, 2010.)
O N F INAL R EPORT by the Board on the Unauthorized Practice of Law of the Supreme Court, No. UPL 09-05.

__________________ Per Curiam. {¶ 1} On June 4, 2009, relator, Disciplin ary Counsel, filed a three-count complaint with the Board on the Unauthorized Practice of Law against respondents, Foreclosure Alternatives, In c. (“FAI”), Kert Alexakis, and Lance Baker, a.k.a. Lance Trester (“Trester” or “Lance”), alleging that respondents engaged in the unauthorized practice of law by soliciting homeowners who were defendants in foreclosure proceedings and offering to manage the defense of the foreclosure actions while negotiating with the lenders. FAI was the business entity engaged in the practices at issue, and Alexakis and Trester were agents and employees of FAI who were involved in those practices. {¶ 2} Two counts of the complaint detail particular instances in which respondent FAI entered into contracts with foreclosure defendants, engaged attorneys for the limited purpose of filing pleadings, and ostensibly acted to resolve the mortgage disputes. In bot h instances, the homeowners lost their homes, which were sold in foreclosure sales.S UPREME C OURT OF O HIO

2 {¶ 3} The complaint charged, and the boa rd concluded, that respondents had engaged in the unauthorized practi ce of law by counseling clients on the course of legal action in connection w ith foreclosure and by undertaking to negotiate on their behalf in the context of foreclosure actions. We adopt the board’s finding that respondents engaged in the unauthorized practice of law, and we enjoin them from doing so in the future. {¶ 4} In addition, the board, taking cognizance of the hardship suffered by the clients of FAI, recommends the imposition of civil penalties against Trester in the amount of $2,500 per count, for a total of $5,000, and against FAI and Alexakis jointly and severally in the amount of $7,500 per count, for a total of $15,000. We accept the board’s recomme ndation and adopt the sanctions. Factual Background The nature of FAI’s business {¶ 5} FAI, which was incorporated on or about April 19, 2004, by Ronald Trester, is an Ohio corporation located in Hamilton County. Alexakis, who is Ronald Trester’s stepson, stated th at his mother was the sole shareholder and that Ronald Trester and Alexakis himself were the officers. The company apparently ceased operation late in 2007, but it has not been dissolved, because a lawsuit is still pending against it. {¶ 6} FAI would locate customers by consulting online databases that showed persons who were named defenda nts in mortgage-foreclosure actions. Through a mailing, FAI would solicit those persons to enter into contracts with FAI under which FAI agreed to file appropriate pleadings in the foreclosure action and negotiate with the lenders in order to achieve a resolution that would avoid both the loss of the home and the filing of bankruptcy. {¶ 7} Clients of FAI were required to pay $850 up front or $900 in two installments, after which they were to provide financial information to FAI and set up a separate account in to which they were to ma ke regular deposits until theJanuary Term, 2010

3 account reached a specified amount (in one case, the amount was equal to four months of mortgage payments). The fina ncial information (including a “hardship letter”) and the separate account were used by FAI to negotiate a resolution of the dispute with the lender. In the course of representing its clients, FAI would engage one of three attorneys — two licensed in Ohio 1 and one in Indiana — to whom they would assign the responsibility of handling court filings and hearings. The attorneys were typically paid between $125 and $250 for that service, an amount usually paid directly by FAI out of the fee it collected from the client.
Once FAI had financial information and documentation that the client had deposited a significant sum in the separate account, FAI would make a proposal to the lender to pay a percentage of the loan delinquency in order to stop the foreclosure and reinstate a monthly payment arrangement. {¶ 8} None of the shareholders, director s, officers, or employees of FAI was licensed to practice law in any jurisdiction. The nature of Trester’s involvement {¶ 9} Trester 2 is not licensed to practice law in Ohio. {¶ 10} When Ronald Trester was to be incarcerated for a felony conviction and could no longer run FAI, he first turned to his son Lance to run the company. Lance underwent 15 days of intense training and then began to manage the operation. During his tenure, Lance supervised and directed the employees and operations, including solicitation of business from homeowners, retention of attorneys to represent the customers, and attempts to work with customers and lenders to resolve the past-due amount s or otherwise reinstate the loans.

1. Both Ohio attorneys have been disciplined in connection with their involvement with FAI. See Disciplinary Counsel v. Willard , 123 Ohio St.3d 15, 2009-Ohio-3629, 913 N.E.2d 960; Geauga Cty. Bar Assn. v. Patterson , 124 Ohio St.3d 93, 2009-Ohio-6166, 919 N.E.2d 206, ¶ 8–32.
2. On advice of his father, Ronald Trester, Lance Trester adopted the name “Baker” during his tenure at FAI to avoid being associated with his father’s felony conviction.S UPREME C OURT OF O HIO

4 {¶ 11} One week after Trester left the employ of FAI on September 22, 2006, he started a company named Ameri can Foreclosure Professionals, which competed with FAI. American Foreclosure Professionals was in business until approximately November 2008. The nature of Alexakis’s involvement {¶ 12} Kert Alexakis is not licensed as an attorney in Ohio. {¶ 13} Before 2006, Alexakis was only minimally involved in FAI, which had been run by his stepfather, Ronald Trester. According to Lance Trester, Alexakis was president of FAI but inactive in the company business at the beginning of 2006. When Ronald Treste r was convicted and incarcerated in February 2006, he became unable to run th e company and tapped his son Lance to operate the business. On September 22, 2006, Lance left the employ of FAI. {¶ 14} According to Lance Trester, Alexakis ran the company after Lance left. Alexakis met with clients, assembled financial information into client packets, and presented the information to th e lenders in order to avoid foreclosure. Alexakis also supervised the activities of the attorneys with respect to court filings. About 20 percent of the time, the a ttempt to reinstate the loan failed, and the property was sold at a sheriff’s sale. When the company ceased operations in December 2007, Alexakis was no longer active in the business. FAI’s handling of foreclosure No. 1 {¶ 15} FAI’s dealings with the homeowners in Foreclosure No. 1 led to the homeowners’ filing a grievance against the attorney used by FAI, John
Willard. See Disciplinary Counsel v. Willard , 123 Ohio St.3d 15, 2009-Ohio3629, 913 N.E.2d 960, ¶ 9 (the “foreclosure on the home of David and Annette Chandler led to this pr ofessional grievance”). {¶ 16} Early in 2006, David and Annette Chandler fell behind on mortgage loan payments for a house they had occupied since 1989. On May 26, 2006, Wells Fargo Bank commenced a foreclosure action in the Warren CountyJanuary Term, 2010

5 Court of Common Pleas. After receivi ng a mailing from FAI, the Chandlers became customers of FAI. On June 13, 2006, they signed a standard “Mediation Agreement” with FAI. The Chandlers made two payments of $450 to FAI for FAI’s services — the first on June 22, 2006, in conjunction with the signing of the agreement, and the second on September 14, 2006. {¶ 17} Daniel B. Jones signed the agreem ent on behalf of FAI, but later,
Lance Trester became involved in the Chandl er foreclosure. As supervisor of operations, he was aware of the Chandler case and subsequently spoke several times with Mr. Chandler on the phone. {¶ 18} By letter dated August 3, 2006, FAI told the Chandlers that an attorney had “filed a plea and answered” in the foreclosure action. But on August 8, 2006, upon motion of the plaintiff, the common pleas court entered a default judgment against the Chandlers. The order specifically stated that the Chandlers were “in default of Answer or other pleadin g.” The court entered an order that the Chandlers’ home be sold on August 24, 2006. {¶ 19} The Chandlers learned that their home was to be sold by reading the newspaper. On or about October 6, 2006, Alexakis contacted attorney Willard concerning the case, and Willard filed a motion to strike the complaint. Willard informed Alexakis that the plaintiff woul d not stop the sale. The attorney had no
further involvement with the case. Th e home was sold at a sheriff’s sale on October 23, 2006. FAI’s handling of foreclosure No. 2 {¶ 20} In 2005, a homeowner who had first occupied his home in 1988 refinanced the house with an adjustable-r ate-mortgage loan. Beginning early in 2006, the rising monthly interest charges on the mortgage loan made it difficult for the homeowner to remain current with his payments. The homeowner’s attempts to work out a new payment schedule with the lender, Wells Fargo, proved fruitless. Subsequently, in Ma rch 2006, FAI contacted the homeownerS UPREME C OURT OF O HIO

6 through a letter from Lance Trester indica ting the danger of foreclosure. In telephone conversations, Lance Trester a ssured the homeowner that FAI had a high success rate and could stave off foreclosure. The homeowner signed a mediation agreement in April or May 2006, and Lance Trester advised him that he should stop making mortgage-loan paymen ts, that he should avoid filing for bankruptcy, and that the foreclosure had been “stopped” by attorneys who would be “taking care” of his case. The homeowner was told that the attorneys were “too busy” to communicate directly with him and that the attorneys were “across the hall” from the bank attorneys and would negotiate with the bank. {¶ 21} Pursuant to the mediation agreement, the homeowner made two deposits totaling $4,250 (representing four m onths of mortgage-loan payments) in a special U.S. Bank account, and FAI wit hdrew $850 from that account as its fee. Lance Trester thereafter negotiated with the bank; during that time, the homeowner called Lance Trester twice per week and was told that attorneys were working on his case but that they did not ha ve time to talk to him. By October 2006, the homeowner’s calls went to Alexak is, who told the homeowner that he owned FAI and that negotiations with th e lender were ongoing. The homeowner continued to try to speak with a lawyer, and a secretary at FAI finally gave him the name of attorney Willard. When the homeowner called Willard, Willard told him that he was not assigned to his case. {¶ 22} In January 2007, the homeowner fina lly discovered that attorney David Patterson was assigned to his case. By phone, Patterson told the
homeowner that an answer had been filed in the foreclosure case and that that was
all that Patterson had been hired to do. Patterson also obtained for the homeowner a pay-off figure from Wells Farg o for back payments plus foreclosure costs that amounted to over $17,000, a figu re that exceeded what the homeowner was able to pay.January Term, 2010

7 {¶ 23} In March 2007, the homeowner filed for bankruptcy; at first, he attempted to retain the ho me by proceeding under Chapter 13, but later, the case was converted to a Chapter 7 liquidation proceeding, and the homeowner lost his
home. Disposition Injunction against further unauthorized practice warranted {¶ 24} Based upon the facts in this case, we have no difficulty concluding that FAI, Alexakis, and Lance Trester engaged in the unauthorized practice of law. The general business plan adopted by FAI as well as the specific handling of
the Chandler matter and the forecl osure against the second homeowner demonstrate that FAI, Alexakis, and Lance Trester (1) gave advice to homeowners in the context of pending or threatened foreclosure proceedings, in particular, advice concerning whether to continue making mortgage payments and the wisdom of legal alternatives such as bankruptcy, (2) made representations to creditors on behalf of homeowners facing foreclosure, and (3) evaluated for and
with homeowners the terms and conditions of settlement in the foreclosure proceedings. We have held that the unauthorized practice of law, defined at Gov.Bar R. VII(2)(A) as “[t]he rendering of legal services for another by any person not admitted to practice in Ohio,” includes those three activities when performed by nonlawyers. See Ohio State Bar Assn. v Kolodner , 103 Ohio St.3d 504, 2004-Ohio-5581, 817 N.E.2d 25, ¶ 15 (unaut horized practice of law includes “representation by a nonattorney who advise s, counsels, or negotiates on behalf of an individual or business in the attempt to resolve a collection claim between debtors and creditors”); Cincinnati Bar Assn. v. Telford (1999), 85 Ohio St.3d 111, 113, 707 N.E.2d 462 (unauthorized pr actice of law includes a nonlawyer giving “legal advice to defendants in pending [foreclosure and debt-collection] lawsuits in an attempt to settle those cases”); Cincinnati Bar Assn. v Mullaney
, 119 Ohio St.3d 412, 2008-Ohio-4541, 894 N.E.2d 1210, ¶ 20 (“laypersons engageS UPREME C OURT OF O HIO

8 in the unauthorized practice of law” by “a dvising debtors of their legal rights and the terms and conditions of settlement in negotiations to avoid pending foreclosure proceedings”); Cincinnati Bar Assn. v. Foreclosure Solutions, L.L.C.
, 123 Ohio St.3d 107, 2009-Ohio-4174, 914 N.E.2d 386, ¶ 22, 26. {¶ 25} Indeed, the constrained role played by licensed attorneys in this case highlights the evils associated with laypersons providing legal services to the public: instead of personally evaluating the particular situations of their clients, the attorneys performed piecework by fili ng pleadings as part of the “single strategy that respondents offered as a re solution—to stall the pending foreclosure proceedings,” while nonlawyers such as Alexakis and Lance Trester pursued the “negotiation of a settlement with the mortgagee.” Foreclosure Solutions at ¶ 23. The record in this case indicates the possibility of far better outcomes for the former homeowners had they received the full attention of qualified, competent attorneys who abided by their ethical obligations. Instead, the former homeowners paid hundreds of dollars for wh ich they received little in return. See
Willard , 123 Ohio St.3d 15, 2009-Ohio-3629, 913 N.E.2d 960, ¶ 19, quoting Mullaney , 119 Ohio St.3d 412, 894 N.E.2d 1210, at ¶ 23 (lawyer who worked with FAI “intentionally fail[ed] to seek the lawful objectives of his client” by “ ‘surrendering [his] professi onal judgment’ ” to FAI); Patterson , 124 Ohio St.3d 93, 2009-Ohio-6166, 919 N.E.2d 206, ¶ 8–32. {¶ 26} Because we find that respondents engaged in the unauthorized practice of law, we adopt the board’s recommendation and enter an injunction against each of the respondents, forbidding any further violation. Civil penalties justified {¶ 27} We now turn to the board’s recommendation that civil penalties be assessed against respondents. Gov.Bar R. VII(8)(B) authorizes the imposition of such penalties in an amount up to $10,000 per offense based upon consideration of relevant factors, four of which are enumerated.January Term, 2010

9 {¶ 28} 1. Degree of cooperation. Respondent Lance Trester actively participated and coope rated in the proceedings by entering into stipulations with relator and appearing and testifying at the hearing before the panel. By contrast, respondents Alexakis and FAI did not participate or cooperate, apart from Alexakis’s filing a pro se answer to the complaint. {¶ 29} 2. Number of violations. The record documents FAI’s handling
of the Chandler and the other homeowner’s matters, but otherwise, the evidence is inconclusive as to the total number of customers, the services they received, and what harm they suffered. {¶ 30} 3. Flagrancy. Respondents made damaging and misleading representations to the Chandlers a nd the second homeowner during their foreclosure cases. For example, responde nts indicated in correspondence to Mr. Chandler that an attorney had filed an answer and that the Chandlers had time to get their affairs in order, but in fact , no answer had been filed, and default judgment was entered against the Chandlers a mere five days after the correspondence. Respondents also accepte d a fee from the Chandlers after the default. As to the second homeowner, respondents indicated to him that his foreclosure had been “stoppe d,” a mischaracterization of the facts. In actuality, an attorney whom the second homeowner had never met filed an answer, and the foreclosure proceedings continued. FAI also indicated that attorneys were providing legal services to the Chandl ers and the second homeowner but were “too busy” to speak with them, when in fact, the attorneys did no more than file basic pleadings. After that, the attorneys took no action in the cases. {¶ 31} 4. Harm to third parties. Bo th the Chandlers and the second homeowner lost their homes in sheriff’s sales after becoming customers of FAI. {¶ 32} 5. Other factors. The board iden tified additional considerations as pertinent.S UPREME C OURT OF O HIO

10 {¶ 33} a. Pursuant to UPL Reg 400(F)(1), the board noted that relator sought joint and several liability against the three respondents for a civil penalty of $10,000 for each of the two specific in stances of misconduct—the Chandler
matter and the second- homeowner matter. {¶ 34} b. Pursuant to UPL Reg 400(F)(2), the board observed that the “imposition of civil penalties would further the purposes of Gov.Bar R. VII by deterring the establishment of additional ‘foreclosure assistance’ entities that provide unlicensed legal representati on to often-desperate, vulnerable
homeowners.” {¶ 35} c. As aggravating factors pursuant to UPL Reg 400(F)(3), the board noted that FAI was a for-profit ente rprise that collected fees from its customers and that Lance Trester and Kert Alexakis were paid employees, with Alexakis serving as an officer of FAI. {¶ 36} d. As mitigating factors pursuant to UPL Reg 400(F)(4), the
board observed that Lance Trester sti pulated that his conduct involved the unauthorized practice of law and that he had ceased providing foreclosure
services. The value of this factor is d iluted by Lance Trester’s admission that he opened a rival foreclosure-services business after leaving FAI’s employ. The board also noted some mitigating effect of Lance Trester’s youth and inexperience and the fact that he left college at his father’s request to take over operations at FAI. As for FAI and Alexakis, the board found no mitigating
factors. {¶ 37} As a final matter, the board persuasively refuted Lance Trester’s contention that no civil penalties were justified in light of our decision in
Foreclosure Solutions , 123 Ohio St.3d 107, 2009-Ohio-4174, 914 N.E.2d 386, ¶
29–35. In Foreclosure Solutions , the parties stipulated that services had been provided to 12,000 to 14,000 Ohioans, and that, in part, formed the basis for the imposition of civil penalties. Id. at ¶ 11, 30. To be sure, the present case does notJanuary Term, 2010

11 quantify the total number of instances of unauthorized practice of law; but this case does present in detail the harmful effe ct of such violations in two specific instances. Accordingly, we agree with the board’s analysis that civil penalties are
warranted in this case. {¶ 38} The board recommended that we impose a civil penalty of $7,500 per documented violation jointly and severa lly against Kert Alexakis and FAI, for a total penalty of $15,000. In light of th e mitigating factors previously discussed, the board recommended a civil pena lty of $2,500 per documented violation against Lance Trester, for a total penalty of $5,000. No objections have been filed to the penalties, and we now adopt the board’s recommendation.
Conclusion {¶ 39} For all the foregoing reasons, FAI, Kert Alexakis, and Lance Trester are enjoined from further acts constituting the unauthorized practice of law. In addition, a civil penalty of $15,000 is imposed jointly and severally against FAI and Alexakis, and a civil penalty of $5,000 is imposed against Lance Trester. Costs are taxed to respondents. Judgment accordingly.
B ROWN , C.J., and P FEIFER , L UNDBERG S TRATTON , O’C ONNOR , O’D ONNELL , L ANZINGER , and C UPP , JJ., concur.

__________________ Jonathan E. Coughlan, Disciplin ary Counsel, and Heather Hissom, Assistant Disciplinary Counsel, for relator. Frost, Brown, Todd, L.L.C., and James Frooman, for respondent Lance
Trester.

______________________