account for the Concord Monitor:
Concord attorney Dan Dargon and his disbanded law firm have been ordered by the state Banking Department to pay more than $330,000 in fines and restitution for modifying mortgages without a license. But it's unclear whether the department - or the 71 clients it decided were entitled to restitution - will see any of the money.
"It's not going to happen," Dargon said yesterday. "Number one, I don't have a half a million dollars or whatever to pay. I'm 29 years old, I'm a young lawyer. I'm actually going into the Army late October. I'm not really happy about too many things with the practice of law right now."
Dargon, who started his own firm after graduating from the former Franklin Pierce Law Center in 2008, closed the doors to the North State Street business last fall as the Banking Department pursued an investigation into its practice of modifying mortgages without a state license.
The licensing requirement had only recently been enacted by the Legislature, and Dargon took the Banking Department to court over the dispute, maintaining he and his staff of 30 attorneys and paralegals were practicing law - not working as loan originators - and were therefore exempt from oversight by banking investigators. But after several days of administrative hearings last winter, a presiding officer decided Dargon and his lawyers had, in fact, broken state law by working as unlicensed loan originators, entering into "best efforts" contracts and collecting advance fees from clients.
The officer, Stephen Judge, didn't decide until the end of last month how much Dargon would be fined for the violations. He found Dargon's firm responsible for paying $129,500 in fines and $147,196 in restitution, with amounts ranging from $500 to $3,400 per client.
Judge also found Dargon individually liable for an additional $56,000 in fines.
Although his firm no longer exists, nine of Dargon's former employees are named in Judge's order and could also be liable for the fines. "If there is no firm, we're going to chase the individuals," Richard Arcand, a spokesman for the Banking Department, said yesterday.
And if no one pays, Arcand said the department will take Dargon to court for the money - "on behalf of consumers."
"We're going to be investigating the appropriate course of legal action, which could involve the attorney general or the court system," Arcand said. The order against Dargon includes a provision that if he declares bankruptcy, he will have to list in his petition each person to whom he owes restitution.
Dargon, meanwhile, said he intends to file a motion for reconsideration. If the department rejects it, he said he'll appeal to the state Supreme Court, confident that new regulations from the U.S. Department of Housing and Urban Development would lead the justices to side in his favor. New Hampshire enacted its licensing requirement for loan originators in light of the federal SAFE Act, passed in 2008 to enhance consumer protection and cut down on fraud in the mortgage industry.
Dargon, whose firm was filing loan modification requests to get clients lower monthly payments on their mortgages, has argued that the kind of work performed by attorneys at his firm isn't regulated by the SAFE Act, a position that ran contrary to the Banking Department's interpretation.
But Dargon pointed yesterday to new HUD regulations that say the licensing requirement for loan originators wasn't meant to regulate activities that constitute the practice of law by an attorney [ . . . ]
Several hundred of Dargon's clients were waiting to hear from their lenders when his firm closed last fall. A number of those clients called the Monitor, alarmed that they suddenly hadn't been able to reach their lawyers and angry that they were never informed of the firm's closure.
Dargon's conduct also prompted a former employee to file a complaint with the Attorney Discipline Office, which doesn't make grievances against attorneys public until a certain stage in its investigation. The office has issued no public decision.
Dargon yesterday maintained that he had done what he could to help the clients who hadn't heard back from their lenders, paying lawyers to represent them with the money he got from liquidating the firm's assets.
"If I was the heartless capitalist, I could have taken the money and run," he said. He said he was still upset by the way he felt the Banking Department portrayed him in court and in administrative proceedings - part of the reason he's joining the Army, he said.
"I was really insulted to have them take my reputation, use it as toilet paper," said Dargon, who heads to basic training in October and said he has lost 80 pounds in preparation for enlistment. "Part of me said, I'll show you what I'm capable of. I'm capable of selfless service."
Scott Greenfield has a running trope over at the Simple Justice blawg relating to the various ways young attorneys find themselves over their heads. Here's another example.