By Justin M. Norton
New York Lawyer
The Recorder
January 24, 2005

SAN JOSE -- A federal judge has referred a former public defender to the U.S. attorney's office and the California State Bar for an investigation of the attorney's alleged role in a scheme to prey on homeowners close to losing their property.

U.S. District Judge William Alsup issued the ruling Wednesday in a case involving Thomas Spielbauer, who worked in the Santa Clara County public defender's office for more than two decades and made three unsuccessful runs for judge.

According to the ruling, plaintiffs Scott Heineman and Kurt Johnson used the Internet to seek out homeowners behind on mortgage payments. The order says that, for a $3,000 fee, the pair would offer to "eliminate" the homeowner's mortgage.

The pair would then execute a complicated series of transactions that actually would leave "the borrower in worse condition than when he or she first looked to the plaintiffs for debt relief," Alsup said.

As counsel to Heineman and Johnson, Spielbauer brought frivolous lawsuits against banks involved in the loans in an attempt to win settlements. The suits claimed the banks could not collect the debts because the loans had been paid for with wire transfers, not cash.

"The court here has seen the scam at work," Alsup said. "Greater bad faith would be hard to imagine. Plaintiffs and their counsel have employed a smokescreen to burden various lending institutions and impose upon them litigation costs in hopes of extracting settlements."

Spielbauer and his clients were ordered to pay about $77,000 to attorneys for the defendants.

Spielbauer was fired from the public defender's office in July 2003 after being charged with the misdemeanor of deceiving a superior court judge.