Class Action Lawsuit Filed against Bankruptcy Firm – The Sandberg Law Firm and Anthony Sandberg
Another class action lawsuit was filed this week by a former client against her consumer bankruptcy attorney, alleging improper collection of pre-petition attorney’s fees by depositing post-dated checks or “pre-authorized post-dated bank account debits.” The Defendants are The Sandberg Law Firm, LLC, and Anthony Sandberg. The lead plaintiff is a former client of the firm, Karen Ann Walla, now represented by Rome, GA attorney, Terry Haygood. The case was filed yesterday, October 18, 2011, in the United States District Court for the Northern District of Georgia, Rome Division, case no. 4:11-cv-00258, assigned to Judge Harold Murphy.
A similar lawsuit was filed by Mr. Haygood earlier this month against Clark & Washington, the largest filer of consumer bankruptcy cases in the State of Georgia. An earlier post discussed the Clark & Washington lawsuit, and the legal and ethical implications when a chapter 7 case needs to be filed immediately, but the client does not have an immediate ability to pay for the case. Here’s a link to that post: https://northgabankruptcy.wordpress.com/2011/09/27/chapter-7-bankruptcy-how-do-lawyers-get-paid/
The allegations in the Walla vs. Sandberg complaint are interesting. According to the Complaint: “Defendants, despite claiming on their website that they ‘believe that every person, regardless of their current financial condition, deserves to be treated with […] honesty,’ do not disclose to their potential clients that the post-dated checks and/or pre-authorized, post-dated debit transactions Defendants accept and intend to cash or complete during and/or after the planned bankruptcy cases represent a debt subject to discharge through those same cases. Thus, Defendants have established a practice of publicly claiming to absolve clients of all debts incurred prior to the filing of a bankruptcy case, while privately working instead to create pre-petition debt covering Defendants’ fees and concealing said debt from their clients to prevent the clients from exercising the right not to pay discharged debt.”
Paragraph 31 of the Complaint states: “[An employee of The Sandberg Law Firm] explained to Plaintiff that she was required to pay $299.00 (plus costs) that day, and then give ten (10) pre-authorized post-dated debit transactions. The employee had Plaintiff sign documents confirming the details of Defendants’ representation of Plaintiff during her upcoming case, including a document authorizing Defendants to debit the sum of $100 once per month for ten months, beginning in March of 2010. When Plaintiff questioned whether she would have the required funds in her account over the next ten months, Plaintiff recalls the employee stating that “the debits must be paid or we will sue you.”‘
After Ms. Walla’s chapter 7 bankruptcy was filed, and during the pendency of the case, one or more of the pre-authorized post-petition debits was declined by Ms. Walla’s bank due to non-sufficient funds (NSF). The Sandberg Law Firm, according to the Complaint, sent a collection letter to Ms. Walla demanding that she contact the firm to make payment arrangements. The letter also threatened late fees. Ms. Walla recalls receiving phone calls from The Sandberg Law Firm, and being told that, if she did not pay, her pending Chapter 7 case would be stopped and she would be vulnerable to her creditors. The complaint alleges that Ms. Walla paid The Sandberg Firm via pre-authorized debits, which in turn caused Ms. Walla to struggle with her basic living expenses, including her mortgage payment.
The complaint has several counts, including allegations of Federal RICO Violations, State RICO Violations, Violations of the Bankruptcy Discharge Injunction, Violations of the Automatic Stay, Conflict of Interest Violations, Fraud, Mail Fraud, Bankruptcy Fraud, Fraudulent Fee Agreement, Unjust Enrichment, Fraud by Concealment and Disclosure Violations.
Mr. Haygood and his client have demanded a trial by jury.
Cartersville | Atlanta | Dallas | Calhoun | Dalton