ATTORNEY GENERAL OF THE STATE OF NEW YORK

BUREAU OF CONSUMER FRAUDS & PROTECTION

In the Matter of the
IJIvestigation by Eric T. Schneiderman,
Attorney General of New York, of
Assurance No. 12-002
STEVEN J. BAUM p.e., PILLAR PROCESSING, LLC,
STEVEN.J.. BAUM, individually and as principal of
Steven J. Bauffi, P.C. and Pillar Processing, LLC,
and BRIAN KUMIEGA, individually and as partner of
Steven J. Baum, P.C., and principal of Pillar Processing, LLC
Respondents.
ASSURANCE OF DISCONTINUANCE
The Office ofAttorney General of the State of New York (the "OAG") has been
conducting an ongoing investigation, pursuant to Executive Law 63(12) and General Business
Law ("GBL") 349, of the business practices of Steven J. Baum p.e.; the New York operations
of Pillar Processing, LLC; Steven J. Baum, individually and as principal of Steven J. BauIn P.C.
and Pillar Processing, LLC; and Brian Kumiega, individually and as partner of Steven J. Baum
P.C. and principal of Pillar Processing, LLC (collectively, "respondents"). This Assurance of
Discontinuance ("Assurance") contains fil1dings of the OAG's investigation (the "Investigation")
insofar as it concerns respondents' foreclosure-related law practices, and the relief agreed to by
the GAG and respondents (collectively, the
I. FINDINGS
Parties
1. Respondent Steven J. Baum P.C. ("Baum Firm") is a law firm with its principal
place of business at 220 Northpointe Parkway, Suite G, Amherst, New York. The Baum Firm
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also has a smaller office in Westbury, New York. Until recently, the Baum Firm was one of the
largest volume mortgage foreclosure firms in New York State. In November 2011, shortly after
Fannie Mae and Freddie Mac barred mortgage servicers from referring new foreclosure
proceedings to the Baum Firm, the Baum Firm announced layoffs of its 89 attorneys. The Baum
Firm largely ceased operations on or about December 31, 2011 and is finalizing the winding
down of its operations.
2. Respondent Pillar Processing, LLC ("Pillar") is a business service provider with
its principal place of business at 220 Northpointe Parkway, Suite G, Amherst, New York.
Steven J. Baum formed Pillar in 2007 to provide law-related back office and administrative
support for the Baum Firm and other law fi!ffis. Steven J. Baum sold Pillar to a private equity
firm the same year. Although legally separate entities, the Baum Firm and Pillar shared some of
the same office suites. Prior to 2007, much of the Baum Firm's foreclosure work was handled
by non-attorney staff employed by the Baum i ~ When Pillar became a separate legal entity in
November 2007, these individuals became Pillar employees. In 2009, Pillar moved to a
professional employer organization model, and the Baum Finn leased the Pillar employees. In
November 2011, Pillar announced layoffs of its 610 New York employees. Pillar largely ceased
its New York operations on or about December 31, 2011 and is finalizing the winding down of
those operations.
3. Respondent Steven J. Baum is the president of the Baum Finn and a founder, the
former Chief Executive Officer, and indirect partial owner of Pillar through Pillar Holdings LLC
("Pillar Holdings"). Baum was an attorney at Marvin R. Bauffi, PC, the predecessor to the Baum
Firm since 1986 and became its president in 1999. III 2001, Marvin R. Bauffi, PC was renamed
the Baum Firm. Baum has -been involved in the management ofthe Baum Firm and Pillar and
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addition, the Office of the Comptroller of the Currency ("OCC") issued cease and desist orders
against fourteen of the nation's mortgage loan servicers finding that mortgage servicers filed
affidavits "making various assertions ... in which the affiant represented that the assertions in
the affidavit were made based on personal knowledge or based on a review by the affiant of the
relevant books and records, when, in many cases, they were not based on such personal
knowledge or review of the relevant books and records." The ace further found that mortgage
servicers had "failed to sufficiently oversee counsel and other third-party providers handling
foreclosure related servicers."
9. In an attempt to correct these widespread servicer abuses, as of October 20, 2010
the New York State Court System required foreclosure attorneys to submit an affinnation
attesting to the accuracy of the foreclosure summons and complaint they filed ("Lippman
Affirmation").. The Lippman Affirmation requirements led to a substantial decrease in the
number of foreclosure filings by the Baum Firm and the withdrawal of a large volume of already
filed foreclosure proceedings.
The Baum Firm's Practices with Respect to Standing
10. Compounding the problem ofrobo-signing by servicers, the Baum Firm
repeatedly filed complaints, affirmations and other legal papers in foreclosure and bankruptcy
proceedings without taking appropriate steps to verify the accuracy of (i) the allegations, (ii) the
plaintiffs right to foreclose or (iii) its ability to file a bankruptcy proof of l i m ~
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11. To maximize efficiencies and the volume of foreclosure filings, the Baum Firm
created a highly compartmentalized system for processing foreclosures. The Baum Firm relied
on Pillar, comprised of approximately twenty-five departments staffed by non-attorneys, to
1 Many of the problematic foreclosure practices described in this Assurance were also used in bankruptcy matters
related to foreclosures.
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handle the bulk of the work in each stage of the foreclosure proceeding, from client referral
through foreclosure sale. Complaints and other legal doc'uments were generated through the
Baum Firn1s' computerized data system into which Pillar employees input basic information
about each delinquent mortgage with i n s u i ~ i n t attorney supervision.
12. Under New York law, a foreclosing plaintiff has standing where it is both the
holder or assignee ofthe subject mortgage and the holder or assignee of the underlying note,
either by physical delivery or execution of a written assignment prior to the commencement of
tIle foreclosure action. However, Pillar employees did not always have access to promissory
notes when preparing foreclosure complaints, nor were they trained to review promissory notes.
In addition, from at least 2007 until sometime in 2008, Pillar employees were not instructed to
look for mortgage assignments when preparing the complaints. Instead, the form complaints
used at that time stated that "the mortgage was to be assigned." In these cases, mortgage
assignments were not executed until after the filing ofthe complaint.
13. From at least 2007 until sometime in 2009, Baum Finn attorneys repeatedly
verified complaints in foreclosure actions stating, among other things, that the plaintiff was "the
owner and holder of the note and mortgage being foreclosed" and that the attorney had: (i) read \
the foregoing summons and complaints and knew the contents thereof; and (ii) the grounds for
belief as to all matters in the Complaint not stated to be upon his or her knowledge was based on
the "original note, mortgage and/or financial documents, together with correspondence."
14. In fact, in many cases, particularly where the llnderlying loan was securitized and
thus the original lender was no longer the holder of the note and mortgage, the plaintiff did not
provide the Baum Firm and the Baum Firm did not have in its possession at the time of the filing
of a foreclosure action documentary proof that the plaintiff was the holder or owner of the note --
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the usual prerequisites to standing under New York foreclosure law.
15. Thus, in many of the cases filed by the Baum Firm, the mortgage had not yet been
assigned in writing to the plaintiff; and/or the only photocopy of the note within the Baum Firm's
possession, if any, did not bear endorsements showing it had been transferred to the plaintiff.
Furthermore, attorneys routinely verified and signed complaints without reviewing the contents
or the underlying documents such as the original note or mortgage.
16. Moreover, even if the mortgage had been assigned, in many cases Baum attorneys
acted as certifying officers of Mortgage Electronic Registration Systems, Inc. ("MERS").
Through corporate resolutions, MERS appointed several attorneys at the Baum Firm as "assistant
secretaries and vice presidents," authorizing them to execute documents necessary to foreclose
(including assignments and affidavits) on mortgages registered in the MERS System to various
servicer members. Thus, in foreclosure proceedings filed by the Baum Firm, Baum attorneys,
including Kumiega, wearing their hat as MERS certifying officers, regularly assigned mortgages
from MERS to the foreclosing parties that the Baum Firm represented. This practice ~ been
questioned by courts. See U.S. Nat'l Bank Ass'n v. Kosak, 2007 WL 2480127, at *2 (N.Y. Sup.
Ct. Sept. 4, 2007).
Improper Verification and Notarization Process
17. Indeed, while Baum Fim1 attorneys were familiar with the standardized con1plaint
forms, from 'at least 2007 through sometime in 2008, attorneys did not routinely see the actual
complaints after they were generated. Instead attorneys pre-signed and notarized verification
and certification pages that were subsequently attached to the complaints by Pillar employees.
The pre-signed and notarized pages were kept in drawers of Pillar employees, with each
employee possessing stacks of between twenty-five and fifty pre-signed pages for each litigation
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attorney. After the verification and certification pages were attached to the complaints, the
complaints were copied by an on-site copy service and the original summons, complaints and lis
pendens were sent for filing at the end of each day with the various county clerks.
18. Even after the practice of attaching pre-signed certification and verification pages
to the complaints changed, attorneys continued to verify complaints without reading them.
Although on occasion attorneys were only provided verification pages, Pillar employees
typically brought each attorney folders of complaints for signature several times per day.
Attorneys typically opened the folders, turned to the last page of the documents and signed their
names without rea4ing or reviewing the summons and complaints.
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19. The Baum Firm stopped verifying conlplaints by 2010, adopted explicit
procedures in late 2010 requiring attorneys to review complaints prior to signing them, and also
instituted additional procedural safeguards in order to pennit the Baum Firm to independently
confirm the accuracy of certain of its clients' representations. However, the Baum Firm
continued to file foreclosure actions without always having the evidence or conducting the due
diligence to determine that the plaintiff had the standing to bring the action.
20. Until sometime in 201 I, the Baum Firm also failed to properly notarize
documents signed b'y its attorneys. In violation of New York law as established by judicial and
Department of State decisions, Baum Firm attorneys routinely signed documents such as
complaint verification pages without being in the notaries' presence; or when documents were
signed prior to notarization, did so without the required oath being administered. Indeed, some
notaries even notarized documents that were signed by an attorney who was not present in the
state at the time the documents were notarized.
2 These practices were widespread. Memoranda to attorneys from the managing attorney of the lltlefltlon
department exhorted attorneys to make sure that complaints and other documents were signed quickly and did not,
until 2011, instruct attorneys to review the complaints prior to execution. .
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21. In a significant number of cases handled by the Baum Firm, courts have
concluded that the plaintiff had not adequately demonstrated its basis for the relief sought, or that
the complaint or litigation pleadings contained an error. See, e.g., Federal Home Loan
Mortgage Corp. v. Raia, 2010 N.Y. Slip Ope 52003(U) (Dist. Ct. 2010); Deutsche Bank v.
McRae, 894 N.Y.S.2d 720, 722-24 (N.Y. Sup. 2010); JPMorgan Chase Bank NA v. George,
2010 WL 1780952, *2-4 (N.Y. Sup. 2010); In re Mims, No. 10-14030 (Bankr. S.D.N.Y. 2010);
Citigroup Global Markets Realty Corp. v. Bowling, 2009 N.V. Slip Ope 52567(U) (Sup. Ct.
Kings Co. 2009). In addition, one court has questioned the practice of Baum attorneys signing
mortgage assignments on behalf ofMERS in cases handled by the Baum Firm. See, e.g., LaSalle
Bank National Association v. Smith, 2010 WL 1007826, *3-5 (N. Y. Sup. Mar. 22, 2010);
Deutsche Bank NA v. Campbell, 2008 WL 5220543 (N. Y Sup. Dec. 16, 2008).
Failure to File Specialized Requests for Judicial Intervention
22. Pursuant to New York court rules, a specialized Request for Judicial Intervention
form ("RJI") must be filed in residential foreclosure actions at the time proof of service of the
summons and complaint is filed with the county clerk. See 22 N.Y.C.R.R. 202.12-a(b). The
Lippman Affirmation, Which requires attorney certification of the accuracy of plaintiffs' filings
in foreclosure proceedings, must be filed simultaneously. 3
23. In the vast majority of cases, the Baum Firm failed to file the RJI and Lippman
Affirmation until many months after proof of service had been filed. Because the filing of the
RJI triggers the scheduling of a mandatory settlement conference and notification of local
housing counselors that the homeowner is at risk of foreclosure, the Baum Firm's untimely filing
of the RJI had the effect of delaying the holding of a formal settlement conference.
J The original Administrative Order 548-10 was later slightly modified in March 2011 by Administrative Order
431-11. However, the timing of the required filing renlained the same.
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24. New York Executive Law 63(12) prohibits persons or business entities from
engaging in repeated fraudulent or illegal acts or otherwise demonstrating persistent fraud or
illegality in the carrying on, conducting or transaction of business.
25. New York GBL 349 prohibits deceptive acts or practices in tIle conduct of any
business, trade or commerce in this State.
26. The OAG has concluded that there is sufficient evidence to support a claim that
the practices described above constitute repeated fraudulent and illegal acts under Executive Law
63(12) and repeated violations ofGBL 349.
IT IS HEREBY AGREED by respondents Steven J. Baum and Brian Kumiega, and
respondents Steven J. Baum P.C., Pillar Processing, LLC, their principals, successors and assigns
and on behalf of their agents, representatives, employees and by any corporation, subsidiary or
division through which it acts or hereafter acts, as follows:
II. PROSPECTIVE RELIEF
WHEREAS, the OAG has been conducting an ongoing investigation, pursuant to
Executive Law 63(12) and GBL 349, of the business practices of respondents related to
respondents' foreclosure-related law practices;
WHEREAS, respondents neither admit nor deny the OAG's Findings (1) - (26) above;
WHEREAS, the GAG is willing to accept the terms ofthe Assurance pursuant to New
York Executive Law 63(15) and to discontinue its Investigation with respect to respondents;
and
WHEREAS, the parties each believe that the obligations imposed by this Assurance are
prudent and appropriate;
IT IS HEREBY UNDERSTOOD AND AGREED, by and between the parties that:
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27. Respondents shall comply fully with General Business Law 349, Executive Law
63 (12) and Uniform Rule 202.12-a(b).
28. Respondents Steven J. Baum and Brian Kumiega shall not represel1t lenders or
servicers in any new residential mortgage foreclosure action, any application in bankruptcy court
to lift the automatic stay for purposes of initiating or continuing a residential mortgage
foreclosure action, or any other action asserting rights or seeking remedies relating to any
residential mortgage ("Foreclosure Proceeding") after the effective date of this Assurance, which
shall be the date the Assurance is executed by the parties ("Effective Date") for a period of two
years from the Effective Date. Nothing in this Assurance shall prohibit Baum or Kumiega from
(i) representing lenders or servicers in Foreclosure Proceedings for which the Baum Firm was
previously retained as legal counsel ("Current Proceedings") until such time as those proceedings
are transferred to another law finn, (ii) appearing or representing lenders or servicers in any
action when required to do so by a court order, administrative rule, or any federal or state law or
regulation, or (iii) otherwise practicing law. Baum and Kumiega shall make their best efforts to
transfer Current Proceedings expeditiously.
II. PAYMENT
29. Respondents shall pay $4,000,000.00 by certified check(s) to the State of New
York Department of Law for penalties, costs, fees and any other lawful purpose, including
funding programs that offer assistance to consumers facing foreclosure or victims of predatory
lending practices, pursuant to the following schedule:
(a) $2,000,000.00 within ten (10) days of the Effective Date;
(b) $1,000,000 on or before May 1, 2012;
(c) $1,000,000 on or before July 1,2012;
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The certified checks shall be delivered to:
New York State Office of the Attorney General
Consumer Frauds & Protection Bureau
120 Broadway, 3rd Floor
New York, New York 10271
ATTN: Laura J. Levine, Assistant Attorney General
30. All payments and all correspondence relating to this Assurance shall reference
Assurance Number 12-002.
v. MISCELLANEOUS
31. This Assurance is entered into pursuant to Executive Law 63(15). As such,
evidence of a violation of the Assurance by respondents shall constitute primajacie proof of a
violation of Executive Law 63(12) and GBL 349 in any civil action or proceeding
subsequently con1menced by the OAG.
32. The OAG has agreed to the tenns of this Assurance based on, among other things,
the representations made to the OAG by respondents and its counsel and the OAG's own factual
investigation as set forth in Findings (1) - (26) abo.ve. To the extent that any material
representations are later found to be inaccurate or misleading, this Assurance is voidable by the
OA(} in its sole discretion.
33. The OAG hereby agrees, pursuant to Executive Law 63(15), to accept this
ASSUlrance in lieu of commencing a civil action or proceeding in connection with the
enforcement of Executive Law 63(12) or GBL 349 for the acts, practices and omissions
described in the Findings. This Assurance will conclude the Investigation and release all claims
by the GAG against respondents for the acts, practices and omissions described in the Findings.
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34. No representation, inducement, promise, understanding, condition, or warranty
not set forth in this Assurance has been made to or relied upon by respondents in agreeing to this
Assurance.
35. Respondents represent and warrant, through the signatures below, that the terms
and conditions of this Assurance are duly approved, and execution of this Assurance is duly
authorized. Respondents shall not take any action expressing the view that this Assurance is
without factual basis. Nothing in this paragraph affects (i) testimonial obligations
or (ii) right to take any legal or factual positions in defense of litigation or other legal
proceedings or governmental investigations to which the OAG is not a party_ This Assurance is
not intended for use by any third party in any litigation or other proceeding and is not.intended,
and should not be construed, as an admission of wrongdoing or liability or the validity of the
Findings by respondents in any such litigation or proceeding.
36. Respondents agree to cooperate fully in any future GAG investigation, and in any
civil or criminal prosecution of other persons or entities that provide foreclosure services in New
York. Such cooperation includes, but is not limited to, providing truthful testimony under oath
before the OAG and any other tribunal or court of law, and providing documentary evidence as
requested by the OAG. Respondents retain the right to assert any applicable privileges,
including the attorney-client privilege. This Assurance does not alter respondents' independent
obligation to provide documents and witnesses pursuant to subpoena.
37_ This Assurance may not be amended except by an instrument in writing signed on
behalf of all the parties to this Assurance.
38. This Assurance shall be binding on and inure to the benefit of the parties to this
Assurance and their respective successors and assigns, provided that no party.. other than the
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OAG, may assign, delegate, or otherwise transfer any of its rights or obligations under this
Assurance without the prior written consent of the OAG, except to a successor-in-interest.
39. In the event that anyone or more of the provisions contained in this Assurance
shall for any reason be held to be invalid, illegal, or unenforceable in any respect, in the sale
discretion of the OAG, such invalidity, illegality, or unenforceability shall not affect any other
provision of this Assurance.
40. . To the extent not already provided under this Assurance, respondents shall, upon
request by the OAG, provide all documentation and information reasonably necessary for the
GAG to verify compliance with this Assurance.
41. Acceptance of this Assurance by the OAG shall not be deemed approval by the
GAG of any of the practices or procedures referenced herein, and respondents shall make no
representation to the contrary.
42. If a court of competent jurisdiction determines that respondents have breached
this Assurance, respondents shall pay to the OAG the reasonable cost, if any, of such
determination and of enforcing this Assurance, including without limitation reasonable legal
fees, expenses, and court costs. Prior to the filing of any action alleging a breach of this
Assurance, the OAG shall provide written notice to respondents of the alleged breach and
provide respondents with a two-week period from receipt of such notice to demonstrate to the
OAG why such an action should not be filed unless the OAG determines such notice is contrary
to the public interest.
43. Nothing contained herein shall b.e construed as to deprive any person of any
private right under the law.
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44. This Assurance constitutes the entire agreement between the GAG and
respondents and supersedes any prior comn1unication, understanding or agreement, whether
written or oral, concerning the subject matter of this Assurance.
45. Any notices, staten1ents or other written documents required by this Assurance
shall be provided by first-class mail and email to the intended recipient at the addresses set forth
below, unless a different address is specified in writing by the party changing such address:
For The People of the State ofNew York:
New York State Office of the Attorney General
Consumer Frauds & Protection Bureau
120 Broadway, 3rd Floor
New York, New York 10271
ATTN: Laura J. Levine, Assistant Attorney General
For respondents:
Elkan Abramowitz, Esq.
Morvillo, Abramowitz, Grand, Jason, Anello & Bohrer, P.C.
565 Fifth Avenue
New York, NY 10017
Such notices; statements and documents shall be deemed to have been given upon mailing.
46. Respondents shall provide written notice to the OAG of any new law-related
employnlent within ten days of such change for a period of five years from the Effective Date.
47. The GAG finds the relief and agreements contained in this Assurance appropriate
and in the public interest. This Assurance shall be governed by the laws of the State ofNew
York without regard to any conflict of laws principles.
48. The Assurance may be executed in one or more counterparts, each of which shall
be deemed an original but all of which together shall constitute one instrument.
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tLIvV

IN WITNESS WHEREOF, this Assurance is executed by the parties hereto on the 1''1\-
day of February, 2012.
Steven J. Baum, P.C.
Pillar Processing, LLC

arne. :So W!(f
Title: ' /1
., - -, t/')
Steven J. Baum
By:
Name:
Brial1 Kumiega
By: -rill-/;

frx;t'
Eric T. Schneiderman
Attorney General of the State of New York

By: c7/rt
Laura J. Levine
Assistant Attorney General
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By: -h:
7lJ
f l ~
a M. Azia '
reau ChIef
Consumer Frauds & Protection