Deception Before Congress
Deception Before Congress
Thank You, New York Times and Adam Liptak
Leo D. Wees of Boise, Idaho was praised by bankruptcy judge, Terry L. Myers. Then judge Myers betrayed Leo by finding him $1,000 for allegedly misleading customers into believing they were receiving legal advice and ordered him not to charge more than $60.00 for filling out routine bankruptcy forms.
The New York Times, in an article written by Adam Liptak, reports that in the last seven years, U.S. Trustees have filed almost 4,000 motions seeking to stop bankruptcy petition preparers or to reduce their fees.
On March 4, 2003, Lawrence Friedman, Director of the Executive Office for U.S. Trustees, stated before Congress that in fiscal year 2002, he "successfully" took action under Section 110 against petition preparers in more than 1,500 cases. There's reason to believe that all 1,500 of those cases resulted in closed businesses.
Leo Wees, like many other court document preparers, charges less than an attorney to prepare documents for those that want to represent themselves in court. Some lawyers charge $1,000 or more for a chapter 7 bankruptcy. Court document preparers charge less. The average cost for a chapter 7 bankruptcy is about $300.
Business 101
U.S. Trustees, nationwide, contend that court document preparers overcharge for "clerical work." In general, U.S. Trustees have concluded that charging a $200 fee implies that legal services are being provided. It is obvious that attorneys of the U.S. Trustee Program either have no education in business, or are intentionally violating anti-trust laws to put court document preparers out of business.
"Clerical work" is a business for some. It's a career for others.
Apparently in the perception of U.S. Trustees, clerical work is an unskilled labor and a threat to lawyers. How many U.S. Trustees that disdain "clerical work" have personal computers that they bought to discover and enjoy the world of the internet and email, and discovered that it takes typing skills to really be able to use and enjoy a computer? How many U.S. Trustees actually know how to replace a print cartridge in a printer, or how to load envelopes in a printer?
What about business overhead? Charge per hour for "clerical work" that does not include the cost of overhead, and you're out of business. Even attorneys know that employee costs, such as health insurance, social security matching, workman's comp insurance, and in some states, unemployment insurance, and bonding, is part of the overhead added into their fees. Many small companies, and the self-employed, find these costs are higher for them than for corporations and law firms.
There is the cost of office supplies. Personnel with the U.S. Trustee Program have the benefit of using supplies that are provided to the federal government by the lowest bidder. If they need paper for their printer, they have boxes of it stored for their taking. Folders, envelopes, print cartridges -- all at bargain prices that U.S. Trustees do not have to be concerned about. The cost doesn't come out of their salary.
Rent, office furniture, telephone, utilities and business licenses, are all overhead expenses. U.S. Trustees convince bankruptcy judges that business owners that prepare bankruptcy petitions can survive on $50.00 or $60.00 per customer for TYPING a petition. They forget the telephone costs, electricity, and supplies involved.
The U.S. Trustees' violations of anti-trust law accomplishes four things. It takes whatever money the businesses do have by fining the companies, in some cases, thousands of dollars based on fraudulent testimony and frivolous claims. It bans them from preparing bankruptcy petitions, which essentially, reduces the services they provide for charge. It eliminates the competition with lawyers that charge three to five times more for the same service. It keeps the public ignorant, since court document preparation businesses provide customers with publications with instructions to assist them in understanding the law and procedures and filing requirements.
In his interview with the New York Times, Jason Searns, General Counsel of We The People, a court document form-preparation company, stated, ''This is a fundamental turf war between bankruptcy lawyers and bankruptcy petition preparers. They're essentially trying to take us out of the business. This smacks of antitrust, monopoly and price-fixing.''
In retaliation, Lawrence Friedman, Director of the Executive Office for U.S. Trustees, is publicly attacking We The People. In the February 1, 2003 issue of the American Bankruptcy Institute, he stated: "There have been a couple of very significant decisions that have come down. For example, in a case out of Idaho called In re Doser involving a franchisee of We the People, the court found that certain acts by the franchisee constituted the unauthorized practice of law and amounted to a deceptive and unfair practice under 11 U.S.C. §110. There are other issues pending against We the People and other petition preparers."
Lawrence Friedman did not, however, speak of the case against We The People that was dismissed in the Northern District of Illinois. Tom Walz, attorney for U.S. Trustee Ira Bodenstein, filed a complaint against a franchise owner of We The People. The lawyers for We The People vigorously defended the preparer. The petition preparer closed business, and left town, but the lawyers for We The People continued to defend him.
Tom Walz failed at getting Judge Manuel Barbosa to find the preparer guilty of practicing law without a license, due to We The People's lawyers advising Judge Barbosa that the state has exclusive jurisdiction over the practice of law.
Tom Walz then changed his attack and asked Judge Barbosa to enjoin the petition preparer from preparing bankruptcy forms. How do you enjoin someone from providing a service when they are no longer in business? Tom Walz argued that there is still the potential for the person to go back into business. His argument says that the U.S. Trustee does not want court document services preparing bankruptcy petitions at anytime -- even in the future, and even when they have not been found guilty of the unlicensed practice of law.
The lawyers for We The People argued with case law to back them up. Judge Barbosa dismissed the case. In retaliation, Tom Walz waited until another We The People franchise owner filed a bankruptcy petition, and not only named the franchise owner as a defendant in his complaint, but also named We The People.
Lawrence Friedman's vindictive attitude toward We The People can be esteemed by those-in-the-know as propaganda, and by court document preparation services as intentionally prejudicing the public. His opinion is not for the consumer but for his colleagues. A search on the web for petition preparers turns up lawyer and legal firm sites warning the public that such services are not qualified and are only out to get money by overcharging.
Some businesses, such as Amicus Curiae Court Document Preparation Services, invest hundreds of dollars into software programs to produce the documents. They invest in forms that their customers fill out. Since they cannot give legal advice, they also invest in instruction packages or books to assist their customers. The preparer then takes the information from the forms filed out by the customer, and enters the data into the software program that generates professional documents to be filed in court.
Judge Manuel Barbosa of the bankruptcy court in Rockford, Illinois entered an order saying that transferring information from a form to the computer can be practicing law. There we have it -- a bankruptcy judge declaring that administrative assistants, secretaries, data entry clerks, and accountants working for attorneys practice law when they take information from one form, and prepare it in typewritten form.
David A. Skeel Jr., a law professor at the University of Pennsylvania and author of a history of bankruptcy law, in reference to the U.S. Trustees' attack against bankruptcy petition preparers, stated' 'It's mostly a concern about competition, not a concern about quality."
In his interview published in the New York Times, Steven Lubet, Northwestern University law professor, stated that ''People need to know that lawyers don't own the law. ''There's lots of room for nonlawyers to talk about the law.''
The fear of competition is the result of the fear of education. Educating the public on what the law says makes one suspect of practicing law. Soon, people will not be able to teach their children how to drive. Relating the rules of the road could be practicing law without a license.
Section 110(f) provides; "a bankruptcy petition preparer shall not use the word "legal" or any similar term in any advertisements, or advertise under any category that includes the word "legal" or any similar term."
In reference to using "no lawyers" in his advertising, a document preparer stated, "It's ridiculous. I can say 'no lawyers' in advertising for preparing documents for uncontested divorce, and uncontested adoptions, but I can't use 'no lawyers' if I advertise for preparing bankruptcy petitions. That means I need two sets of business stationary."
In this particular case, the advertising stated "No Lawyers. Save Money." Judge Manuel Barbosa's decision is not just weird -- it goes beyond that. In his decision, he wrote:
"While it is true, as the defendant argues, that the bold statement "no lawyers" makes it clear that "if you are looking for a lawyer, you should not be coming to us," when placed in the context of the advertised services, the terms "no lawyers" and "save money" can imply that the savings is the result of getting something that would ordinarily require a lawyer."
As one can see from Judge Barbosa's decision, using the term "lawyer" -- a similar term to "legal" in advertising was not the problem. Advertising to "SAVE MONEY" was the problem. Judge Barbosa used the same twist in the Amicus Curiae Paralegal Services case. Casual observers in the bankruptcy court in Rockford stated that Tom Walz's intent was obvious. The U.S. Trustee sees a service charging $250.00 as a threat, and anyone having knowledge of law and procedures without working directly for a lawyer is a threat. Judge Barbosa's order in the case barred the owner of the business, Tauhidah El-Amin, from charging more than $150.00. Tom Walz appealed the decision, and lost.
El-Amin also appealed, but against Judge Barbosa's order finding that the name of her business was "deceptive advertising," concluding that using the term "amicus curiae" was violating Section 110 that disallows the use of the word "legal or similar term" in advertising by petition preparers. Federal district Judge Reinhard dismissed El-Amin's appeal because she didn't cite case law to support her position. Is there case law addressing what the public knows or believes about the term "amicus curiae"?
Tom Walz, attorney for U.S. Trustee Ira Bodenstein, requested in his complaint, "Finding that Ms. El-Amin is a bankruptcy petition preparer and has violated Section 110 of the Bankruptcy Code by using the word "Paralegal" in her advertising."
Judge Barbosa gave Tom Walz relief that he didn't ask for. El-Amin eliminated "paralegal" from her advertising. Although Tom Walz did not ask for the court to decide on the use of the term "amicus curiae" in his complaint, upon finding that El-Amin eliminated "paralegal" from her advertising, he deceptively changed his argument in a memorandum. Without amending his complaint, Tom Walz argued that "People naturally associate the term "amicus curiae" with courts and legal proceedings" …
Judge Barbosa should have easily detected that Tom Walz was arguing something that he had not alleged in his complaint. However, without digging up another argument, Judge Barbosa could not find El-Amin guilty of deceptive advertising. Therefore, the phrase "amicus curiae" came under attack of deceiving the public to believe they were receiving legal services.
Ninety-five out of one hundred people polled in public forums did not know what the term means. As El-Amin has stated, "People think it's my name. They call and ask to speak to Ms. Curiae." She has entertained having her name legally changed to "Amicus Curiae."
Maybe court document preparers should change their first, middle, or last name to "Esquire" or "Court." It will drive the U.S. Trustees crazy.
Can petition preparers publish that they are not lawyers, and not be charged with violating Section 110? As old sayings and religious teachings go, a tree is known by its fruit. Everything produces according to its own kind. The seed of deception reproduces deception. On March 4, 2003, Lawrence Friedman gave a statement before the United States House of Representatives, Subcommittee on Commercial and Administrative Law, Committee on the Judiciary. In regard to enforcement efforts being aided by H.R. 975, currently under legislation, he stated;
"Under Section 221, bankruptcy petition preparers will be required to give their customers a prescribed notice that they are not attorneys and cannot give legal advice."
How deceptive. One Section will require bankruptcy petition preparers to give customers a prescribed notice saying "I am not an attorney," while they will be found in violation of Section 110 that bans the use of the term "legal or similar term" in advertising.
Don't be misdirected by the naïve that do not understand the twisting and half-truths used by trustees and judges in bankruptcy courts. A prescribed notice will be interpreted as advertising so that petition preparers notifying customers that they are not lawyers will be in violation of Section 110. See if you can hear the trial now ….
Attorney for U.S. Trustee: "This that I'm holding is a document that you provide to those coming to your place of business inquiring of your services, is that correct?"
Petition Preparer: "That's correct."
Attorney for U.S. Trustee: "Do you make this available before the public fills out any contract for services with your company."
Petition Preparer: "Yes."
Attorney for U.S. Trustee: "Your honor, information that would inform the public of services or provide descriptions, such as "I am not an attorney and cannot give legal advice" before the customer agrees to the service is advertising. Section 110 forbids the use of the word legal or similar term in advertising."
As with other deceptive, trap bankruptcy law, see if you can see how this can be used to the U.S. Trustees' benefit …
Attorney for U.S. Trustee: "This that I'm holding is a document that you provide to those coming to your place of business inquiring of your services, is that correct?"
Petition Preparer: "That's correct."
Attorney for U.S. Trustee: "Do you provide this to your customers before you agree to provide them with service, or afterwards."
Petition Preparer: "I provide it at the same time that I provide the contract."
Attorney for U.S. Trustee: "Your honor, this is evidence of deceptive practice. The customers come in, discuss having a bankruptcy petition prepared, and don't know that the preparer is not an attorney, and cannot give legal advice, until after they have chosen to use the service."
There will be no way for petition preparers to survive the charges of violating Section 110, and if passed, Section 221. These sections are not for the benefit of protecting the public, but for the benefit of the U.S. Trustee Program to run every honest, hard-working, public service oriented court document preparation service out of business.