Originally published in Mass Lawyers Weekly, written by Brandon Gee
June 12, 2014
Tables Are Turned for Foreclosure Law Firm Connolly, Geaney, Ablitt & Willard
Woburn-based Connolly, Geaney, Ablitt & Willard employed approximately 150 people earlier this year and, at one point, billed up to $100,000 a day, according to internal documents and emails obtained by Lawyers Weekly.
Now the well-known foreclosure firm is facing eviction following several tumultuous months that saw forensic accountants investigating its books and the firm bouncing checks, failing to pay employee insurance premiums, and laying off the majority of its lawyers, paralegals and other staff en masse. Meanwhile, a Florida whistleblower lawsuit against the firm is scheduled to go to trial later this year.
Many of the problems surfaced with the departure of the firm’s chief financial officer, Robert F. Feige, in February. Feige’s checkered past includes numerous allegations and findings of financial misdeeds. For example, a federal consent judgment in 2009 required him to restore more than $25,000 to Michael Benes Communications’ 401(k) plan and barred him from overseeing retirement plans in the future. The U.S. Department of Labor had accused Feige of failing “to forward employee salary deferrals to the plan and to take prudent steps to collect contributions owed to the plan,” according to a DOL summary of the case.
While partner Kevin P. Geaney steadfastly insists that Connolly, Geaney, Ablitt & Willard “is presently growing and is clearly moving in a positive direction for the future,” former employees, public records and other documents tell a different story.
‘People were crying’
The mood at The Country Club Professional Building in Woburn was anything but holiday-like on May 23, the Friday before Memorial Day.
Connolly Geaney had just carried out its third round of layoffs in four months, and, according to ex-employees and other building occupants, many of the newly unemployed — which sources said numbered up to 40 between the Woburn, West Palm Beach, Florida, and Puerto Rico offices — wept outside the Cambridge Road building.
“Every day it was the same. We had no idea what direction the firm was going,” said Mark S. Barbuto, a paralegal who worked at the firm from November 2013 until he was laid off on May 23. “There were people crying. There were people who had health issues who weren’t going to have health insurance anymore. I’ve never seen anything like it.”
Lawyers Weekly tracked down a number of attorneys laid off by Connolly Geaney in recent months. Most did not return calls. Others who did confirmed other employees’ versions of events but declined to comment for this story, fearing professional repercussions.
According to internal law firm emails, Connolly Geaney’s day-to-day operations were being funded by Durham Commercial Capital, a “factoring firm.” A factor helps a company meet its immediate cash needs by purchasing the company’s accounts receivable at a discount. In February, however, Durham cut the firm off and began auditing its files, processes and procedures. For many employees, the first sign of trouble came on Friday, Feb. 28, when they failed to receive their paychecks as expected.
“I find it hard to believe that we still have not received any official notification or explanation from the management team in our MA office regarding this most serious situation,” Dennis Green, a litigation paralegal in the firm’s Florida office, wrote in an email that morning to co-workers, including Feige and managing partner Rachelle D. Willard.
Later that day, Steven A. Ablitt sent a firm-wide email informing employees that Feige was “no longer with the firm and that there are forensic accountants in the office.”
Barbuto, who claimed the firm still owes him for about 60 hours of vacation time, said that from Feb. 28 forward, employees stopped getting checks from payroll service ADP, and instead began receiving handwritten checks generated by the firm.
‘We, of course, are evicting them’
The foreclosure firm saw its office building, owned by an affiliated entity, foreclosed on and sold at auction in March. The building was purchased for $4 million by brothers Joseph A. and Ronald A. Martignetti, who are lawyers but primarily focus on real estate investments.
“They have not paid any rent, and we, of course, are evicting them,” Ronald Martignetti said. “We have eviction proceedings going on right now in Woburn District Court to remove them from that building.”
In an email responding to questions from Lawyers Weekly, Geaney said the new owners informed the firm that the lease was void and, after several weeks, “proposed a rent that we believe is far too high.”
According to the District Court case file, however, Connolly Geaney has failed to pay for its use and occupancy even under the terms of the pre-existing lease, which the Martignettis asked the firm to do until it vacated the premises. As of May 27, the firm owed more than $88,000, according to the case file.
“They were stiffing everybody in sight,” Peabody lawyer John J. Regan said of the law firm.
Regan won a $9,000 default judgment in Salem District Court last year on behalf of Richard’s Cleaning for unpaid bills against SAA Group, the affiliated entity run by Ablitt that owned the Cambridge Road office building before foreclosure. (Since-retired partner Lawrence F. Scofield Jr. is SAA Group’s registered agent. Its investors, other than Ablitt, are unknown.)
In February, Amanda L. Lundergan, a Florida lawyer, sent an email to Connolly Geaney claiming her accounting department had reached out four times about a bounced check but never received a response. And on March 6, Brian A. Leung, who practices in Tampa, notified the firm that a $750 check it sent him had been dishonored.
When asked about the problematic checks, Geaney said his firm changed banks earlier in the year and that, “during the cross-over, there were some overlooked checks that were returned. When the firm learned of this, it began re-issuing the checks from the new account.”
Unpaid insurance premiums
Perhaps the most disconcerting moment for Connolly Geaney employees came when they were notified in a May 8 letter from Blue Cross Blue Shield of Massachusetts that their health insurance had been canceled as of March 12 “because your employer has not paid the premiums for the coverage.”
March 12 was the same day Ablitt had sent an email to employees assuring them that “reimbursements/benefits will be paid in full in the coming days and will be done without interruption.”
Alan Levine, a former paralegal in the Florida office, provided Lawyers Weekly with a pay stub from April showing that the firm continued to deduct money from his paycheck for health insurance despite the fact that it was not paying his premiums. That did not happen to all employees, as the firm paid 100 percent of the premiums for those who opted for single coverage. Employees like Levine who elected family coverage paid a portion of their premiums.
Levine said he incurred $6,000 in medical expenses during the period he thought he was insured but actually was not.
Then, in a May 13 email, Ablitt instructed employees who wanted to avail themselves of temporary continuation of coverage for those two months to pay for it themselves — in Levine’s case, at a cost of $1,253.16 — and that the firm would reimburse them.
“He wants us to pay after money has already been taken out of people’s checks,” Barbuto wrote in a May 20 letter to Middlesex County District Attorney Marian T. Ryan, a copy of which was provided to Lawyers Weekly. “I don’t think so.”
A spokeswoman for the DA’s Office, MaryBeth Long, said Barbuto’s letter, which contained numerous allegations of financial misdeeds, is being reviewed.
Geaney blamed the failure to pay insurance premiums on Feige, the former CFO. “Employees who submit for reimbursement will be reimbursed by the firm,” Geaney said. “The firm is in the midst of reconciling all accounts, and any withheld funds will be reimbursed to those individuals where the firm withheld funds.”
There are also issues with the firm’s income tax withholding, according to Department of Revenue spokeswoman Maryann Merigan, who said the firm failed to submit a return, due in April, detailing the income tax withheld from employees.
And Connolly Geaney is facing the Florida whistleblower suit. The case is being brought by Lorelai Fiala, the managing attorney of the Florida office from August 2010 to October 2011, when the firm was known as Ablitt Scofield.
According to the complaint, Fiala accuses Ablitt and Feige of pressuring her to generate fees faster by engaging in a document fraud scheme whereby the Florida lawyers would attach verification pages previously signed by clients to lawsuits that had undergone edits in the Florida office without clients’ knowledge before filing.
Fiala claims the firm also failed to give her contractually required bonus payments and alleges that her firing “was in retaliation for her complaints” about the unpaid bonuses “and/or for her refusal to change documents that were previously sworn,” the complaint states.
In its pleadings, Connolly Geaney contends Fiala was not entitled to any bonus and argues that her whistleblower claims are without merit.
In August, a Florida Circuit Court judge denied the firm’s motion to dismiss, and in May the judge also denied the firm’s motion for partial summary judgment on the whistleblower counts. The trial is scheduled to begin Sept. 5.
Ablitt initially responded to interview requests with an email denying rumors that Connolly Geaney is closing.
“To allow for growth and expansion, we are reorganizing the firm to accommodate new partners and new opportunities for the firm,” his email stated. “We are in the process of upgrading our office facilities, and we are in fact hiring additional staff to handle the workload. The firm is in an acquisition phase, and as such, changes were needed to accommodate the expansion. … Certain employees were deemed not to be a good fit with the firm going forward.”
In subsequent phone and in-person interviews, however, Ablitt distanced himself from the firm that bears his name when he was questioned about the mass layoffs, the bad checks, the unpaid insurance premiums and other issues.
He said he was only a consultant to Connolly Geaney whose primary responsibility was setting up the firm’s Puerto Rico office, where he claimed to spend most of his time.
Ablitt said he ceased to be an officer or shareholder when his former firm, Ablitt Scofield, merged with Connolly & Geaney “about a year and a half ago.” But his emails show he was intimately involved in fiscal matters, and asked firm employees to contact him directly with any questions about the various financial issues. An employee list provided to Lawyers Weekly by Barbuto, who did not join the firm until last November, lists Ablitt as “owner” located in the Massachusetts office.
And, according to Barbuto, after CFO Feige “disappeared,” Ablitt was in the Woburn office more or less on a daily basis.
Ablitt is also listed as the firm’s registered agent in the secretary of state’s corporations database. Records there show that the firm’s name did not officially change from Ablitt Scofield to Connolly, Geaney, Ablitt & Willard until March 14 of this year, the same day the office building was sold in a foreclosure auction. Connolly & Geaney was dissolved in June 2013, according to the database.
Ablitt said the other name partners could best respond to Lawyers Weekly’s questions, but when a reporter visited Connolly Geaney’s offices — still labeled Ablitt Scofield on the door and in the reception area — the morning of June 9, it was Ablitt who eventually emerged to answer questions. According to the receptionist, at least Willard, the managing partner, was also present.
Geaney emailed a response to questions later that day, but has not responded to subsequent interview requests and emailed questions. He also did not accept a reporter’s offer to go through this story point-by-point.
Many of the answers Ablitt provided in interviews directly contradicted emails obtained by Lawyers Weekly. For example, Ablitt said he knew nothing about the firm writing bad checks. But in a March 12 email to employees, he directly referenced them: “There were a rash of bounced checks that occurred due to Durham’s temporary shutdown of funding and to an unapproved business practice implemented by the former CFO.”
Similarly, despite claiming in an interview not to know anything about insurance premiums not being paid, Ablitt sent an email to employees on May 13 updating them on that precise situation.
And while he and Geaney claimed that the foreclosure had nothing to do with the law firm, Ablitt told employees on March 12 that the foreclosure was “the result of [Feige’s] decision not to pay the rent/mortgage.”
In the same email, Ablitt instructed employees not to worry about the foreclosure displacing the firm, erroneously claiming that “the firm has a lease that the new owner of the building is bound by its terms” (sic). Ablitt did not disclose in the email that he is a member of the LLC that owned the building.
Meanwhile, on June 5, four of the firm’s lawyers — Geaney, Willard, John Connolly Jr. and Paul D. Lambert — filed paperwork to form a new company, C-G Law Group, which lists a new address in Andover as its location.
Craig McGrain — president of Durham Commercial Capital, the factor that was funding Connolly Geaney’s operations — is listed as the new law firm’s manager. McGrain did not return a phone call seeking comment.
Debra A. Squires-Lee of Boston’s Sherin & Lodgen said the turn of events for Connolly Geaney serves as a cautionary tale for others in the legal profession.
“It is a very sad and distressing story, and I have a great deal of sympathy for those employees,” said Squires-Lee, a legal-malpractice defense litigator. “If the allegations are true, the conduct certainly reflects very badly on the legal profession as a whole and, again, if true, arguably violates the ethical rules. The lesson for lawyers is that you can never abdicate ultimate responsibility for law-firm management to non-lawyers.” -MLW
Firm’s CFO had checkered past
Robert F. Feige was chief financial officer at Connolly, Geaney, Ablitt & Willard despite voluminous amounts of public information going back decades that, if seen, might have raised red flags.
In 1993, Feige and his business partner, Steven Sechrest, were sued by Corporate Life Insurance Co. after the two purchased the company and allegedly converted $11 million of its mortgage loan portfolio.
Sechrest settled and was released from liability, which led to Feige and Sechrest suing each other. In a 1996 opinion in the case between Feige and Sechrest, the 3rd U.S. Circuit Court of Appeals said that “allegations of this case form a tangled web of intrigue, fraud and self-dealing,” but ultimately upheld a District Court judge’s decision to stay the case at the request of the statutory liquidator for Corporate Life. No further action was taken in the case.
In 1996, Feige’s company Marketechs declared bankruptcy. In adversary proceedings, the bankruptcy trustee accused Feige of breach of fiduciary duty, of giving a “sham” promissory note to the company, and of making $100,000 in fraudulent transfers from the company to himself. A Bankruptcy Court judge agreed with the trustee that the promissory note was a “sham,” but that finding was reversed by the Bankruptcy Appellate Panel. The company was forced to liquidate.
In 1997, Feige, his wife, Sechrest and others were indicted by federal authorities in Oklahoma and accused again of taking over an insolvent insurance company via fraud and plundering its remaining assets. The charges eventually were dropped; online federal court records do not indicate why.
In 2009, the U.S. Department of Labor obtained a consent judgment requiring Feige to restore more than $25,000 to Michael Benes Communications’ 401(k) plan and permanently barred him from serving in a fiduciary capacity to any ERISA-covered plan in the future. According to the DOL summary of the case, Feige was alleged to have failed “to forward employee salary deferrals to the plan and to take prudent steps to collect contributions owed to the plan.”
The list goes on. Feige has been involved in numerous other state and federal lawsuits, and his property has been encumbered by a $140,000 federal tax lien, a municipal tax lien and attachments ranging from $18,000 to $1.4 million, according to the Norfolk County Registry of Deeds.
Connolly, Geaney, Ablitt & Willard leaders would not answer questions about Feige or his involvement, if any, with the firm’s retirement plan. Feige, who resides in Wellesley, did not return a message left on his home phone. According to his LinkedIn profile, he now is the principal of a company called CEO 1st Focus, which, he states, provides “management and leadership development, problem resolution [and] profit enhancement.”
Background: Mortgagee filed summary process action seeking to evict mortgagor following foreclosure sale of mortgaged property. The Housing Court Department, Worcester County Division, Timothy F. Sullivan, J., entered judgment in favor of mortgagee, and mortgagor appealed.
Holding: After transferring the case on its own initiative from the Appeals Court, the Supreme Judicial Court, Spina, J., held that mortgagee’s conduct, providing mortgagor with deficient notice of 90-day right to cure default, did not affect validity of fore-closure sale.
Recent judicial and legislative rulings have had a great impact upon our understanding of the foreclosure process. The rulings on the Ibanez and Eaton cases means that lenders wanting to foreclose on mortgages will need to comply with some new guidelines.
Hi There! This content is for registered M.I.T.E.A. members only. If you are a Title Examiner in Massachusetts, please consider joining us to have access to this page. Thanks!