Washington State

Office of the Attorney General

Attorney General

Bob Ferguson

Consumer Protection Division Chief Doug Walsh submitted the following letter to the editor of The Seattle Times in reaction to a Nov. 15 article about a hard money lender:


From Doug Walsh
Consumer Protection Division Chief
Washington State Attorney General’s Office

Nov. 22, 2010

I’m greatly troubled by the way the Attorney General’s Office and Assistant Attorney General David Huey are portrayed in Christine Willmsen’s Nov. 15 story about Emiel Kandi, “Lender seizes desperate borrowers’ homes.”

There’s no doubt that Mr. Kandi is a despicable person who preys on the desperation of struggling homeowners. Everyone at the AGO feels enormous sympathy for Christine Provost and his other victims.

But your story fails to adequately portray the role of our office, the limitations of civil enforcement action and the incredible work that our office and Assistant Attorney General David Huey, in particular, have accomplished to protect consumers from unfair lending practices.  

1) First, you and your readers should know that David Huey has been nationally recognized for his leadership and commitment to protecting consumers and promoting ethical business practices. David played a leading role in negotiating four significant nationwide settlements with lenders concerning allegations of mortgage fraud: Ameriquest, Household International, Countrywide/Bank of America and Wells Fargo/Wachovia.

David and Assistant Attorney General Jim Sugarman have successfully brought civil lawsuits against several businesses and individuals that promised to save homes from foreclosure but failed to do so. They drafted several laws to reduce foreclosure rescue schemes and protect families who lost homes to tax foreclosure.

David serves on the executive committee of the 50-state multistate task force investigating the mortgage servicing industry and allegations of abuses such as robo-signing.  He also spearheads Washington’s investigation into reports of lenders and trustee services not properly reviewing foreclosure documents or following other legal procedures.

Our office allocated $320,000 to the state bar to establish free legal services to homeowners facing foreclosure, $5,000 to train private lawyers how to assist these clients and $600,000 to fund counseling for homeowners. David made that happen.

I have no doubt that if you spoke to attorneys David Leen or Martin Burns, they would agree that David has a sterling reputation for helping Washington consumers.

2) Second, you need to understand how our office selects cases. As you know, Mr. Leen sent David Huey a letter in July 2009 about Mr. Kandi and alleged criminal violations. Ms. Provost already won her case by then – and that’s the first we were notified of Kandi’s actions. The letter was intended to notify us of another case being filed in Pierce County by Mr. Burns – a case with criminal allegations in which the victim already was represented by an excellent private attorney.

David tells me that he wishes he could have more adequately explained the role of our office when you asked him about the letter and why we didn’t take enforcement action.

a) Our office doesn’t represent individuals in legal matters. The Consumer Protection Division brings cases to vindicate the public’s interest in a fair and non-deceptive marketplace. Our role is to affect general deterrence in partnership with other regulatory and law enforcement agencies.
b) Unfortunately, the Consumer Protection Division can’t investigate every complaint or pursue every individual or business suspected of violating our laws. So we have to be selective. We consider many options when deciding which cases to investigate and litigate, including the number of people affected, the nature of the allegations, available resources, whether the case fits with priorities identified in our work plan, and whether another agency or law enforcement would be in a better position to respond. Additionally, the office would consider the fact that the victims we were notified about via Mr. Leen’s letter already had counsel and there were allegations of criminal conduct.
c) The Attorney General’s Office doesn’t have direct criminal jurisdiction. That means we can’t file criminal charges unless we’ve received a referral from a county prosecutor.

3) Third, if our office were to bring a consumer protection action against Kandi, the remedies available to us are the same as those consumers can obtain through private attorneys. Private counsel actually can have some advantages – in that individuals can obtain a resolution more quickly and their attorneys can specifically request restitution.

But let’s face it: Mr. Kandi doesn’t pay his judgments. Some people aren’t deterred by civil enforcement actions – even those brought by a state agency. The criminal arena may be their best deterrent.

4) Finally, I don’t want Mr. Kandi or types like him to gain the impression that they can get away with these schemes. Just because state agencies haven’t taken action doesn’t mean his predatory actions will go unpunished. It doesn’t mean state agencies won’t take action. And it certainly doesn’t mean that officials don’t care. We do.


Doug Walsh


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