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Monday, July 26, 2010

South Florida foreclosure lawyer David J. Stern and DJSP enterprises sued over steep drop in stock price, did Stern disclose that 1/3 owner Kerry S. Propper was the Subject of Department of Justice Investigation and SBA Law Suit.



Broward County attorney David J. Stern, whose law firm handles 20 percent of all foreclosure cases against Florida homeowners, is being sued himself.  In a complaint filed this week in federal court in Fort Lauderdale, two Ohio residents allege that Stern and DJSP Enterprises, a public company that gets most of its business from Stern's firm, "materially misled'' them and other investors about the company's revenue prospects.

Specifically, the suit states, Stern and DJSP were slow to disclose a "substantial decrease'' in foreclosure cases referred to Stern's firm by one of its bank clients in April and May.  That drop, along with a slowdown in foreclosures because of government loan modification programs, led to lower-than-expected earnings forecast for DJSP and a nearly 29 percent plunge in its stock price in a single day, the suit states.

The company is registered in the British Virgin Islands but is based in Plantation and gets more than 90 percent of its business from Stern's law firm. Stern is DJSP's chairman and CEO as well as a major shareholder (1/3 of all common stock).


The lawsuit was filed by Stan Cooper and Neeraj Methi on behalf of all investors who bought DJSP stock between March 16 and May 28, when the stock dropped from $8.98 per share to $6.33. It closed Friday at $4.98.
As the St. Petersburg Times recently reported, Stern's high-volume practice has made him a controversial figure. In March, a Pasco County judge dismissed a foreclosure case after ruling Stern's firm had submitted a clearly fraudulent document.


In 2000, Stern paid $2.1 million to settle a class action suit alleging his firm had overcharged homeowners for title searches and other expenses. And in 2002, the Florida Bar publicly reprimanded him for misleading and overcharging some of his own bank clients.
In an amended registration statement filed with the Securities and Exchange Commission in June, DJSP Enterprises touts Stern's years of legal experience. But the statement does not mention the reprimand, even though the company's business could be affected by state laws and Florida Bar rules.


St. Petersburg attorney Jack Kiefner, an expert in securities law, noted that public companies are supposed to disclose "material'' facts that could affect an investor's decision to buy the company's stock.

"The test is, is it something that a reasonable investor or prospective investor would want to know?'' Kiefner said. "My opinion is that if the chief cook and bottle washer has a practice-of-law disciplinary history I would think that would be material.''  St Pete Times articel by Susan Taylor Martin who can be reached at susan@sptimes.com .

Chardan 2008 China Acquisition Enters Into Business Combination With DAL Group, David J. Stern Law office, DJSP Enterprises, Inc - Gone public on the NASDAQ.  Foreclosure Mill in Plantation Fl run by David J. Stern Law office (DJSP Enterprises, Inc)., went Public on the NASDAQ, David J. Stern has 1/3 ownership of the common stock with Kerry S. Propper 1/3 and “Royale Holdings" 1/3.  Unless otherwise indicated, the business address of each of the individuals is 900 South Pine Island Road , Suite 400, Plantation, Florida 33324.

Kerry S. Propper.....Chardan 2008 China Acquisition was run by Kerry S. Propper, he has had some problems with the SBA and the Department of Justice as did his father Dr. Richard D. Propper.
Kerry S. Propper, Richard D. Propper and Royale Holdings own 1,151,128 shares of Chardan 2008 China Acquisition, they are the majority share holders of the company now directly linked to David J. Stern which is  DJSP Enterprises, Inc.

1). Kerry S. Propper was the subject of 2003 Federal law suit filed in Conn. by the Small Business Administration one of his co-defendants was Acorn Ct Investments LP, they all ended up paying the SBA $1,764,333 in total see link http://www.paed.uscourts.gov/documents/opinions/04D0487P.pdf  

2). Kerry S. Propper was/is under Dept of Justice investigation with his father Richard Propper. One of their partners was convicted of defrauding the SBA and sent to Federal prison for 70 months. SBA seeks to recover $96 million from Richard Propper and the rest of the crew in yet another SBA lawsuit, see info below……
DEPARTMENT OF JUSTICE;
FRIDAY, DECEMBER 29, 2006, U.S. Files Suit Against John Torkelsen, Richard Propper, Daniel Beharry, & Sovereign Bank Alleging Fraud of $32 Million Against the Small Business Administration

WASHINGTON - The Justice Department announced today that it has filed a lawsuit accusing John Torkelsen, Richard Propper, Daniel Beharry, and Sovereign Bank of defrauding the Small Business Administration’s Small Business Investment Company (SBIC) program of $32 million. The suit was filed in the Eastern District of Pennsylvania under the False Claims Act, which allows the United States to recover up to three times the amount of its losses plus civil penalties.

The government’s complaint alleges that Torkelsen, Propper and Beharry violated the conflict of interest and management fee rules of the SBIC program by engaging in multiple secret transactions that funneled government money into companies controlled by Propper and Beharry or Torkelsen and his family. The SBIC program has rules designed to prevent the unauthorized investment of government funds in companies controlled by those who act as managers of the SBICs. The alleged fraud is believed to be the largest perpetrated upon the program to date.

The SBIC program, administered by the U.S. Small Business Administration, was created in 1958 to fill the gap between the availability of venture capital and the needs of small businesses in start-up and growth situations. The government, itself, does not make direct investments or target specific industries. Rather, the SBIC program is a “fund of funds” – meaning that portfolio management and investment decisions are left to qualified private fund managers. Small businesses which qualify for assistance from the program are able to receive equity capital, long-term loans and expert management assistance.

The investigation of the fraud allegations against the defendants was conducted by the U.S. Attorney's office in Philadelphia, Pa.; the U.S. Small Business Administration’s Office of Inspector General and Office of General Counsel; the Federal Bureau of Investigation; and the Justice Department's Civil Division. The United States has settled with, or reached settlement in principle with, a number of other individuals or entities involved in the alleged fraud.

Published January 12, 2007 Kerry S. Propper is an executive at both SPACs.

Richard Propper, father, a physician and venture capitalist who had started an array of businesses, including Medibuy.com, a Website for marketing medical supplies. Propper subsequently launched two more bulletin-board-traded SPACs — Chardan North China Acquisition (CNCA) and Chardan South China Acquisition (CSCA). He serves as chairman of the former and chief financial officer of the latter.
Richard Propper is head of Chardan Capital, a San Diego-based venture capital firm. His son Kerry S. Propper, who is an executive at both SPACs, heads the similarly named Chardan Capital Markets, a New York-based broker-dealer and investment bank.

The elder Propper has an eventful investment history. In the early '90s, he resigned as the managing general partner at Montgomery Medical Ventures, a venture-capital firm controlled by Montgomery Securities, amid reports that he inadvertently disclosed to a family member inside information about a Montgomery-related transaction (SEC investigation). He now says only that the incident "had nothing to do with anything."

In 1996, meanwhile, he settled with the Securities and Exchange Commission over allegations that, as a general partner of two Montgomery funds, he failed to disclose holdings and transactions in several public companies. He says it was simply a matter of bookkeeping issues.

If this history has cast a shadow over Origin's shares, an early recovery is hardly likely in view of new litigation. On Dec. 29, the Justice Department filed a civil suit in federal court for the Eastern District of Pennsylvania against Propper, his partner Daniel Beharry, their former partner John Torkelsen and Sovereign Bancorp, alleging they'd defrauded the Small Business Administration of $32 million.

That suit is running parallel to a civil action filed by the SBA in early 2005. In that action, the government alleges the same plaintiffs (Kerry S. Propper) funneled SBA money through Acorn Technology Fund, a small-business investment company, to their own companies. Among other things, it contends that Propper loaned money to Acorn to finance Medibuy, that Acorn repaid him with SBA money, and that Propper-related partnerships received more than $800,000 from Acorn. In June, Torkelsen began serving a 70-month Federal prison sentence after pleading guilty to making false statements to the SBA.

A Justice Department spokesman says the government aims to recover up to $96 million from the defendants in its suit. In interviews last week, Propper and Beharry called the allegations in the suits "baseless." Sovereign says none of its current employees are involved.

Propper puts the whole blame on Torkelsen: "It was his doing completely. He's in jail. The SBA didn't oversee him as well as they could have, and they're just angry at the fact that money was lost." Torkelsen's attorney didn't return calls for comment.

As for Origin, Propper still does shareholder-relations work for the company. In an answer to e-mailed questions from Barron's, Origin's chief financial officer, Jeff Wang, declined to comment on the stock-price decline or the litigation, other than to state that Origin isn't named.

Wang noted that Origin's revenues in the six months ended June 30 were $65 million and net income was $13 million, sharply higher than five years earlier, and that proprietary products now account for 10% and a growing portion of sales. And, he says, Origin remains focused on acquisitions. Read more: Blind-Pool Danger at SmartMoney.com http://www.smartmoney.com/investing/economy/blind-pool-danger-20640/#ixzz0jfavgysX  

By its Order of January 17, 2003, this (Federal) court placed Acorn Technology Fund, L.P. (“ATF”) in Receivership and appointed the United States Small Business Administration (“SBA”) as Receiver. http://www.paed.uscourts.gov/documents/opinions/04D0487P.pdf  

Pursuant to powers granted under the Receivership Order, the SBA undertook the task of marshaling the assets of ATF and conducting all business affairs of ATF. This included making written demand upon certain limited partners of ATF for arrearages on investor agreements.

On October 29, 2003, after the Defendants (Kerry S. Propper et al) failed to meet their contractual obligations, the SBA, in its capacity as Receiver for ATF, brought separate actions against eight individual defendants and one corporate entity alleging breach of contract. The court consolidated all the cases on January 27, 2004. In response to the SBA’s demands, all defendants filed answers, affirmative defenses and counterclaims against both ATF and the SBA.

The Defendants allege claims for fraud in the inducement against ATF and negligence against the SBA. After being courted as potential investors by John Torkelsen, president and manager of Acorn Technology Partners, L.L.C. (“ATP”), the general partner of ATF, the Defendants entered into investment agreements (“Subscription Agreements”) for a partnership interest in ATF. In the Subscription Agreement, each defendant contracted to purchase a limited partnership interest in ATF and to make certain capital contributions to the partnership

For the foregoing reasons, the SBA’s Motions to Dismiss Defendants’ Counterclaims are Granted and the Defendants are ordered to pay the SBA as listed below; ATF is a New Jersey limited partnership pursuant to the Certificate of Limited Partnership filed with the Secretary of State of New Jersey on September 29, 1997.

The total amount demanded by the SBA from Defendants is $1,764,333. The following are the individual arrearage amounts per defendant(s):
• Acorn Connecticut Investments, L.P. and Daniel Beharry: $670,000
• Kenneth Borow: $25,000
• MichAel Chermak: $100,000
• Timothy Garton: $26,000
• William Lerach: $750,000
• Kerry Propper: $25,000
• Richard Propper: $128,333
• Charles Smith: $40,000


DJSP Enterprises, Inc Ownership, Number of Ordinary Shares, Percentage of Ownership
Kumar Gursahaney -0- -0- -0- -0-
Juan V. Ruiz -0- -0- -0- -0-
Matthew S. Kayton -0- -0- -0- -0-
Mark P. Harmon -0- -0- -0- -0-
Nicholas H. Adler -0- -0- -0- -0-
Jerry Hutter -0- -0- -0- -0-
All Directors and Officers as a Group -0- -0- -0- -0-

US Small Business Admin v. Propper, et al
Plaintiff: US Small Business Admin
Defendants: Richard D. Propper (father), Acorn Ct Investments LP, Kerry S. Propper (son), P. Timothy Garton, Michael D. Chermak, Charles R. Smith and Kenneth M. Borow.
Case Number: 3:2009mc00204
Filed: June 22, 2009
Court: Connecticut District Court
Office: New Haven Office [ Court Info ]
County: Hartford
Presiding Judge: Judge Robert N. Chatigny
Nature of Suit: Other - None
Cause: Registration of Foreign Judgment
Jurisdiction: Federal Question
Jury Demanded By: None
Access additional case information on PACER

Bill Warner Private Investigator, SEX, CRIME, CHEATERS & TERRORISM.