Tables turn on foreclosure law firm

A Massachusetts law firm that profited for years by helping banks foreclose on homeowners is learning what it feels like to be on the receiving end of the boot.

Woburn-based Connolly, Geaney, Ablitt & Willard employed about 150 people earlier this year and, at one point, billed up to $100,000 a day, according to internal documents and emails.

Now the foreclosure firm is facing eviction after 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. A Florida whistleblower lawsuit against the firm is scheduled to go to trial 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 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. 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 summary of the case.

While partner Kevin P. Geaney 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.

‘There were people 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, Fla., 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 until he was laid off May 23. “There were people crying. There were people who had health issues who weren’t going to have health insurance anymore.”

Massachusetts 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. 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 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 firmwide 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.

‘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 an email, 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.

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 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.

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.”

Connolly Geaney also 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.

Fiala accuses Ablitt and Feige of pressuring her to generate fees faster by engaging in a document fraud scheme. 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.

Connolly Geaney contends Fiala was not entitled to any bonus and argues that her whistleblower claims are without merit. The trial is scheduled to begin Sept. 5.

Contradictions abound

Ablitt initially responded to interview requests with an email denying rumors that Connolly Geaney is closing. In subsequent 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 questions about financial issues. An employee list provided 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 questions, but when a reporter visited Connolly Geaney’s offices June 9, it was Ablitt who emerged to answer questions. Geaney emailed a response to questions later that day but has not responded to subsequent requests.

Meanwhile, on June 5, four of the firm’s lawyers filed paperwork to form a new company, C-G Law Group.

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.

“I have a great deal of sympathy for those employees,” said Squires-Lee, a legal-malpractice defense litigator. “The lesson for lawyers is that you can never abdicate ultimate responsibility for law-firm management to non-lawyers.”