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UNITED STATES BANKRUPTCY COURT

EASTERN DISTRICT OF WISCONSIN

COURT MINUTES

CHAPTER
DATE:
JUDGE:
CASE NO.:
DEBTOR:
NATURE OF HEARING:

13
June 5, 2013
Margaret Dee McGarity
13-23112-MDM
Kelly L. and Jeff A. Ziegler

APPEARANCES:

COURTROOM DEPUTY:
TIME:

United States Trustee’s motion for determination of reasonable value of
services and disgorgement pursuant to § 329 and rule 2017 and request
for sanctions.
Debra Schneider, Trial Attorney for U.S. Trustee
Attorney Robert Leite-Young, Respondent
Debra Stencel, Attorney for Debtors
Carolyn A. Belunas
1:01 - 2:17 pm

There was no appearance by Jesse Lesuer, aka Jesse Scott.

Testimony of Kelly L. Ziegler

Ms. Ziegler and her husband are the debtors in this case. They were facing foreclosure and learned of
Mortgage Healthcare via the internet. Mortgage Healthcare offered to assist the debtors in a loan
modification at no cost, but charged them $950.00 and $79.98 on August 17, 2012, to audit their
mortgage. The debtors were charged a recurring monthly fee of $29.99 by Mortgage Healthcare for legal
help. Ms. Ziegler indicated that Mr. Scott told her that the $29.99 recurring fee gave them access to
attorneys and paralegals. On September 24, 2012, the debtors were charged $2,650.00 from Mortgage
Healthcare for a “Home Saver Program.” Jesse Leseur, aka Jesse Scott told the debtors the program
would keep them in their home for a period of time and they would be required to pay only $300 per
month. They were told that $300 of the $2,650 would be applied toward to the preparation of their
bankruptcy petition and schedules. Mr. Scott indicated that legal matters would be handled by Attorney
Robert Leite-Young.

The debtors were e-mailed their bankruptcy papers by Lanette Sansoni, a paralegal at the law office of
Robert Leite-Young. Ms. Sansoni requested the debtors sign the petition where indicated and file the
petition with the court. After filing, they were to fax or bring proof to the sheriff’s office to stop the sale of
their home. Ms. Ziegler spoke with Mr. Leite-Young on two occasions, and was told they should file
chapter 13 because chapter 7 would not keep them in their home. He also told them that they should
seek legal counsel in their district because he was not licensed to practice in Wisconsin.

On November 3, 2012, they received an email Mortgage Healthcare had relocated to a new address. The
debtors paid a total of $3,799.94 to Mortgage Healthcare and/or Jesse Lesuer, aka Jesse Scott, from
August 2012 to December 2012 for services rendered in connection with their bankruptcy filings. Ms.
Ziegler asserted they were assisted by both Jessie Scott, Attorney Leite-Young, and Ms. Sansoni with the
preparation of their petition and schedules. However, no attorney or petition preparer signed their
schedules or disclosed fees.

Testimony of Robert Leite-Young

Mr. Leite-Young is an attorney, and his law firm is located in New Jersey. He is licensed to practice in
Pennsylvania, New York and New Jersey. He stated that he was contacted by Mr. Scott through a
CraigsList ad because his firm was trying to find bankruptcy business. He learned that Mr. Scott was not
an attorney, but that he had clients in multiple jurisdictions. He was looking to partner with attorneys in
different states, and he would supply them with bankruptcy clients. He told Mr. Scott that he was familiar
with the provisions of “no fee sharing” in the bankruptcy code and that he was not interested in pursing this
with him. Subsequently, Mr. Scott contacted him and said that he had clients that were being foreclosed

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Case 13-23112-mdm Doc 27 Filed 06/13/13 Page 1 of 2

and they needed to file bankruptcy. Mr. Leite-Young told Mr. Scott that he would not mind talking with the
Zieglers, but that he could not represent them.

Mr. Leite-Young was contacted by Ms. Ziegler and informed her that he was not licensed to practice in
Wisconsin, and that she and her husband should seek legal counsel in their district. He explained the
difference between bankruptcy chapters, and that he believed they were given bad advice by Mr. Scott as
to what chapter to file. He asserted that he spoke with Ms. Ziegler on two occasions.

He attempted to locate Mr. Scott and learned that he had vacated the building where was doing business.
He has never received any monies from Mr. Scott or the Zieglers, and he is not a part of Mr. Scott’s
Mortgage Healthcare business. He is unaware if Ms. Sansoni had any participation in preparing the
debtors’ bankruptcy petition or schedules. He asserted that Ms. Sansoni is no longer an employee of his
business.

Exhibits 1-3, 5 and 6 were admitted.

Ms. Schneider argued that the debtors were taken advantage of and should receive a refund of the
monies they paid to Mortgage Healthcare. There was legal advice given, and no disclosure in the debtors’
petition or schedules. She requested that the court order sanctions against Jesse Lesuer, aka Jesse Scott
dba Mortgage Healthcare and Attorney Robert Leite-Young.

Argument

Mr. Leite-Young stated that his office made a mistake and even though he may be responsible for
wrongdoing by his employees, it was done without knowledge or direction on his part.

Ms. Stencel, the debtors’ counsel, argued that Rule 9011 has been violated and sanctions should be
imposed.

Decision

The court is satisfied that the attorney’s office prepared the schedules and that the paralegal took it upon
herself to do it, improperly using Mr. Leite-Young’s email letterhead. She did so under his apparent
authority and apparently within the scope of her employment. Thus, Mr. Leite-Young has failed t properly
supervise his staff and to establish controls to prevent such an occurrence. He did give them legal advice
on two occasions, which along with preparing and sending the bankruptcy schedules by his paralegal,
created the impression that he was acting on their behalf. Under the doctrine of respondeat superior, Mr.
Leite-Young did not make a reasonable inquire into the facts and presented papers to the court for an
improper purpose, i.e., failing to disclose fees and participation in the bankruptcy. See Fed. R. Bankr. P.
9011.

The court is satisfied that Mr. Leite-Young was not paid anything by the debtors or by Mortgage
Healthcare. Nevertheless, he is sanctioned $750, payable to the debtors through their counsel, for his
participation in this case. Mr. Jesse Scott, aka Mr. Jesse Lesuer, is ordered to refund all amounts paid by
the debtors, for which he delivered no value.

The court suggested that Mr. Leite-Young report this matter to the U.S. Trustee in his district and the U.S.
Attorney, because it appears that the debtors might have been victims of internet fraud.

Ms. Schneider will submit an order.

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