Attorney general investigating Costa Mesa group

Paul Clinton

The state attorney general is investigating a local consumer

advocacy group for its role in a lawsuit abuse scheme to bilk small

business owners out of thousands of dollars.

The Costa Mesa-based for-profit organization Citizens for Fair

Business Practices has come under the scrutiny of the spotlight of

the state’s top cop, said Tom Dresslar, a spokesman for Attorney

General Bill Lockyer.

The organization is purportedly the litigation arm of Tustin law

firm Callahan, McCune & Willis, investigators said.

The law firm has been suing mortgage firms, alleging a number of

purported violations of California’s Unfair Competition Law, Dresslar

said. Under this law, attorneys can sue businesses on behalf of the

general public, as represented by consumer advocacy groups.

These firms offer to absolve the businesses of any wrongdoing if

they submit a payment to the firm by a specified date, Dresslar said.

“They use this [Costa Mesa] organization to file the lawsuits,”

Dresslar said. “We’re trying to determine how they’re conducting

themselves and whether they’ve violated any laws.”

Pete Callahan on Wednesday said his firm had done nothing wrong.

“They’re wrong in that regard,” Callahan said. “They probably

don’t know the facts.”

Callahan said his firm has been suing mortgage brokers who engage

in “blatantly deceptive advertising” by offering low-rate loans with

hidden hooks.

“These brokers use bait-and-switch tactics to make the phone

ring,” Callahan said. “To mislead customers is not a good thing. ...

It’s not a good idea to trick people.”

Calls to partner Larry Willis were not returned Wednesday. The

firm’s third partner, Steve McCune, is deceased.

The state is also investigating four other law firms, two in the

Southland and two in Sacramento, in a broader probe of these

frivolous suits. Beverly Hills-based Trevor Law Group, Brar & Gamulin

in Long Beach, the Consumer Action League and the Californians for

Fair Business Practices are also under investigation. The last two

groups are represented by Sacramento attorneys Brian Kindsvater and

David Byers.

State investigators say the law firms threaten to sue the

businesses to net a quick settlement payment for themselves. Many of

the businesses targeted by these law firms, investigators say, are in

ethnic and immigrant communities.