Bankruptcy judgment entered after ‘astonishing’ discovery violations

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A couple accused of running mortgage fraud schemes committed such “astonishing” discovery violations that the sanction imposed by a federal judge last week was a final judgment in the case.

Vincent L. Abell, his wife, Marta Bertola, and their company, American Trust LLC, repeatedly destroyed and concealed electronic evidence in the bankruptcy proceedings.

“They have repeatedly ignored and abused their discovery obligations, making it difficult if not impossible for adversaries to prosecute their claims or to collect judgments obtained as a result of the fraud,” U.S. Bankruptcy Court Judge Thomas J. Catliota wrote in court filings.

Though there are still a number of parties involved in the bankruptcy proceedings, Catliota effectively ended the case for the key parties by making the judgments final, according to Jean E. Lewis, a principal of Kramon & Graham P.A. in Baltimore.

Abell petitioned for bankruptcy in 2013, and trustee Roger Schlossberg filed a complaint in 2014 in bankruptcy court in Maryland seeking sanctions for spoliation of evidence.

Lewis and colleague David J. Shuster represent Schlossberg and sought a declaration that their client owned specified property — mostly bank accounts and real estate — as well as the imposition of a constructive trust and an order that the property be turned over to him.

“We wanted there to be no question that these assets belonged to the Trustee [now],” Lewis said.

Abell has multiple judgments against him for “mortgage rescue scams” that caused severe emotional distress as well as financial loss to his victims, according to Catliota’s memorandum opinion, issued April 14. Abell was part of more than 100 pre-foreclosure transactions, and trial courts found he preyed on distressed and vulnerable homeowners in subsequent lawsuits.

Judgments from the lawsuits were the largest claims against Abell’s assets in bankruptcy, according to Shuster, but there are other creditors.

Bertola, an attorney suspended from practicing in both Maryland and Washington, D.C., organized the computer and document-filing systems of the business. Bertola threw away or failed to produce hard drives and other storage requested during proceedings and used software on the company’s computer system, with Abell’s knowledge, to permanently delete documents and data to prevent a plaintiff from getting it.

The defendants claimed any destruction of evidence resulted from the ordinary use of hard drive cleaning software. But evidence showed Bertola changed the settings on the software to permanently delete files intentionally and in bad faith, often in close proximity to discovery requests and court orders to turn them over.

“Ms. Bertola destroyed [electronically stored information] after she and Mr. Abell had been explicitly told on numerous occasions they had a duty to preserve it, reminded to take care to preserve it, and warned of the consequences that would result from violating the duty,” Catliota wrote. “Their degree of culpability could not be higher.”

Shuster said the judge addressed several options for sanctioning the defendants before deciding that entering judgment was the most appropriate.

“In light of all the facts and circumstances of this case and these litigants, the judge issued the most serious sanction that could be awarded by a court,” he said.