Going for Broke

It's the morning of July 3 at the Peoria residence of Gabriel Murrietta and Ramona Flores Seja. They are explaining what it's like to lose their dream home to foreclosure.

"We really expected to see that tree grow up and give us shade," says Flores, pointing to a small tree in the yard. "Instead, I'm just gonna water it one more time before they kick us out of here."

They have good jobs--Murrietta is a wire bonder at Intel, his wife works on a computer for Bank of America. But the couple found themselves in financial straits last year after Flores was unemployed for a time.

In September, the Murriettas decided to file for bankruptcy, choosing the lengthy route of Chapter 13. It usually allows debtors to keep key assets--a home and two cars, in their case--while paying off creditors through a court-approved plan.

That didn't happen. The couple already have had a car repossessed. Within days they'll vacate their residence of three years and move into an apartment in Tempe.

The details of their financial freefall fill a six-inch-thick binder at United States Bankruptcy Court. It tells of botched paperwork, missed deadlines, failures to appear for hearings. The Murriettas can't blame their attorney, because they didn't retain one.

Instead, they paid $1,295 to a Tempe-based document-preparation firm called People's Paralegal, Inc. By law, such firms may not do much more than to prepare a customer's bankruptcy petition; they aren't to give legal advice.

Apparently, People's Paralegal did.
"They told us not to make our house and car payments after we filed, so we didn't," says Gabe Murrietta, a small man who seems dazed by his ordeal. "[People's Paralegal founder] Dick Berry messed up our case so bad we never could set things straight. But he made sure we paid them. It was our fault for getting into money trouble. . . . But everyone has told us we didn't have to lose this place."

This is not sour grapes.
Authorities familiar with the case say Murrietta and Flores needn't be losing their home.

"Telling someone in the Murriettas' situation not to make house payments is . . . an incredibly dangerous and stupid thing to do," says Joel Nordquist, an attorney for Chapter 13 trustee Ralph McDonald. "What it does is put people in a better position to pay off People's Paralegal. But it also puts them in a deeper and deeper hole as their creditors pound on them."

Even People's Paralegal founder Dick Berry says the Murrietta case hasn't been his firm's finest hour: "I feel very badly about this one. Everything that possibly could have gone wrong did go wrong."

Gabe Murrietta is not in a forgiving mood.
"Here we are," Murrietta says, "broke as you know what, even though we work all the time. . . . It just pisses me off no end to think that they're probably raking in money over there [at People's Paralegal] right now."

A few hours later, at People's Paralegal in Tempe, director of operations Paul Dvorscak sits at his desk. In front of him are neat stacks of bills--fives, tens, twenties and fifties.

He stops counting to greet a guest.
"How can I help you, sir?" he asks.
Francine and Nelson Bregio drove to U.S. Bankruptcy Court last month looking for a fresh financial start.

The Mesa couple and nine other debtors anxiously shuffled into a hearing chaired by Ed Maney, attorney for a Chapter 13 trustee; a trustee, among other tasks, makes sure that creditors have a voice in the repayment plan.

Each of the 9,000 Arizonans who have filed personal bankruptcy this year--up 30 percent from a year ago--must attend one of these "341" hearings, so named for a section of the Bankruptcy Code. Those who don't attend have their cases dismissed.

Maney asks debtors, who are under oath, if their bankruptcy petitions are accurate, and informs them if any paperwork is missing. Finally, he allows attorneys for creditors--usually lending institutions--to question debtors about their finances and intentions.

About half of the debtors in the Bregios' group appeared pro se, without a lawyer. The Bregios had considered themselves in that category until that day.

The couple had paid People's Paralegal--also known as People's Services, Why Pay a Lawyer?, and, formerly, as People's Law--$664 of a $995 bill to prepare their petition.

They and thousands of other Valley residents in financial trouble were lured by a television ad featuring bombastic ex-talk-show host Morton Downey Jr.

"I've checked these folks out, and they know what they're doing," Downey Jr. booms from the front entrance of People's Paralegal, near the intersection of McClintock and Broadway. "Get a fresh start from the very start."

The Bregios got a call from People's Paralegal shortly before the hearing. They were told that attorney Fred Taylor would represent them at their hearing. They'd never heard of Taylor.

But the couple learned something during the 341 hearing as they awaited their turn. They listened as Ed Maney told debtors Janice and Ricky Sekayumpeta that, months earlier, a judge had ordered People's Paralegal not to charge more than $200 per bankruptcy case without approval.

Maney told the Sekayumpetas they didn't have to pay Fred Taylor or People's Paralegal until further notice. One reason was the $200 ceiling, which is about the norm for document preparers around the nation. The other was that "unsecured" debts incurred before filing for bankruptcy are automatically frozen and may later be discharged by the court. That legal protection is the reason most people file bankruptcy.

People's Paralegal and Fred Taylor would be classified "unsecured" creditors.

Maney handed the Sekayumpetas a copy of a May 23 ruling issued by Bankruptcy Judge Redfield Baum. It banned People's Paralegal from preparing further bankruptcy petitions in Arizona--and from advertising that they do.

The reason, according to Baum? People's Paralegal's proprietor Dick Berry "has repeatedly and continually engaged in conduct in violation of [the law], and the sanction of statutory fines has not been effective in ending such conduct."

"We were wondering what the hell was going on," Francine Bregio says. "No one at People's Paralegal told us they'd gotten kicked out of court. No one told us about the 200-bucks limit. Actually, the first thing Taylor said to us was we had to sign something that promised to pay him more money. . . . How unprofessional, how unethical, how sorry."

Maney told the Bregios that their reorganization plan and other crucial paperwork was missing. By law it should have been filed within 15 days after the couple declared bankruptcy May 6.

Get it to the court clerk immediately, Maney said, or your case will be dismissed.

Fred Taylor stood mutely during the five-minute hearing.
Afterward, in the crowded waiting room, the attorney--a lanky, middle-aged man in a gray suit--sat to read a newspaper.

"I want to see my file right now, sir," Francine Bregio told him, waving her copy of Judge Baum's order against People's Paralegal.

The barrister peeked up at the Bregios.
"It's not for me to give it to you," Taylor said diffidently, returning to the newspaper. "It's the property of People's Paralegal."

"Who are you, anyway?" she asked, loudly enough for much of the room to hear.

"I'm Fred Taylor."
"Who the hell is Fred Taylor?"
"What else do you want to know?"
"I don't have to listen to this dude," Nelson Bregio interjected.
Francine Bregio picked up a phone and called People's Paralegal.

"I need my file," she said loudly, "and this guy who keeps saying he's my attorney won't give it to me."

She hung up and addressed Taylor. "We don't want you to represent us, sir," she said. "We don't know who you are. What happened to our plan?"

"I'm not sure."
"You bastard."
"You're welcome."
The couple left.
Moments later, Glendale debtor Greg Sawyer entered the waiting room.

"Are you looking for Fred Taylor?" Taylor politely asked Sawyer, a supervisor of a child-crisis center.

"Yes, I am."
"That's me. I'm here to represent you, okay? Let's see. Here we go. You still owe one payment. You make it out payable to me, not to People's Paralegal, okay?"

"Yes, sir."
Taylor handed Sawyer a sheet that authorized Taylor to collect the purported debt, and to charge more if necessary. Sawyer scanned the document, then signed it.

Minutes later, Ed Maney grilled Greg Sawyer during his 341 hearing.
"When did you hire Mr. Taylor as your attorney?"
"I was just notified today that he was going to be my attorney."

"Are you prepared to allow Mr. Taylor to represent you as your attorney here today?"

"Well, I think I have an objection to that and, Mr. Taylor, the objection is this: Obviously, you've never met with the debtor before now. My guess is there is no fee agreement that you have with the debtor."

"Yes, I do," Taylor replied.
"Can I see that?"
"I don't know what relevance it has to these proceedings."

"I think there's an ethical obligation, and that is the solicitation of clients outside of this courtroom."

"That is not what happened. And, furthermore, I didn't know the trustee was involved in ethics."

"Well, I'm an attorney in the state Bar of Arizona, and if I think there's an ethical violation, I have a duty to see that it's not committed--and I think there's something going on right now."

That's an understatement.
Almost overnight, starting May 1, Fred Taylor became Arizona's busiest bankruptcy lawyer.

His sudden rise is because of his unique--many say illegal--financial arrangement with People's Paralegal.

Dick Berry says he struck the deal with Taylor this spring because he foresaw his banishment from Bankruptcy Court.

United States trustee Adrianne Kalyna and others in positions of power--the Chapter 13 trustees and, finally, some of the judges--have had Berry in their sights for months.

But he has stayed a step ahead of a system that openly despises him.
A disbarred attorney who served four years in prison for white-collar fraud in the early 1980s, the 55-year-old Berry is clever and tireless.

He blames his woes on lawyers hell-bent to protect their own lucrative turf. "You can't get more beat up or buggered by the system than me," he says.

Berry has spent hours at Bankruptcy Court hearings in recent weeks, answering the charges of trustees determined to bring him to his knees. But he's still kicking, and he seems to relish the skirmishes.

"To look at me is to see an arrogant asshole," Berry says.
Actually, what one sees is a tall, trim, balding, bespectacled man with a steady gaze and a feisty demeanor.

"They can't stand that I'm still in the ball game. I know they think that I'm some kind of thief, but I'm not. I'm the most investigated SOB in the state of Arizona, but I'm a guy with no nerves. I consider myself an honest guy who found a niche, and the powers-that-be hate it."

In spite of their recent eviction from Bankruptcy Court, Dick Berry and People's Paralegal are maintaining their powerful market share through the new arrangement with Fred Taylor.

"The bottom line," Berry told a judge last April, "is that we have found out how to market this and, most importantly, in all candor, the antilawyer sentiment out there is so deep it is unbelievable. There are people, literally . . . who would come in there and pay us more than they'd pay a lawyer, just have a nonlawyer do it."

It will take more than a mere court order to shut down Dick Berry and People's Paralegal.

People's Paralegal's ascendancy is testament to three things--the firm advertises relentlessly; people buy the promise of cheap, quality service; and many people hate lawyers.

Since starting its advertising blitz in early 1996, People's Paralegal has become a million-dollar mill, having lured more than 2,000 customers.

By August 1996, it had assumed the lead position in the local bankruptcy market. In the first five months of 1997, the firm attracted almost 900 debtors, accounting for about one in nine of all filings.

Hundreds of people, however, have paid dearly for hiring People's Paralegal.
New Times interviewed debtors who unnecessarily have lost homes and cars or found their bankruptcy cases in tatters after taking the firm's illegal and often misguided advice.

Undaunted, Berry says People's Paralegal has provided uniformly excellent service to thousands of satisfied customers.

". . . There is no harm to the debtor, and there's never even been an allegation from day one as to that," he told a judge at a June 17 hearing.

During a March hearing, People's Paralegal co-owner and director of operations Paul Dvorscak testified: "There's never been a general complaint by a given customer."

That would come as a shock to numerous People's Paralegal customers, including Kelly and George Soto, a young Phoenix couple who wrote to People's Paralegal on June 2:

"This letter is to inform you of our request for a refund of $464. . . . Your representative, whom we met with on May 21, 1997, did not give us sufficient cause for the amount of $995 to be charged versus the $200 as per said court order. . . . Furthermore, on May 9, 1997, a response to an objection to our [Chapter 13] Plan from [a secured creditor] was drawn up and was to be mailed [by People's Paralegal] . . . Recently, we have learned that this was not done. This only compounds our dissatisfaction with your company."

As of last week, the Sotos still hadn't gotten a refund.
New Times examined more than 600 bankruptcy files involving People's Paralegal customers, and spoke with 36 people whose petitions were prepared by the firm.

Some endorse People's Paralegal, including Martin Wolf, whose bankruptcy, ironically, became the test case that led the court to impose the $200 limit.

But many contain disturbing examples other than those already noted:
* Eva and William Rankin, an elderly Phoenix couple, paid $995 to People's Paralegal in a bankruptcy case that became far more costly than necessary because of the firm's poor advice. "This is indicative of the type of advantage that People's Services takes of debtors," a representative for the couple's sole secured creditor--a car-loan firm--recently wrote to a court official. "It most certainly appears that these people were preyed upon."

* Lorey Clark, a disabled Phoenix woman, says she took the advice of People's Paralegal and stopped making payments on rented furniture, a bed and a dinette set after declaring bankruptcy. She ended up losing all of the items, and her Chapter 13 reorganization plan wound up being dismissed.

* Henry Vaughn, a Phoenix man who said under oath last April that People's Paralegal threatened to ruin his bankruptcy case if he didn't pay the rest of his bill--which he did.

Few of those burned by People's Paralegal have fought back with the gusto of Francine and Nelson Bregio. After the Mesa couple clashed last month with attorney Fred Taylor, they drove to People's Paralegal.

"I made a beeline for Dick Berry's office," Francine Bregio says. "'Yo, DB, we got to talk.' I told him, 'You guys screwed up our paperwork and almost cost us our house. Now, you're laying this lawyer on us we don't want.' He kept telling me he had to have someone's name on it. I told him I just wanted my file."

It turns out People's Paralegal had erred in collating the Bregios' bankruptcy petition. Francine Bregio says she handed copies of the court's injunction against the firm to People's Paralegal customers in a waiting room.

"It was my little public service," she says. "We got ripped off like fools."
But the Bregios' problems were far from over.
These people pay big money for Dick Berry to fill out some forms, then they wind up at their 341 hearing thinking they'll be protected by their paralegal. It's seductive. But then it's, "Where's this schedule or that form?" I've had to ask debtor after debtor. "I don't know, People's Paralegal did it." So now Dick has found an attorney to front for him. Isn't that false advertising from someone whose sign screams to the world, Why Pay a Lawyer?

--Chapter 13 trustee Russell Brown

In 1997, People's Paralegal has billed about $420 per case in Chapter 7 filings, or, on average, a few hundred dollars less than most attorneys charge. It has charged much less in Chapter 13 cases--about $800 per filing compared with about $2,000 by an attorney.

Attorneys, however, often collect most, if not all, of their fees in Chapter 13 cases over the three- to five-year term of the debtor's repayment plan.

That's an important distinction, says Ed Maney, attorney for a Chapter 13 trustee.

"If you can't afford $30 or whatever extra per month in your plan to pay your attorney," Maney says, "then Chapter 13 isn't where you need to be. How can a debtor claim he or she can't afford an attorney, then dole out five hundred or a thousand bucks to a document preparer?"

People's Paralegal, meanwhile, seeks to get as much money up-front as it can from customers.

But even if People's Paralegal complied with the court order and charged no more than $200 per case, customers still might not be getting a bargain.

Court records indicate that Chapter 13 debtors who use People's Paralegal or other Valley document-preparation services are about 10 times less likely to have their plans approved than those who hire attorneys.

"The failure rate of such cases is staggering," Bankruptcy Judge James Marlar wrote in a recent ruling. "Ultimately, it is the debtors who suffer the most from such dismissals, especially where home foreclosures, auto repossessions, and/or tax levies are pending. Debtors are being lulled into a false sense of security and are paying a very high price for the limited service preparers . . . are able to provide."

Those who choose Chapter 13 must have jobs or some steady income. The paperwork in an average Chapter 13 case dwarfs that of a Chapter 7 case, and it must be accurate and complete. Chapter 7s usually are simpler--like liquidation sales in which debtors forfeit many possessions but evade paying unsecured creditors.

The Chapter 13 trustees say filings by People's Paralegal and other document-preparation services are often riddled with errors and omissions.

"We grew too fast, like a damned weed," Dick Berry admits, "and we made mistakes, especially during the supergrowth spurt in the third quarter of '96. But Adrianne [Kalyna, U.S. trustee] and her yesmen have had it in for us because they want to protect the status quo, the attorneys."

The war has become personal between Berry and Kalyna.
"Mr. Berry needs to be told that this scam is over," Kalyna told Judge Marlar during a hearing last month. "It's just outrageous to me that this continues to go on."

Countered Berry: "We are being held to a much higher standard. I understand how the politics is played. I understand that game. There is just no question that Ms. Kalyna has become the Bar's shill."

Kalyna's office--which is an arm of the Department of Justice--acts as a watchdog in bankruptcy cases. Attorneys and nonattorneys who deal with her say she's no shill.

But, as an ex-attorney himself, Dick Berry knows that lawyers make easy targets.

Berry's attack on his former profession is perhaps intended to obscure his own brazen disregard of the $200 limit. His excuse that he didn't understand the court's January order seems disingenuous.

Remarkably, there's no person, computer or central registry at Bankruptcy Court that can state how many people People's Paralegal has overcharged, and how much.

"We could have one attorney assigned just to do Berry stuff," says Kalyna. "This whole thing just ballooned too fast for the system to keep up with it."

New Times read each of the 600-plus petitions prepared by People's Paralegal from January 24--the date the $200 limit went into effect--until May 23, when Judge Baum kicked it out of court.

The records indicate that, during that stretch, People's Paralegal has billed customers about $270,000 more than it should have. It charged $200 (or less) less than 10 percent of the time.

What's more, Berry and his firm this year have evaded court-imposed fines totaling about $50,000 and counting.

Bankruptcy Court insiders say People's Paralegal has been able to skip its fines and overcharge customers because judges have been slow to grasp the magnitude of the crisis, and slow to enact remedies.

One problem is that the seven federal bankruptcy judges sitting in Arizona are insulated from each other, often knowing little about proceedings outside their own courtrooms.

And chief judge George Nielsen Jr. apparently wants the general public to remain in the dark as well. Through his secretary, Nielsen declined a request for comment. "He cannot talk about People's Paralegal, or any aspects of bankruptcy," the secretary says.

People's Paralegal blossomed last year after it began dumping more than $10,000 into advertising, according to one of Dick Berry's courtroom avowals.

Berry says People's Paralegal provides its customers "far more than a typing service," but he stops short of admitting he and his employees give legal advice.

"[Lawyers] think that if it's not typing; ergo, it must be practicing law," Berry testified in April. "And that's not true. . . . If we charge $395 or $595 for a bankruptcy--and as a product . . . the public perceives value and it's done properly, [then they] didn't get defrauded, then we've met the statutory standard."

But at least one judge has ruled People's Paralegal has engaged in the unauthorized practice of law. That and other violations of the 1994 Bankruptcy Reform Act have led to numerous fines, which Berry usually ignores, with little consequence.

Berry and his minions have evaded prosecution because Arizona is one of two states (Texas is the other) that doesn't consider the unauthorized practice of law a crime.

These days, Berry works closely with Fred Taylor, an attorney and a longtime friend.

"Instead of us being the horse, we'll be the cart," Berry said during a recent hearing. "The lawyer will be the horse, and the fees will go to him, and then he will hire us to perform whatever services he desires us to do."

But the arrangement vexes many. Some consider Fred Taylor an illegal front man for Berry: U.S. trustee Kalyna recently filed a complaint with the state Bar of Arizona against Taylor, accusing him of illegal fee-splitting and other ethical violations. In his response, Taylor denied any wrongdoing.

Speaking of the Berry-Taylor arrangement, Judge James Marlar told Berry during a June 25 hearing, "I'm not going to tolerate any shenanigans, puppetry, shell games. People can get hurt, people can overpay."

Berry tells New Times, "We truly don't think it's fee-splitting in any way. Fred has the stones to give it a try until told otherwise. What's so egregious about that?"

Court records show Taylor served as an attorney in just five bankruptcy cases in 1996. He filed just four bankruptcy cases in the first four months of this year.

Since May 1, however, Taylor has become the attorney of record in more than 400 cases, a majority of them onetime customers of People's Paralegal.

Court papers filed by Berry indicate People's Paralegal has been "selling" its bankruptcy customers to Taylor at $75 per case. Meanwhile, Taylor has subleased a suite from Berry a few doors from People's Paralegal.

Berry and many of People's Paralegal's 25 or so employees now are based at Taylor's new digs. Berry and his team sometimes wear polo shirts embroidered with the word "ATTORNEY," with a slash mark through it.

Berry sees no irony that he has flourished while posturing as the good guy in a holy war against lawyers--and is now toiling inside a law office.

"This is evolutionary," he says. "We're doing what we have to do."
Berry insists he and the staff are working at Taylor's office as independent contractors. He says People's Paralegal continues to interview potential customers/clients, to fill out bankruptcy petitions, and to perform other tasks--for an additional fee for which the firm bills Taylor.

That Berry's firm is doing any bankruptcy work at all violates the May 23 injunction. But he seems unfazed.

"We charge Fred for the use of my physical facility commensurate with fair-market value," Berry says. "It's task-oriented. He uses our bookkeeper, our staff, our everything. It's free enterprise. We spent a lot of time on this with Randy Haines--a bankruptcy and ethics expert I hired. He worked on it, and gave it his okay."

That's not exactly how Haines recalls it. A respected attorney who is on the state bar's committee on the Rules of Professional Conduct, Haines spoke with New Times after Berry waived the attorney-client privilege.

"Our conversations specifically were limited to the [1994 Bankruptcy Reform Act]," he says. "We agreed that I would not be advising him on the ethical rules that govern attorneys, because he's not an attorney. . . . We specifically did not discuss fee-splitting or referrals or advertising, or any of the other ethical issues that may be very relevant here. . . . Mr. Taylor has never sought my advice."

A state bar official says the Fred Taylor-People's Paralegal arrangement "sounds fraught with all kinds of trouble."

It appears to violate an Arizona Supreme Court rule which says, "A lawyer shall not give anything of value to a person for recommending the lawyer's services . . ."

But the deal may be a windfall for Berry and, possibly, Taylor, who didn't respond to a New Times request for an interview. Much depends on how the state bar deals with the complaint filed against Taylor, and how Bankruptcy Court judges handle the situation.

Berry says he's long referred some customers to attorneys.
He told Judge Redfield Baum in December, "There's some people that you can look at, you know they can do okay [by themselves in court]. But if you get an Hispanic or somebody who's intimidated by things--I think in my mind, they're not going to do real well. I'll send them to a lawyer."

And, truth be told, Dick Berry would be a lawyer right now, if they'd let him.

We have a money-back guarantee, always. If a debtor has a problem with the way we do business, we'll take care of them.

--Dick Berry, to New Times

[Berry's] fee was $995. . . . Then I said, "Well, I'm just not happy with the service I'm getting. There's letters from the trustee saying that there's things wrong in my bankruptcy that can cause it to be dismissed. . . . I'd like to go to another attorney and have him finish our case, and I'd like our money back." And, at that point, [Berry] got really upset and he said, "Well, I'm not going to refund any of the money." So I asked him why. He said, "Well, we have done a lot of paperwork for you. . . . I have to charge you for any of the papers I have. If I'm to return these papers, I want $500 for all the documents I did prepare for you. And if the attorney wants a copy, it's going to cost him $300." . . . And at that point, [operations director] Paul Dvorscak walked into the room. He walked in, flies off the handle. "You're not getting any of your money." I said, "I'm going to go to the court and get my money back." And he said, "You won't go to the court. Because if you do go to the court, I'll rip your head off." So we started to walk out. Paul was right behind me like he was trying to chase me out of the office. There was a waiting room full of customers. He said, "If you touch your daughter again, I'm going to call CPS."

--Testimony of Chapter 13 debtor Frank Aline Jr., April 18, 1997, before Bankruptcy Judge James Marlar

Is that the kind of shop you're running out there?
--Judge Marlar to Berry,
on the Aline matter
That [Aline] case, that's isolated.
--Dick Berry

Arizona's bankruptcy war is a microcosm of a nationwide debate over the courtroom role of document preparers.

In the late 1980s, the confluence of home computers and increasing bankruptcy filings created a market for what became known as the document-preparation industry.

"In the late '80s, we'd see legal secretaries making some extra money on weekends helping people who couldn't afford an attorney," says Chapter 13 trustee Ralph McDonald, a nonlawyer. "Their work was reasonably good and their prices weren't out of line. In the early 1990s, it became an industry to itself, and it hasn't stopped, for better in some cases and for worse in others. . . . This is not lemonade-stand money we're talking about."

Questions arose in Arizona and elsewhere about how far "doc-prep" operations could go in providing legal advice to customers.

The unauthorized practice of law (UPL) debate became news in the early 1990s, after two Florida trial judges ruled the state's UPL law was unconstitutionally vague, and dismissed misdemeanor charges against a husband-wife paralegal team.

Other states weren't so charitable, stiffening UPL penalties.
Arizona, as it often does, took an unorthodox route. In 1984, the state's lawmakers allowed a law against UPL to expire, opening the door for document-preparation services to work without fear of prosecution.

About 100 such businesses now operate in the state, many of the mom-and-pop variety, says an industry spokesman. Many provide good, affordable, basic service in simple divorce cases, bankruptcies, name changes, living wills and other court matters.

But in the early 1990s, the state bar opened a file of UPL complaints. The grievances have run the gamut.

One was against a Gregory Maxon, who portrayed himself as a member of the "Arizona Law Courts, Civil Mediation Division."

And there was a complaint against a Carl Smith, who in 1995 subjected a customer to the following tape-recorded hogwash:

Debtor: "So Paul [Demos, a bankruptcy petition preparer] isn't a lawyer in the state of Arizona?"

Smith: "No, he's a lawyer, he's not an attorney. There's a major difference between an attorney and a lawyer. A lawyer means that you've graduated from law school and that you are a registered attorney somewhere. An attorney means that you're the attorney for the state."

In April 1992, Jim Marlar, then an attorney in private practice, complained that a disbarred lawyer had started a quasi-law firm.

"This type of practice is dangerous to the innocent public," Marlar wrote to then-chief bar counsel Harriet Turney.

"Thank you for your letter regarding People's Law and the infamous Richard S. Berry," Turney responded. "The [UPL] Task Force hopes to come up with some kind of solution that will both protect the public and enhance access to legal services, particularly for lower-income individuals."

Solutions have been elusive.
It was the first UPL complaint against Dick Berry. Four years later, in 1996, Jim Marlar--by then a Bankruptcy Court judge--ordered Berry to take the word "Law" out of his business name, then called People's Law.

Berry renamed it People's Paralegal.
In October 1994, a new federal law acknowledged the need for low-cost legal services by recognizing "petition preparers" as a bona fide part of the system. At the same time, the new law spelled out a system of accountability for document preparers.

Some members of Congress considered it a consumer-protection measure; naysayers called it a thinly veiled attempt to protect attorneys by allowing stiff fines--up to $500 per violation--against errant document preparers.

Trustees around the nation soon persuaded judges to limit preparers' fees, and recommended fines for violating the new requirements. Many trustees interpreted the law to mean document-preparation firms may provide a typing service, but everything else constitutes the practice of law.

Shortly after the 1994 law took effect, the U.S. trustee's Phoenix office sent explanatory fliers to area document-preparation firms and others.

In 1995, the Arizona Legislature attempted to resurrect the state's UPL statute, making it a felony for nonlawyers to perform legal work, with certain exceptions. The bill passed the state Senate, but died in the House. It failed despite--or perhaps because of--an intense lobbying effort by the state Bar of Arizona and other pro-lawyer groups.

"Part of our problem is the Legislature hates us," state bar special services counsel Lynda Shely told a seminar last month. Shely often responds to UPL complaints, usually with a tone of resignation.

"As you know, regrettably," she wrote to one complainant last year, "the state bar will not be able to do much with the information that we receive, other than to add you to our ever-increasing UPL files."

Chapter 13 trustee Russell Brown points out that Arizonans who sell hay, cut hair, trade horses or do nails must be licensed--but not independent paralegals.

"If a lawyer screws up badly enough, he or she can have his ticket punched, as in suspension or disbarment," Brown says. "If a petition preparer messes up a bankruptcy filing, too bad."

That's true, but the state bar's disciplinary arm is no panacea. In 1993, a pair of Phoenix law firms took the Chapter 7 bankruptcy market by storm, advertising that clients didn't have to pay them anything up-front ("Debt in the Water," February 2, 1994).

The two "zero-down" firms ran like fast-food restaurants, with speed and volume their prime concerns. But many of their filings--even in boilerplate Chapter 7--contained errors. Worse, the firms intentionally misled their clients about their fees, which were about double those charged by attorneys who demand most or all of their fees before filing.

The firms crumbled in 1995. However, only one zero-down attorney--Michael S. Manning (not the Michael C. Manning who is contesting Governor J. Fife Symington III's bankruptcy)--was disbarred.

Most of the other lawyers landed on their feet, with some finding their way into Dick Berry's sphere.

Berry says he has directed customers toward Michael S. Manning's ex-partner, Hugh Hull--who recently declared his own Chapter 13 bankruptcy. Another practitioner, John Bruno, now works for Fred Taylor.

And J. Murray Zeigler--a slick-talking lawyer whose zero-down work cost debtors unnecessary money and grief--is now an assistant attorney general pursuing delinquent taxpayers for the Arizona Department of Revenue.

People's Paralegal started its rapid ascent a year or so after the zero-down firms crumbled.

"It's not like, if you decide to be a document preparer, that everything in your life has to be crystal-clear, clean and white," Dick Berry testified at an April 7 hearing. "God knows, I wouldn't fit that bill."

On June 18, 1997, I called the telephone number of People's Services, Inc. . . . I asked her if People's Services provided bankruptcy services and she responded that it did.

--From a request for contempt of court against Dick Berry, filed June 18
by the U.S. trustee's office.
It seems to me I ought to order [you] to comply with the injunction. . . . I think that you think that because Fred Taylor can do bankruptcy work, you can do bankruptcy work. I have seen a lot of [People's Paralegal] filings coming in since May 23. If it continues, I will find a way to stop it.

--Judge Redfield Baum, at last month's contempt hearing
I do no bankruptcy work whatsoever. The company does not do bankruptcy work. We subcontract with Mr. Taylor. . . . I haven't received a plugged nickel since this [court injunction] happened.

--Dick Berry to Judge Baum

It would be easier for Dick Berry's detractors to paint him as an ogre if he weren't so personable. But he's disarmingly loquacious about his own mercurial life--his triumphs, his mistakes, his troubles.

Some say Berry is honest, and gets into hot water only when he's too trusting of others. Others consider him a scamster with a reptilian knack of shedding old skin and re-creating himself.

In his adult life, he's been a lawyer, a jailhouse lawyer, a convict, a finance manager, an independent paralegal, a landlord and the owner of several businesses. He's been married to the same woman, Jean, for 35 years. The couple raised three sons, none of whom is an attorney.

A native of Harrisburg, Pennsylvania, Berry graduated from Ohio's Otterbein College, where he participated in drama. He later earned a law degree from Northwestern.

Berry moved to Tempe in the mid-'60s--"Me and the wife in a covered wagon," he jokes--and dabbled in politics as he built a law practice. In 1970 and 1972, the lifelong Democrat lost close races for the Arizona Senate.

"I'm a guy whose father split when I was a kid," he says. "I had to learn how to survive on my own. I've always gotten along better with people on the wrong side of the tracks than country clubbers."

Berry was in such company after being imprisoned in the early 1980s on fraud and conspiracy convictions. The Maricopa County convictions stemmed from a failed white-collar plot to steal money from individuals and a local bank.

Disbarred, Berry spent four years in prison before his release in 1985. There, he became a jailhouse lawyer of near-mythic proportions.

"I was pretty popular with the other inmates because I told it like it was," Berry recalls. "If I thought they had a bona fide grievance, I'd fight like hell for them."

But authorities who knew Berry were not moved.
From a parole officer's notes, dated July 31, 1985: "Arrogant attitude. Manipulative. Do not foresee a change in his decorum in the near future, if ever."

That officer described Berry as "very slick, sophisticated and being substantially more dangerous to the public than most offenders. . . . [Berry] is a classic white-collar criminal who shows no remorse, does not accept responsibility for his actions, is deceitful and manipulative."

As a condition of parole, Berry was ordered "not to be hired in a position which handles clients' funds."

In 1987, Berry went to work as a paralegal for a Tempe law firm. His parole ended in May 1988, and he applied with the state bar for reinstatement of his law license.

Several of Berry's friends wrote to the state bar on his behalf.
"I have always felt," attorney Fred Taylor opined, "that [Berry's] actions met or exceeded the ethical and moral standards expected of attorneys practicing in this state."

In November 1990, Berry applied at Maricopa County Superior Court for restoration of his civil rights. But Judge Cheryl Hendrix ruled that letters supporting Berry did not establish rehabilitation.

"Before one can improve oneself and become rehabilitated," Hendrix wrote, "one must first acknowledge there is a need for improvement and rehabilitation. [Berry] has failed to present any evidence as to what steps he has taken to transform his perception of right and wrong . . ."

Berry's effort at readmission to the bar also failed.

I rented some furniture, a bed and a dinette set, but I was in some trouble with my finances. I went over to People's Paralegal to talk about a [Chapter] 7, a fresh start, but by the time I got done, I was in a [Chapter] 13. Paul [Dvorscak] told me to stop paying the rental place, that I was home-free 'cause I was in bankruptcy. He said he had bought a house himself less than a month after going bankrupt back East. He had me goin' so good. I was at a vulnerable stage. Then my trustee told me my Plan was underfunded and that, legally, I couldn't put rental furniture payments onto a [Chapter] 13. Meanwhile, People's Paralegal is hitting on me to pay up what I owed them--$600 total. Then the rental people come calling and knocking on my door, and I finally had to give their stuff back to them. Things got so messed up I finally had to hire me a lawyer to pull it together.

--Lorey Clark, a Phoenix woman, in an interview with New Times

Last February 12, an attorney for the U.S. trustee asked Paul Dvorscak in a deposition about his role at People's Paralegal. Dvorscak described himself as the firm's director of operations.

"I built the steam engine that exists," he said of the highly successful marketing plan he devised for People's Paralegal. Now, he was earning $78,000 a year and--in January--had become a one-third owner.

That's consistent with Dick Berry's April 7 testimony in the case that led to the recent injunction against People's Paralegal. Until Dvorscak came along in early 1996, Berry testified, his firm had three employees, and focused on preparing divorce petitions and negotiating in personal-injury cases.

"Dvorscak [said] that perhaps bankruptcy could be marketed as a product as distinct from just sort of a service," Berry testified. "And a television ad was developed, and the thing succeeded beyond anybody's wildest expectations--I have never seen anything like it in my life."

Dvorscak claimed he'd learned some of what he knows about bankruptcy firsthand, having filed for protection three times--one Chapter 7 in Virginia and two Chapter 13s in Arizona, most recently in 1995. (Both of the latter filings were dismissed.)

Like Dick Berry, the 36-year-old Maryland native is a convicted white-collar felon who served time for fraud. Virginia court records show Dvorscak spent almost a year behind bars there in 1994-95 after pleading guilty to a felony fraud charge.

The crime? Failing to mention his bankruptcy on a loan application for a 1992 Jaguar.

"I am guilty of false statements on a loan application," Dvorscak told his probation/parole officer in 1995. "I felt it was irrelevant at the time."

The officer, Heather Austin, was not enamored of his prospects for rehabilitation. She wrote in a presentencing report: "Mr. Dvorscak strikes this officer as one who may continue operating his businesses in ways that are not necessarily in the best interest of those who put their trust in him."

A judge in early 1995 sentenced Dvorscak to a year in prison, and placed him on probation for 10 years. He served several months behind bars before his early release.

Dvorscak moved to Arizona, where he went to work with Dick Berry in early 1996.

"We don't have that many problems down there," Dvorscak testified in deposition that month. "Everybody seems to be very happy with the services rendered."

An attorney for the U.S. trustee asked, "You compare the fees charged by People's Services with the fees charged by attorneys?"

"Are those services comparable?"
"Most definitely."
That was the wrong thing to say.

By the end of 1996, Dick Berry had promised two judges in writing that his firm would stop violating the 1994 Bankruptcy Reform Act. In one of those cases, Berry reached an agreement with the U.S. trustee in which he promised "not to give 'legal' advice to any person or entity . . ."

But those "consent agreements," as they're called, didn't stick. Since September, the U.S. trustee and the Chapter 13 trustees have filed almost 100 complaints against People's Paralegal--many of which have led to fines and/or orders to repay selected debtors.

One complaint led to the May 23 banishment of People's Paralegal from Bankruptcy Court.

I just paid them yesterday--$332. They told me if I don't finish making those payments, the bankruptcy would be automatically dismissed. Automatically. If I didn't have the money in there, I'd be out of it [the bankruptcy].

--Phoenix resident Henry Vaughn,
Chapter 13 debtor, at a April 23 hearing

Francine Bregio's Dodge Ram truck was missing from the driveway when she awoke July 9.

"At first, I thought it had been stolen," she says. "I called the police. They told me it had been repo'd. I started to put two and two together."

On June 19, the day after the Bregios' clash with Fred Taylor, she had filed the delinquent paperwork that Ed Maney, the trustee's lawyer, had instructed them to submit promptly.

But neither the Bregios nor Maney had realized it was too late. On June 23, Judge Baum dismissed the couple's case because they had failed to file the paperwork on time: He apparently ruled before the Bregios rushed the missing materials to the clerk's office.

The next day, the clerk mailed notice of the dismissal to the Bregios' creditors, including the firm that had financed their Dodge. The dismissal instantly made them fair game for creditors.

But Francine Bregio says she didn't get a letter from the court about the dismissal until June 27, a Friday. That day, she says she went to the law offices of Fred Taylor--where Dick Berry and many People's Paralegal staff members now reside.

There, she demanded $160--the cost to refile a bankruptcy--and asked the firm to prepare her Chapter 13 petition free.

"I was basically in their face until they came around to my point of view," Bregio says. "They filled everything out again--which I checked very, very carefully. . . . But I couldn't get it to court until the following Monday."

The Bregios' debts again were frozen when the clerk accepted her latest bankruptcy filing on the morning of June 30. But word apparently didn't get to the finance company, which unleashed its repo man.

The Bregios got the truck back later that day after making two months' worth of truck payments in advance.

Then she drove straight to the law offices of Fred Taylor/People's Paralegal.

"I stampeded in because I wanted everyone to know how dangerous they are, how they had put us into this hell," Bregio says. ". . . Dick Berry slammed his door. Fred Taylor was nowhere to be seen, not that he'd know what to do. They started this mess, and I wanted them to know I didn't forget that."

She says she decided to ask a trick question of a female employee of People's Paralegal with whom she had previous dealings.

"I asked her, 'What am I supposed to do, pay them [the finance company] or not pay them?' just to see what she'd say."

The employee, Bregio says, suggested that Bregio not pay.
"She told me, 'We can take care of this for you. Legally, you don't have to pay nothing.' I knew that, but I couldn't believe she had the audacity to give me legal advice after all this.

"I told her, 'Hey, you're giving me legal advice. You can't do that. Anyway, you guys are shut down.' She comes back with this, 'Oh, yes, we can. We're a law office now.'


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