Exasperated courts order investigation into foreclosure attorney William Butler

  • Article by: RANDY FURST , Star Tribune
  • Updated: July 11, 2013 - 9:42 AM

Investigation ordered into lawyer William Butler.

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James Konobeck is one of the clients who feels cheated by the actions of foreclosure attorney William Butler.

Photo: Marlin Levison • Star Tribune,

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The chief federal judge in Minnesota has taken the rare step of ordering an investigation of a Minneapolis foreclosure lawyer who has been slapped with sanctions at least nine times since 2011.

The sanctions imposed by federal district judges against William B. Butler total $323,307, according to Star Tribune calculations. The self-described Libertarian openly defies the judges on his website, Butler Liberty Law, reveling in their attacks and declaring he won’t pay. In an interview, he said he believes their criticisms are “illegitimate and unfounded.”

Chief Minnesota federal Judge Michael Davis filed court documents last week appointing former chief federal Judge James Rosenbaum “to investigate [Butler’s] fitness to appear before this court, and to make a recommendation regarding appropriate disciplinary actions or sanctions.”

Martin Cole, who heads the Minnesota Lawyers Professional Responsibility Board, said it’s “quite rare” for the federal judiciary to investigate a lawyer. It usually relies on the state board to conduct inquiries and supports their discipline.

U.S. District Judge Patrick Schiltz announced last year that he was asking the state board to investigate Butler. Cole acknowledged last week that such a probe was underway. Now it appears that the local federal judiciary decided it was not going to wait for the state board’s conclusions.

Butler has had cases in front of most, if not all, local judges, and several have publicly expressed exasperation.

In a March 2012 memorandum, Schiltz hit Butler with a $50,000 sanction and another $7,500 in legal fees for the entities he’d sued, saying Butler had filed “nearly 30 frivolous lawsuits.” He called Butler’s arguments “evasive and often absurd,” said he misrepresents the facts with “constantly shifting and contradictory arguments.”

Butler responded to those sanctions in a video on his website. “I haven’t paid it and I never will pay it and I don’t have the resources to pay it,” he said.

In another case, in June 2012, U.S. District Judge Ann Montgomery ordered Butler to pay a $75,000 sanction, plus $17,068 in attorneys’ fees.

“Butler’s insistence on re-litigating losing arguments is staggering, and it comes with a cost, because it multiplies the expense of litigation and monopolizes scarce judicial resources,” she wrote. “Moreover, no one, not even Butler, can reasonably or competently believe in the merits of any of these arguments.”

In August 2012, U.S. District Judge Donovan Frank hit Butler with $45,451 in sanctions. He said Butler’s “baseless” arguments had been “consistently rejected” by other courts. He also noted that Butler had defaulted on his mortgage and had “been living in his house for more than three years without making any payments.”

A few days later, the 8th Circuit Court of Appeals affirmed an earlier Frank decision upholding the 2010 foreclosure on Butler’s house, which Butler and his wife, Mary, purchased in 2006 for $280,000. The Appeals Court labeled Butler’s reasoning “deficient” and having “no merit.”

Butler said he remains in his home, having started a second action against Fannie Mae. U.S. District Judge Susan Richard Nelson threw that case out, but Butler said it is on appeal.

Butler’s signature argument

The judges say Butler generally contends that mortgage companies do not have clear title to the original notes, making foreclosures illegal.

Schiltz explained in his memorandum that in mortgage transactions, a borrower signs both a note in which he promises to pay the loan and a mortgage in which he pledges his home as a security to repay it.

Historically, the lender held both note and mortgage. But since the 1990s, it has become common for them to be held by different entities. Often, the note is held by the lender, or someone who bought the note from the lender, while the mortgage is held and recorded in the name of a nominal mortgagee such as Mortgage Electronic Registration Systems Inc. (MERS).

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