© Michael S. Williamson/The Washington PostAn Aeon-owned property in Cleveland.
The firm that threatened to foreclose on hundreds of struggling D.C. homeowners is a mystery: It lists no owners, no local office, no Web site.
Aeon Financial is incorporated in Delaware, operates from mail-drop boxes in Chicago and is represented by a law firm with an address at a 7,200-square-foot estate on a mountainside near Vail, Colo.
Yet no other tax lien purchaser in the District has been more aggressive in recent years, buying the liens placed on properties when owners fell behind on their taxes, then charging families thousands in fees to save their homes from foreclosure.
Aeon has been accused by the city's attorney general of predatory and unlawful practices and has been harshly criticized by local judges for overbilling. All along, the firm has remained shrouded in corporate secrecy as it pushed to foreclose on more than 700 houses in every ward of the District.
"Who the heck is Aeon?" said David Chung, a local lawyer who said he wasn't notified that he owed $575 in back taxes on his Northwest Washington condominium until he received a notice from Aeon. "They said, 'We bought the right to take over your property. If you want it back - pay us.' "
Aeon's story underscores how an obscure tax lien company - backed by large banks and savvy lawyers - can move from city to city with little government scrutiny, taking in millions from distressed homeowners.
The firm came into the District eight years ago with hardball tactics, sending families threatening letters and demanding $5,000 or more in legal fees and other costs, often more than three times the tax debt.
© Bonnie Jo Mount/The Washington Post"Who the heck is Aeon?" said lawyer David Chung, who spent months disputing Aeon's fees after he learned he owed $575 on his D.C. condominium.
In Maryland, Aeon filed more than 1,000 foreclosure cases mostly in Anne Arundel, Baltimore and Prince George's counties, moving against the homes of a severely disabled woman and a grocery clerk who was hospitalized as the firm pressed to foreclose over a $2,100 tax debt.
In Cleveland, Aeon took the deeds to dozens of houses and then failed to care for them when they didn't sell, leaving rotting porches, shattered windows and collapsed walls, prompting the city to levy more than 100 code violations.
Calls to two former Aeon executives and several attorneys who work on the company's behalf were not returned.
"Somebody needs to do an investigation," said Frank Ford, a senior policy adviser for a nonprofit housing agency in Cleveland. "You're talking about an industry that comes to town and can impact hundreds of properties. If you don't vet and screen these buyers, it's going to cost you in the long run."
In the District, city officials said they have never been able to determine who owns Aeon.
When city lawyers challenged the firm in court to divulge its owners three years ago, the company refused, even filing for a protective order to stop the city from digging deeper.
Aeon has long listed its headquarters in the famed Willis Tower in Chicago, but when The Post showed up at the 110-story building in October to track down company officials, a building representative said Aeon was not a tenant. A second address used by the company's law firm turned out to be a United Parcel Service store in the heart of downtown - two other addresses were UPS stores in strip shopping centers outside the city.
The Post spent three months examining Aeon's corporate history, traveling to Chicago, Cleveland and three counties in Maryland and reviewing hundreds of business and land records, to find out who is behind the company that has affected thousands of homeowners across the country.
The trail begins and ends with a 52-year-old Chicago lawyer named Mark Alan Schwartz.
Aggressive actions in D.C.
Aeon jumped into the District's tax lien market in 2005 as bank financing was transforming an industry once led by mom-and-pop investors.
With Schwartz as the firm's attorney, Aeon started small, buying 89 tax liens worth $65,000 at the District's public auction.
Four years later, the company was among the top purchasers in the city, buying liens worth more than $1 million and dominating the tax auctions with the financial support of two national banks.
For Aeon, the District was the perfect place. Investors could charge property owners 18 percent interest and had to wait only six months before filing for a foreclosure, compared with a year or longer in other jurisdictions.
Between 2005 and 2009, Aeon bought 1,300 tax liens from Columbia Heights to the city's poorest neighborhoods near the Anacostia River. Then, the firm with the slogan "Supporting Local Communities" embarked on a series of lawsuits that would stun property owners.
Week after week, Aeon took families to court, where the firm demanded they pay thousands in legal fees or lose their homes. On a single day in 2009, the company filed nearly 270 cases.
"Aeon was like a machine," said Amy Mix, an attorney with AARP's Legal Counsel for the Elderly. "Other purchasers would have some sympathy for our clients . . . but we didn't get that from them. They were unapologetic."
A Washington Post investigation in September found that tax lien investors had foreclosed on hundreds of properties owned by the elderly, the disabled and the poor, taking the homes and all of the equity.
Aeon ended up with only a handful of properties, instead pressing for the fees from the property owners pulled into court.
One of the first to challenge Aeon's bills was John Kazemi, a 71-year-old retired teacher who waged a two-year battle with the company.
In 2007, he discovered that Aeon had purchased a $500 lien on a condominium parking space he owned in Northeast Washington. The D.C. tax office had been mistakenly sending the annual bills to the former owner, and Kazemi said he had no idea that he owed the money.
As soon as he received a court summons from Aeon, he paid the $500 in back taxes.
But Schwartz, Aeon's attorney, also demanded that Kazemi pay $4,200 for Aeon's legal fees and costs - more than eight times the tax debt. Kazemi hired an attorney to fight the bill, but Schwartz refused to drop the case until the money was paid, writing in an e-mail, "We are fully prepared to litigate."
Kazemi's attorney pushed back: "You run a factory and we are not going to be victims to it."
Schwartz, who has a medical degree from the University of Illinois and a law degree from John Marshall Law School in Chicago, wrote: "Let's litigate it. My pleasure."
When the case went to court, the judge slashed the fees to $952, saying they were "excessive" and "unnecessary." In one instance, the law firm billed one hour for court hearings - the judge cut the time to 12 minutes. In another, the firm billed nearly five hours to review documents - the judge reduced the time to 30 minutes.
A second attorney on the case was Schwartz's father, Spencer, who had been suspended from practice for a year in Illinois in 2001 for misconduct, including allowing his son to practice law before he was licensed, records show.
Mark Schwartz had been reprimanded, too, for sending out ads that exaggerated his professional experience and accomplishments.
In the end, Kazemi said the fight with Aeon was grueling, costing him time and money.
"They had lawyers from Chicago and they came really to destroy," he said.
Neither Spencer nor Mark Schwartz returned calls or letters seeking comment. In a court document filed in the case, Mark Schwartz wrote, "No time or expenses are billed for unsuccessful or unnecessary motions."
By 2009, hundreds of families were struggling to pay Aeon. One property owner faced $7,300 in fees for a $1,546 lien. Another faced $6,750 in fees for a $901 lien.
Homeowners complained that their calls to Aeon were not returned, and there was no office to visit in the District. A former attorney for Aeon, Malik Tuma, said the Chicago mail drops were used as a safety precaution.
Most homeowners paid the fees, but some stepped forward, asking local judges to weigh in. In a series of critical rulings, Superior Court Judge Alfred Irving called Aeon's charges "extraordinarily high," while Judge Joseph Beshouri referred to them as "unreasonable" and "excessive."
Judges found that Aeon billed for legal work that was not done and repeatedly charged homeowners $450 an hour for one top attorney's time.
That attorney was Tuma, who said the company did not overcharge homeowners.
"I purposely requested the courts to give people time to redeem their properties," said Tuma, a Maryland and D.C. real estate attorney who represented Aeon for several years.
He also said his rate was justified: "The $450 hourly rate is the low-to-median rate charged by law firms with attorneys with equivalent levels of experience in the District of Columbia and the District's suburbs."
Working a regular 40-hour week for 50 weeks, that would amount to $900,000 a year.
In 2009, D.C. Attorney General Peter Nicklessued Aeon, arguing that the firm's legal fees and practices were "abusive" and "unlawful" and asking the court to step in.
"There was significant evidence of padding of the bills, charging an excessive number of hours for literally doing nothing," Nickles recently told The Post. "They gouged the hell out of poor people."
The city is waiting on a ruling in the case.
By 2010, Aeon had stopped buying liens in the District. But the company still has more than 300 active foreclosure cases.
Condemned homes in Ohio
© Michael S. Williamson/The Washington PostFrank Ford, a longtime Cleveland housing advocate, inspects a house that Aeon took through foreclosure. It was later condemned.
In 2008, Cuyahoga County was reeling from a sinking economy and plummeting housing prices. In two years, Aeon spent more than $25 million buying thousands of liens in the county's largest city, Cleveland, as well as several nearby cities.
But unlike the District's homeowners, who largely paid the fees to avoid foreclosure, hundreds in Ohio didn't do so. Aeon went on to foreclose on more than 400 properties, from Cleveland's historic Slavic Village to the badly blighted east side.
Aeon tried to sell the properties, but buyers were scarce. In neighborhoods across Cleveland, Aeon houses are rotting, prompting inspectors in the past two years to condemn 41 properties and file more than 100 code violations.
"The houses are stripped to the bone - no windows, no doors, no walls, no pipes. This is what I'm screaming about," neighborhood activist Anita Gardner said.
© Michael S. Williamson / The Washington PostIn Cleveland, Aeon properties have been cited for more than 100 code violations, including rotting porches, shattered windows and collapsed roofs.
Delaney spokesman Will McDonald said the congressman didn't know about the company's problems in Ohio or the District's lawsuit against Aeon, which was the subject of media reports, including a national story in the Huffington Post in 2010. The article also found that Aeon's law firm was doing business out of a Chicago mail drop.
"During Congressman Delaney's time as CEO, CapitalSource made over 5,000 business loans, loans probably totaling over $20 billion," McDonald said. "The CEO of a bank does not track the ongoing business operations of all outstanding loans because doing so would be impossible." Delaney took a leave of absence from his position at the bank last year and resigned after being elected to Congress.
A spokesman for CapitalSource said the bank doesn't comment on its borrowers "as a matter of policy and pursuant to borrower confidentiality agreements."
An attorney for Aeon in Cleveland declined to comment, but during a hearing last year over one of the troubled houses, attorney Kirk Liederbach argued that the firm had invested heavily in the city and "didn't contemplate" taking title to so many rundown properties.
"We intend to be good citizens here," said Liederbach, who works in the law firm's Cleveland office.
Jay Westbrook, a 33-year member of the Cleveland City Council, said the company has repeatedly failed to step up. "Aeon has an extra-vicious business model - take no prisoners, take no responsibility," he said.
As Aeon sparred with Cleveland officials, the company began getting rid of the houses. On a single day this summer, Aeon sold 83 to a newly formed limited liability company, records show.
One member of the city council, concerned that Aeon is trying to skirt the code violations, has requested that prosecutors investigate whether the sales were legitimate.
The lead agent for Aeon who signed the deeds was John A. Lord, a former Ohio attorney who was permanently disbarred in 2007 for deceiving and abandoning clients and then keeping their money. He was later convicted of aggravated theft and served one year's probation, records show.
Lord did not return calls seeking comment.
Lord has also signed legal documents on Aeon's behalf in Maryland, where the firm has filed hundreds of foreclosure cases since 2006, including one against Craig Brown's family home in Baltimore. The 53-year-old grocery clerk who earns $16 an hour stocking milk had been hospitalized for three weeks with a chronic illness when Aeon moved to take the house.
"It was terrible," said Brown, who said he tried to persuade Aeon to give him more time to pay the bill but ultimately lost his home. "They just didn't care."
Who's in charge of Aeon?
D.C. officials say they still don't know who actually owns Aeon.
In 2010, city lawyers tried to determine whether there was "cross-ownership" between Aeon and Schwartz's law firm, demanding that Aeon produce financial records. Aeon refused, asking the court for a protective order.
The District agreed to stop pressing the issue if Aeon swore that Schwartz's law firm had no ownership interest in the company. Again, Aeon refused. The judge ultimately focused only on Aeon's legal bill, saying it was "rife with inaccuracies and vague descriptions."
But clues to Aeon's ownership appear in corporate and court records reviewed by The Post.
Records in Nevada in 2004 and Maryland the following year show that Aeon Properties - a predecessor to Aeon Financial - was managed by Schwartz's younger sister, Stacey Lynn Schwartz, a clinical social worker.
In 2011, records filed in Kentucky for Aeon Financial list Schwartz as a director, along with his sister and a neighbor, Robert Mesch, who lives near Schwartz's $1.7 million estate in Colorado.
© Marc Piscotty for The Washington PostMark Schwartz, an attorney who owns this $1.7 million estate on a mountainside outside Vail, Colo., has been a constant force behind Aeon Financial. His law firm lists its address at the property.
In addition, records show that one company, Axis Investment Holdings Trust - which lists the same office as Aeon in Chicago's Willis Tower - has ownership interest in both Aeon Financial and another company, Axis Capital.
Schwartz is the chief executive officer of Axis Capital, which has a subsidiary, Records Direct, court records show. The office suite in the Willis Tower, where Aeon is supposed to do business, is registered to Records Direct.
Schwartz, who is divorcing his wife in Chicago, said in that case earlier this year that the faltering economy had hurt his businesses.
"I was caught right in the middle of it," Schwartz said in a deposition. "We had liens on real property. The value of those assets suddenly plummeted."
In court records, Schwartz said he was "living off borrowed funds." His estranged wife described a high-end lifestyle that took him to Hong Kong, London, Aruba and Hawaii. His Colorado estate has five bedrooms, a chef's kitchen, a game room and an artist's study. The residence is listed as an address for Schwartz's law firm.
Nickles, the former D.C. attorney general, said the District should continue to pursue its case against Aeon and determine the company's ownership.
"This is debt collecting that leads to the destruction of the lower economic level of the community," he said. "Anyone who would be behind that kind of scheme - and it was a well-thought-out scheme - I don't think they would be very happy about their names being disclosed on the public record."
More on the story here
Steven Rich, Jennifer Jenkins and Alexia Campbell contributed to this report.
The man at the center of this cynically predatory web of abuse of the US legal system is just a financial terrorist. He ought to already be in prison.
Yeah, these are civil matters, he's just a businessman trying to make a buck, prosecutors can't see the criminality in it, and besides they have nonviolent drug dealers to put in prison to rack up convictions instead, yada yada yada.
However, I suspect that someday he is going to prey upon some poor victim related to someone who will take extreme offense at his abuse and use a more direct approach than merely hiring a lawyer and so on.
Someday his car could blow up, or his house burn down, with him in it. Or possibly he might simply disappear. Couldn't happen to a nicer guy.