CMS INVESTMENT HOLDINGS, LLC vs LAWRENCE E. CASTLE, CAREN J. CASTLE (CASTLE LAW FIRM) | $45 million investment loss

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CMS INVESTMENT HOLDINGS, LLC vs LAWRENCE E. CASTLE, CAREN J. CASTLE (CASTLE LAW FIRM) | $45 million investment loss

CMS INVESTMENT HOLDINGS, LLC vs LAWRENCE E. CASTLE, CAREN J. CASTLE (CASTLE LAW FIRM) | $45 million investment loss

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No.

CMS INVESTMENT HOLDINGS, LLC,
Plaintiff,

v.

LAWRENCE E. CASTLE,
CAREN J. CASTLE,
LEO C. STAWIARSKI, JR.,
LEC HOLDINGS, LLC,
LCS COLORADO HOLDINGS, LLC
Defendants.

FACTUAL ALLEGATIONS

10. Beginning before 2007, Castle, Caren Castle, and Stawiarski owned,
directed, controlled, and/or were affiliated with various law firms operating in Colorado,
New Mexico, Arizona, Nevada, Wyoming, and Utah, including Castle Meinhold &
Stawiarski, LLC (now known as The Castle Law Group); CMS Legal Services, LLC;
Castle Meinhold & Stawiarski Legal Services, LLC; and Cooper Castle Law Firm, LLP,
referred to herein as the “Castle Law Firms”, whether collectively or individually. The
Castle Law Firms provided legal services in connection with foreclosure, bankruptcy,
and title processing, principally to mortgage lenders and mortgage servicing companies
in connection with loans secured by residences or other real property.

11. Defendants and the Castle Law Firms also owned, managed, and/or
operated entities that provided other, non-legal services to mortgage lenders and
mortgage servicing companies on a fee basis (the “Castle Services Businesses”) in
connection with, among other things, mortgage defaults, foreclosure processing, title
insurance and related services, title curative services, and real estate owned closing
services. The Castle Services Businesses supported, and provided their services
principally to, the Castle Law Firms and their clients. In 2006-2007, defendants desired
to find investors to help them capitalize the Castle Services Businesses for growth and
to allow defendants to partially cash out.

12. FTV Capital believed the Castle Services Businesses presented an
investment and growth opportunity. Plaintiff was organized and funded to make an
investment. Plaintiff agreed to make a substantial investment after months of due
diligence and negotiations with defendants.

13. An initial step in the investment transaction was the organization of CMS
Holdings Group, LLC, later renamed RP Holdings Group, LLC (under whichever name,
hereinafter “RPH”). Defendants sold the Castle Services Businesses to RPH in
exchange for Class A Preferred Units, Class B Common Units, and promissory notes in
RPH. Castle, Caren Castle, and Stawiarski controlled RPH.

[…]

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