A Montgomery County couple is suing a Maryland lawyer who said he could handle securities litigation and then charged more than $300,000 in legal fees after the couple lost most of their investment in a bundle of Baltimore properties, the lawsuit claims.
The complaint alleges that the lawyer, Steven D. Soto, agreed to represent the couple despite having no experience trying cases involving the Maryland Securities Act and incorrectly told the couple that their case was “rock solid” and that they would be entitled to attorneys’ fees and punitive damages.
Soto made, “for himself and on behalf of the law firm, … false representations for the purpose of inducing Plaintiff into signing lucrative retainer agreements to secure Plaintiffs’ business, and paying legal fees to Mr. Soto and his law firm in excess of well over $320,000,” the complaint claims.
The couple said in a statement that they were new to the United States when they retained Soto and trusted him to zealously represent their interests.
Soto did not return a phone message requesting comment on the lawsuit, and his lawyer, Brian O’Shea, declined to comment in an email.
Soto’s response to the complaint is due in Montgomery County Circuit Court later this month, according to the couple’s lawyer.
The couple, Ting Tang and Dongyun Mao, are a husband and wife who live in Montgomery County and who in 2014 invested $300,000 in Baltimore Harlem Park Investment, LLC.
The company intended to acquire more than 30 rental properties in Baltimore, according to court filings, but it quickly became clear that the purchase faced serious problems, including the threat of tax sale against many of the properties, a lack of up-to-date lead certificates, and inadequate funding to remediate the properties or redeem them at tax sale.
Based on the representations of Baltimore Harlem Park Investment’s management, Tang and Mao believed an investment in the properties was fairly safe and would see a high rate of return, according to their lawsuit against the company. The couple took out a home equity line of credit for $300,000 and invested the money in the company, their complaint claims, only to learn of the company’s fatal financial problems two years later.
The company filed for Chapter 11 bankruptcy in October and listed assets up to $425,000 and debts up to $767,778, according to the Washington Business Journal.
The couple hired Soto in an effort to recoup their investment, relying on the lawyer’s claim that he had “never lost a case” and was prepared to handle a lawsuit under the Maryland Securities Act, according to the complaint against Soto.
Mao ultimately won a judgment of $133,333, over a third of the money she paid for an ownership stake in Baltimore Harlem Park Investment, court records show.
But in the couple’s lawsuit against Soto, they claim that he did not take basic actions necessary to a successful securities case, including advising the couple to tender or attempt to rescind their interest in Baltimore Harlem Park Investment.
The complaint claims that Soto only called three witnesses at their trial against Baltimore Harlem Park Investment, and did not call any experts to establish the value of the security.
The couple also alleges that Soto said he would be working with an associate attorney but did not disclose that the attorney had just been admitted to the Virginia State Bar and was not licensed to practice law in Maryland.
The complaint accuses Soto of breach of contract, fraud and legal malpractice and requests $510,000 in compensatory damages and $200,000 in punitive damages.
Michael Hsur, the lawyer representing Tang and Mao in their lawsuit against Soto, provided a statement from the couple:
“At that time, we were new to the U.S. and knew nothing about the U.S. legal system, so we placed our trust in Mr. Soto and his law firm. Little did we know that he did not have any experience in litigating securities law matters,” the couple said.
“We believe that Mr. Soto committed the ultimate betrayal of lying to us, his clients,” they said. We hope, and we also believe, that the court will give us a fair decision and will give us justice back.”