More Leadership trouble at Mortgage Bankers

Leadership at the Mortgage Bankers Association is a total joke these days.  Readers may recall how OptionARMageddon exposed Jonathan Kempner’s poor judgment.  The guy merged his association with the one representing subprime lenders and then decided to build new headquarters at the top of the market.  That decision may end up bankrupting MBA.  A few days after our story was published, Kempner resigned.

After his resignation, we wrote that his replacement, John Courson,  is a doozy.  His own firm, Central Pacific Mortgage, went belly up, but not before HUD caught him overcharging customers for credit reports.  Sounds like a small issue, though it was big enough that Courson was forced to settle for $85k.

Since taking over at MBA, Courson has been lobbying hard for, among other things, Paulson’s $700 billion bailout package.

Now, check out this story on Courson from the Sacramento Bee:

[Courson] has been accused of defrauding 11 of his former branch managers and embezzling $879,000 from them in the collapse of [Central Pacific Mortgage] in 2007.

The story goes on…

Last year, Courson also was accused of a $1.6 million civil fraud by Lehman Brothers Bank of New York, the giant Wall Street investment bank that filed for bankruptcy protection two weeks ago.

And on…

• Sixteen former employees secured judgments against Central Pacific Mortgage  for unpaid wages, overtime, vacation pay and other penalties totaling $111,953.
• A&A properties, which leased a 46,000-square-foot office to Central Pacific on Iron Point Road in Folsom, secured a judgment against Courson’s company for $295,170 in unpaid rent.
• Three Florida businessmen who lent Courson and Central Pacific $1.5 million accused him of fraud and fraudulent misrepresentations. They said he personally vouched for a loan they made to his company for its operations.

As for the embezzlement charges…

Courson’s dispute with his former branch managers, who claim they lost $879,000, remains before the U.S. District Court for Eastern California. They were branch owners and thought they had separate financial accounts for each branch, which were overseen by Central Pacific’s head office.

Those accounts contained the net profits each branch manager was generating, the managers allege.

Managers used the accounts for salary draws, but also to save and withdraw funds for other needs, including sickness, disability or vacations.

The managers said they were told that their branch accounts were segregated from their parent company’s financial accounts. They also received monthly statements showing their balances up until Central Pacific went under.

The biggest alleged victim is Napa mortgage broker Mark Gelow. Court documents assert he lost $535,000 in the alleged embezzlement. Gelow declined comment.

Florida branch manager and owner Jenny Mann alleges she lost $20,000.

“When I saw he was appointed chief operating officer, I nearly died,” Mann said from North Florida, where she lives. “Don’t they know he did this to us? I would have assumed he would never work in this industry again.”

Where there’s smoke, there’s fire.

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