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ACC, Citi Deal Stings Gov

Republicans calling for Patrick investigation

March 16, 2007


photo of Patrick Crowley
A phone call by a state governor may have played a role in Citigroup's recent rescue package for ACC Capital Holdings. But political opponents are now calling for an investigation.

Massachusetts Gov. Deval Patrick, a former board member of Ameriquest Mortgage, said he made a "mistake" by making a phone call to Citigroup on behalf of the mortgage company.

Patrick, a Democrat elected in November, said in a statement that the Feb. 20 call he made to Citigroup executive Robert Rubin -- the former U.S. Treasury Secretary -- was as a former Ameriquest board member and not as governor.

But, after the incident was first reported by The Boston Globe, Patrick admitted he should not have placed the call to Rubin.

"Even though I made this call solely as a former board member, and I believe that was clear to Mr. Rubin, I appreciate that I should not have made the call," Patrick said in the three-paragraph statement.

"I regret the mistake," he said.

Neither company returned phone calls or e-mails seeking comment.

Patrick said he made the call at the request of an officer at Ameriquest subsidiary ACC Capital Holdings. At the time, ACC was trying to arrange for financing from Citigroup.

About a week after the call, ACC announced it had reached a deal with Citigroup for the financing.

Citigroup agreed to be ACC's primary warehouse lender, the company said.

"ACC Capital Holdings ... has secured additional working capital from Citi's Markets and Banking Division and [ACC's] majority shareholder to strengthen [ACC's] financial position," the company announced in a Feb. 28 press release.

ACC, a subprime lender, said it produced $23 billion in loans last year. But the company has also struggled and was seeking an infusion of capital.

Citigroup does business in Massachusetts and is regulated by state banking officials.

Patrick said he has no "financial interest" in ACC or its subsidiaries.

"I neither knew nor had any interest in the details of the transaction that ACC Capital and Citigroup were considering," Patrick said. "As a former board member, I was asked by an officer of ACC Capital to serve as a reference for the company and agreed to do so."

That ACC official has been identified as Adam Bass, a senior executive and legal counsel.

"I called Robert Rubin, a former colleague from the Clinton administration and an executive at Citigroup, to offer any insight they might want on the character of the current management," Patrick said. "The conversation with Mr. Rubin lasted at most a couple of minutes."

In 1994, President Clinton appointed Patrick Assistant Attorney General for Civil Rights, the nation's top civil rights post, according to his official gubernatorial bio.

He served on the Ameriquest Board while a candidate, resigning last July.

During his campaign, Patrick was forced to defend his relationship with the Orange, Calif.-based lender because of a massive predatory lending settlement and recent Ameriquest layoffs in Massachusetts.

In early 2006 Ameriquest, without acknowledging any wrong doing, agreed to pay $325 million to settle charges of unfair lending practices in 49 states. Among the states bringing the charges and negotiating the settlement was Massachusetts.

Patrick is taking some political heat for his phone call to Rubin.

The Massachusetts Republican Party said in a statement it submitted a letter to the state's Ethics Commission requesting an investigation.

"Gov. Patrick's effort to influence a business transaction at the request of this former employer raises serious ethical questions," Brian Dodge, the party's executive director, said in the statement. "A personal phone call from the state's highest elected official to Citigroup's executive committee chairman at the request of ACC's Capital's vice chairman constitutes influence of the highest order."


Subprime Co. Director Running for Gov
A director on the board of one of the biggest subprime mortgage lending companies is running for governor of Massachusetts.

Bank Took 2 Years to File Politician's Mortgage
SunTrust Bank of Atlanta claims it did nothing wrong by waiting two years to file a mortgage it made to a gubernatorial candidate.

Patrick Crowley is a feature journalist and blogger for MortgageDaily.com. He is also a reporter, blogger and columnist for The Cincinnati Enquirer.
e-mail Patrick at: [email protected]

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