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Net Branch Company Shuts Doors

Advantage Investors advises employees to keep mum

March 29, 2004

By PATRICK CROWLEY


Can a company that brokered $1.5 billion in loans last year disappear?

That seems to be the case with Advantage Investors Mortgage, a Dallas-based net branching firm that stopped writing loans and abruptly closed for business last month.

Advantage Investors, the 19th largest loan broker in the country according to American Banker-Bond Buyer, was apparently forced into foreclosure by its senior lender.

That's the conclusion one can draw from a somewhat cryptic letter vendors received last week.

The March 18th letter is from Bonnie Lee Lepore, who is identified as a "SVP and Controller." It says that as of Feb. 13 "Advantage Investors Mortgage Corporation Inc ... ceased operations."

"On Feb. 26, 2004, Advantage's senior secured lender foreclosed upon and sold all of Advantage's assets through a foreclosure sale," the letter says. "All Advantage accounts with your company are hereby closed."

Advantage was embroiled in a scandal during 2002 when two owners of one of its net branches were accused of using a Virginia title insurance agency to illegally divert loan proceeds for their own benefit. That case, where defendants Fernando Damaia and James R. Niblock were accused of wiring ill gotten funds to overseas banks, left the company scrambling to distance itself from criminal activity.

Information about what happened has not yet surfaced, and the company has not only clamed up, but told former employees to do likewise or face a legal battle.

In the vendors' letter, questions are referred to Jason M. Rudd, a lawyer at the Houston firm of Diamond, McCarthy, Taylor, Finley, Bryant & Lee, LLP.

Rudd and another lawyer at the firm, Kyung S. Lee, were also listed as contacts in an e-mail received by MortgageDaily.com on March 12. The email came in response to questions posed about the operation of the company.

A woman with an Advantage Mortgage e-mail responded "no" when asked if the company was still in business. When pressed with more questions, the woman made the reference to the law firm.

Lee responded to one e-mail by saying he could not comment. He has not returned subsequent e-mails or phone calls. Rudd has also not responded to numerous e-mails and phone messages.

The company's phone and Web site are still turned on. But several voice mail messages left at the company's main number in Dallas have not been returned.

And while the Web site is active few of the links are accessible; those that are contain little if any information.

Employees found out the company was closing on Feb. 13, when they received a letter from Dawn R. Pemberton, who is listed as COO and executive vice president.

"The current mortgage market conditions no longer make it feasible for Advantage Investors Mortgage Corp. ... to continue its current level of operation," the letter states. "Therefore (the company) will cease all origination business as of close of business" Feb. 13.

"As a result of this decision, Advantage ... hereby terminates your employment," it read.

Employees are also sternly told not to talk about the company or give away any information.

"You are prohibited from disseminating confidential information," the letter warns. "You are reminded that certain legal provisions of your employment continue subsequent to your termination and Advantage ... will employ any legal remedies necessary to enforce these provisions."

The letter discusses how benefits -- including health care insurance and retirement accounts -- are being handled.

Pemberton still has an active voice mail at the company, but she did not return phone calls to comment. An employee in an east coast branch operation said he believed Pemberton has since left the firm.

Business appeared to be on the upswing at the company, according to the American Banker-Bond Buyer ranking.

The estimated value of residential loans brokered were $1.5 billion last year, up from $1.2 billion in 2002.


Patrick Crowley is a political reporter and columnist and former business writer for The Cincinnati Enquirer. Email Patrick at: [email protected]
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