|A New York mortgage company, which had been rapidly growing and publicly traded, has filed for bankruptcy liquidation.
MEM Financial Solutions LLC filed a voluntary petition for Chapter 7 Bankruptcy on Oct. 23 in U.S. Bankruptcy Court, Northern District of New York.
The company indicated in its bankruptcy filing that is was located in Glen Falls, N.Y. But its Web site -- before going dark -- indicated the company was located Schenectady, N.Y.
Shares of MEM had been publicly traded on the Pink Sheets under the symbol MFSN.
The mortgage broker reported $52 million in originations during 2004. Around two-thirds of its business was generated from referrals.
In January 2005, eLocity Inc. touted shares of MEM as a stock to watch.
"The company said that revenues are expected to exceed $75 Million for 2004, up from $42 million reported last year," eLocity said in a press release. "MEM also said that, due to the booming housing market, it also anticipates a 12 percent to 15 percent compounded yearly growth that can be furthered by the rapid expansion currently planned."
In July 2005, MEM acquired Land Research Solutions Inc., a title company. At the time, it noted it was reviewing other acquisition opportunities in the title, mortgage and underwriting arena.
In January 2006, after reaching a deal to purchase the 20,000-square-foot Schenectady office, MEM President Mark McLeod said the company expected to grow from 40 employees to around 140 as a result of the office expansion. The city gave MEM a $54,000 grant to help offset the cost of leasing parking spaces for company employees.
Two months later, however, Daniel Duffy purchased a controlling interest in the company and became its chairman, president and chief executive officer. He ousted the board of directors and the company's management.
"In the coming months, our shareholders can except to see a vast array of changes -- including a name change, additions to the management team and implementations of a new business plan," Duffy said at the time.
Duffy noted in the March 2006 announcement that MEM's operating business, The Lending Factory Inc., was reconveyed to the company's former president, Mark E McLeod.
But a May 2005 entry at the Rip-off Report accused Duffy and McLeod of operating a stock scam.
"The individuals in this stock scam misled investors to the tune of 141 million shares, reversed split, sold another 43 million shares and reverse split again," the Rip-off Report said. "They had investors thinking there was a merger going on using the franchise owner's son as the owner. They had investors thinking there was an audit when there was none. They released information about a company's past earnings 5 times and all were different."
Two months earlier, MEM issued a press release indicating that a campaign had been organized to defame the company -- likely the efforts of investors with a short position in the company. Half truths, rumors and outright lies were being spread through Internet chat boards.
"The company would like to inform its shareholders and the investing public that it stands by each and every press release it has issued and that the company will not allow this fraudulent campaign to continue," MEM said in the announcement.
MEM claimed it was interviewing high-profile law firms to quickly file lawsuits.
In the bankruptcy filing, MEM claimed around $3,000 in assets and nearly $850,000 in liabilities owed to less than 50 creditors.
It was McLeod who signed the bankruptcy petition as president. He indicated he owned 100 percent of the company's shares. In addition to MEM Financial Solutions LLC, The Lending Factory Inc. and MEM Financial Solutions Inc. were listed as the debtors.
No real property or secured creditors were listed on the petition, suggesting that Duffy's acquisition included the Schenectady building.
Among the outstanding debt listed was $50,000 in commissions owed to Michael Angelo; more than $346,000 owed to Flagstar Bank, FSB; and nearly $70,000 in state employment taxes owed to New York's Department of Labor. Another $260,000 was owed for a lawsuit to Robert and Pamela Storm.
MEM Financial Solutions, LLC and MEM Financial Solutions, LLC, Debtor
Case No. 08-13514-1-rel, Oct. 23, 2008 (U.S. Bankruptcy Court, Northern District of New York)