Frivolous lawsuits have driven a company that claims to be the largest U.S. branch operation into bankruptcy.

On Wednesday, Premier Mortgage Funding Inc. filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court of the Middle District of Florida.

The Clearwater-based broker's filing states that debts are "primarily business debts" and that, after any exempt property is excluded and administrative expenses paid, the company estimates it will not have funds available to distribute to unsecured creditors. Premier said in the filing it estimates that there are 99 creditors and with liabilities between $1 million to $100 million.

The bankruptcy filing was the result of millions of dollars in frivolous lawsuits filed against the company -- and not because of slow originations, Premier Chief Executive Officer Jerry Cugno told MortgageDaily.com in a telephone interview Friday.

He did note, however, "The market is just horrible."

"Basically we've done nothing wrong," Cugno emphasized.

The CEO described the lawsuits as "people-related," explaining that they could involve anything from borrowers to employees and lenders.

They "stem from the craziest things I've ever seen in my life," the CEO continued. He cited an example of a woman suing because she "thinks she got the wrong loan when people begged her not to take the loan and there were e-mails to prove it." He also said he lost $2 million on a case that never made it to court as it was settled in a summary judgement.

"Lawyers keep coming like sharks," he said. "They nickel [and] dime you to death before you get to court, but they expect millions."

In late 2005, a Premier branch owner and his employees were picketing the headquarters of Premier alleging that the company had not paid them two months worth of work and commissions. At the time, Cugno had said it would pay workers up to a certain date for their work but said some loans originated from that particular branch were fraudulent and would not pay commissions on those loans. Both sides were preparing for legal action.

In Friday's interview, Cugno noted many brokers are being hurt by loan repurchases and the demise of nonprime lenders. The executive questioned how, for example, a lender can offer stated-income programs then ask the broker to buy back a loan because it was stated-income. He noted Mortgage Lenders Network and New Century "are really the ones that hurt us the most. MLN left us hanging with around $70 million on a line with paper."

Premier, which has almost 600 branches, engaged in mortgage banking for less than a year but has not funded loans in almost nine months and is "strictly back to being a mortgage broker," Cugno said. However, it is "absolutely" still originating loans and "all over the country."

"We were so successful, doing so well ... and everything that could be unlucky happened to us from MLN to New Century -- leaving us hanging on a line with deals," Cugno added.

Premier had 4,000 employees and currently holds around 3,000, and to Cugno's knowledge is "still the largest branch company in the United States." The CEO did not know as of when the company had the higher number of employees nor the company's monthly loan volume of originations. "You'd have to call me another day" for mortgage production information, he said.

Premier's Web site says it is licensed to do business in 36 states and offers conventional, subprime, rural. FHA and VA through 300 top lenders, including Bank of America, CitiFinancial, Countrywide, GMAC, IndyMac, Impac, NovaStar Mortgage, Washington Mutual, Wells Fargo, and Accredited Home Lenders. Some of the loan programs listed on the site were 125 percent combined loan-to-value with no prepay on a minimum FICO of 640, 95 percent LTV and 90 percent LTV on no income no asset verification with a respective minimum FICO of 681 and 581.

Rather than paying per-loan fees, the site states Premier's branches pay a flat fee of $1,500 and an administration fee of $125 per month. The flat fee covers quality control and other normal support functions. Branch managers are compensated and receive all fees on the same day the funds are disbursed by the closing agent. The company also provides its branches with 100 free leads every month.

A U.S. Trustee was appointed to the case, which was assigned to Bankruptcy Judge Catherine Peek McEwen, according to court documents. A meeting with creditors is to be held on Aug. 10 in Tampa.

Creditors listed on the bankruptcy filing included GMAC Bank, Countrywide Warehouse Lending, Deutsche Bank, and Popular Warehouse Lending.

"We're just at a point where we're tired of frivolous lawsuits," Cugno continued. "They're getting overwhelming. I just want to protect my people."

"We will be successful again," he added.