A nationwide mortgage banking company, with some 650 employees in 85 branches, has stopped funding loans and paying employees in the wake of the alleged embezzlement of $4 million by the chief financial officer, a branch manager told MortgageDaily.com.
"I've sat here for three days, hoping for light at the end of the tunnel," said Michelle South, manager of the Ankeny, Iowa, branch of Maverick Residential Mortgage. "But now it looks like there is no tunnel.
"It's a train wreck."
She noted that others in the company have said the CFO is suspected of having embezzling $4 million.
All six loan officers in her office are staying as they seek to find another mortgage company, she explained.
"We're going to go to another company and start to close the loan applications we have as soon as possible," South said.
Phones at Frisco, Texas-based Maverick were not being answered, and all calls, including those to at least some officials and employees, were being forwarded to voice mail. Messages that were left were not returned.
South and another branch manager, Judy Miller, told MortgageDaily.com that they have been unable to reach anyone at Maverick's main office.
But in an interview with a local CBS news affiliate, Chairman and Chief Executive Officer Bob Johnson said the company couldn't meet it payroll because of major cash flow problems.
When asked about the missing $4 million, Johnson replied, "We're investigating that right now."
"We've had many different people in here, from CPAs to auditors, to help us understand where we are currently," he continued -- looking surrealistic. "We're not sure."
An e-mail sent on Tuesday, a payday, from the main office to branch managers and employees only said, "A mistake was made through our payroll company," and that direct deposits "will be pulled back out of your account."
Miller, who is the manager of Maverick's branch in Gainesville, Texas, said that neither she, nor her two loan officers, nor, apparently, anyone else, had been paid Tuesday, although all had received their bi-weekly payments two weeks earlier.
She said she had been told that all loans closed by Friday, January 11 will be funded.
"That's what they're telling me," she said. "Let's hope that's the case. If not I'll have to do something else."
She also said that she had been told that Maverick is looking for new funding sources.
"It's always been a very good company and I've always enjoyed working for them," she continued. "I'm very saddened by what's happened. We're going to have to pick up the pieces and go one down the road."
She said she was going to look at "other opportunities."
"I had thought of hanging it out and seeing what's going to happen, but I think at this point I'm going to pursue other opportunities."
Privately-held Maverick, founded by Johnson and President and Chief Operating Officer Barrett Owens, offers a variety of adjustable- and fixed-rate loans of 15- and 30-year duration. It also offers interest only, balloon, stated income, no point-no fee, "imperfect credit," and equity loans. The company reportedly underwrites, closes, funds and then sells into the secondary market all of its loans in at least 36 states.
In May last year, the company was named the fastest growing business in Collin County, Texas in a competition sponsored by Comerica Bank. The designation was based on Maverick's pattern of growth over three years, with a strong emphasis placed on the last 12 months.
Then last November, Maverick placed 48th among the 2007 Dallas 100 Entrepreneur Awards, which is sponsored by the Caruth Institute for Entrepreneurship at Southern Methodist University's Cox School of Business.
No loan production figures were immediately available.
Around 650 people were reportedly employed by the firm.
"Part of where we are right now is getting arms around how much cash we do have available," Johnson added in the CBS interview.