I own a small company located in Plainfield, Illinois. In summer of 2010, I was attempting to purchase a building in Plainfield for my business that was on the market for a long time and almost to foreclosure. I needed a commercial loan and after a couple a failed attempts to obtain SBA financing at my bank, my real estate broker recommended a mortgage broker from St Charles, IL that specialized in loans with the SBA and was an alleged expert. He not only said he could get the SBA funding, but also convinced me he had other loans available at a local bank that was giving out unsecured lines of credit to businesses for up to 125k with just a signature and good credit. which I have. The hitch though, was that you had to pay him the traditional 1% of the loan at closing, which I guess is common, but $5000 of it was up front with the application. After numerous phone calls to my real estate broker about the purchase and loans I still hesitated and declined the offer, however, the real estate broker himself, who was eager to close the sale, guaranteed the money back if the mortgage broker was unsuccessful in getting the loan in order to seal the deal. Furthermore, mortgage broker agreed as well to return the deposit if he was unsuccessful in the obtaining of the loans.
After a few more negotiations, we finally settled on $3,000.00 deposit up front with the application for the two loans, one for the SBA, the other for the line of credit. A deal I never really was comfortable with. At first mortgage broker seemed genuinely interested in the loan, even showing up at my office once a couple days later in the same week to get addition financial documents. But shortly thereafter the communicating started lagging. I had though kept in touch with the real estate broker who seemed convinced and assured me there was going to be a loan from the mortgage broker .
Several weeks later I called the mortgage broker to see what was happening as the contract on the building was expiring soon and the sellers were concerned. he seemed surprised to hear from me and stated he didn’t know anything yet and admitted that he had "dropped the ball" And would start looking and reach out to me when ready. He cited "growing pains" but said he got it straightened out.
Meanwhile, the contract on the building had since expired and at this point I finally gave up and began demanding a refund of my $3000.deposit from the mortgage broker some 7 weeks later.
It took another month for the mortgage broker to even agree that he would cancel the agreement, but refused to refund my deposit at that time.
After a few more weeks in December, the mortgage broker said he would refund only a portion of the deposit, first it was $500, then it was $1,250. Then he agreed to pay $1,750 and would drop a check off to the real estate broker, but he never paid any of the money. Finally almost 3 month months later I complained to the Better Business Bureau in hopes of expediting a refund. However, the mortgage broker ignored all of their repeated requests for a reply to the complaint and issued an "F" on his rating with them.
I also complained to Lisa Madigan at the Illinois State Attorney’s Office (case#2010-CONSC-00295xxx), Where apparently, there is no license required for a commercial mortgage brokers, nor even a disciplinary board and there is little for them to do about this situation, and the mortgage broker also declined to reply to them too. I have at this point no choice so I initiated a suit in small claims court in Will County, Il. Naming the mortgage broker, and mortgage funding co as defendants.
But then sometime in January, 2011, I received a strange email(BELOW) from the mortgage broker. It talked about my refund and asked that I be patient during the processing, it also had some content about my taxes which I found to be rather odd, but didn’t think much of it at that time until I received an audit notice at my business from the IRS this week. It appears the IRS is now aggressively auditing the 2007/2008/2009 taxes for my business, for some strange reason. These are the same tax years that were in the financial document loan package supplied to the mortgage broker in order to obtain the loans for my company just a few months earliar. I am finding it difficult to believe this is purely co-incidental, as all of my taxes have always been prepared by upper bracket CPAs and have never previously been audited by the IRS. I immediately remembered that strange email and further believe that the mortgage broker created the crazy content in the email along with who knows what to my financials and turned it over to the IRS in order to induce this audit and cause hardship on my company and so to deter the focus away from the collection of his debt ultimately and retribution for reporting him to the state attorney. It seems the IRS has a whistleblower program that allows potential informants in possesion of information on tax fraud the ability to earn up to 15% of the taxes collected from the non compliant person if found guilty. The informant must have companies tax id/soc sec/and then know the violators income is more than 200k per year to qualify. all of which the mortgage broker had in his possesion. I have forwarded this information to the State Attorneys office for review, and to an attorney specializing in tax cases, But I am still out $3000. Not to mention the 10k it will take to defend my company now from the IRS. There must be some SBA regulation or rule that governs these unregulated brokers from breach of confidentiality of businesses financial records that must apply at the federal level. the mortgage broker has managed to miss all court appearances even after being properly served which caused a default judgment against his company. I suspect the company will prove to be insolvent and worthlessthe mortgage broker has one more date in April to personally appear in court.
xxx frustrated in plainfield
Below is a copy of email from the mortgage broker in January, 2011
-----Original Message-----
From: the mortgage broker
To: frustrated
Cc: the real estate broker
Sent: Sat, Jan 15, 2011 9:12 am
Subject: Refund
xxx,
According to the real estate broker we have an agreement to refund you a portion of your
deposit in the amount of 1,750.00
Due to sudden changes with the banks, the only files we are accepting is SBA, I
ask if you can be just a bit patient for your refund as we have a couple sba
closings in the next few weeks and can cut you certified funds from those
proceeds.
Again, we ask that you be patient as we were with you in getting your complete
documentation.
Should you choose not to wait, I can refer you to my counsel and we can go from
there. This is the lessor of 2 evils.
I am sorry it did not work out.
The only piece of advice that I can provide you is when doing your taxes, that
you should avoid taking large w2'd income and then claiming large losses to the
government, they do not take that lightly when asking them to borrower you
money. In addition, I did some extra digging for you, just an FYI, you cannot
just make your 2010 taxes look profitable, you would need to go back and file
the previous year or 2 showing a profit, then your ability would greatly
increase. Just providing you sound advice and save you more time.
I will get the certified funds to the real estate broker ASAP.
Sincerely,
the mortgage broker Sent from my BlackBerry® wireless device from U.S. Cellular
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