N.C. Banks commissioner revokes mortgage lender's license
Posted July 7, 2009 10:00 a.m. EDT
Updated July 7, 2009 5:42 p.m. EDT
Raleigh, N.C. — The North Carolina Commissioner of Banks revoked the mortgage lender license of North American Real Estate Services Inc. (NARES), finding that it used a variety of shell companies and fictitious names in order to avoid state regulation, the commissioner announced Tuesday.
The commissioner ordered NARES and its affiliated companies to cease and desist from advertising or engaging in the mortgage business in North Carolina. The commissioner also ordered NARES, its affiliated companies, and the companies’ owners, officers, and directors to pay a $320,000 fine to the state and refund $60,000 to consumers.
“This case shows how far some mortgage companies will go to escape our regulation,” said Chief Deputy Commissioner of Banks Mark Pearce. “This decision holds not only the company responsible, but also the individual owners that profited from the illegal scheme. North Carolina will continue to pursue these companies and shut the door on this type of business.”
The commissioner’s ruling found that NARES was one of several corporate entities that operated under the Pacific Bancorp name. The owners and directors of Pacific Bancorp established shell corporations in an effort to cloud their true identity and to shield them from liability, according to the report.
Through this network of shell companies, the Pacific Bancorp entities attempted to obtain licensure in every state. If one company was denied a license, the enterprise would reapply using the name of a different shell. For example, when the Washington Department of Financial Institutions (“WDFI”) refused licensure to NARES, the enterprise reapplied to the WDFI under the name, “Americawide," according to the report.
"Through these shell corporations, the owners of Pacific Bancorp attempted to sell to unlicensed individuals a right to do business in North Carolina," the commissioner said. "These unlicensed individuals would operate with no meaningful controls, undercutting the state’s efforts to supervise and regulate the mortgage industry."