Mortgage lender in long struggle with state bank ends, CEO says
EAST HARTFORD, CT — A mortgage company in a long battle with the state’s banking department is shutting down for good, the company’s CEO said Thursday.
1st Alliance Lending will complete operations by next month, and its few remaining staff, up from 170 at the top of the company, are working on the final details of the business shutdown.
CEO John DiIorio has said he puts the blame for the business shutdown entirely on the state, which is seeking a $ 1.5 million fine in a license revocation case that has been ongoing for about a year and half. The state claimed that 1st Alliance misled consumers by using call center employees, who allegedly performed tasks requiring licenses.
“The 1st Alliance is dead. There is no way forward for this business, ”said DiIorio. “We have worked very hard and in good faith with the banking department and DECD to find a way forward, and it just cannot be done.”
The state said call center employees involved in the mortgage pre-approval process performed tasks requiring state licensing, such as negotiating the terms of a loan. But 1st Alliance says they played no role in the approval process and could not be mistaken for a decision maker.
“Most of our bureaucrats are very honest and hardworking people. I think they’re there to serve the people who live in this state, and I think they get a bad rap 90 percent of the time, ”he said. “Unfortunately, this company has encountered a few bad apples that have acted in bad faith since the day they came here and lied about their goal.”
Hearings on the 1st Alliance case have been taking place sporadically since September on the banking service app at the end of last year. DiIorio attended another court session on Thursday, where he would start representing the company on his own rather than continuing to use dwindling resources to pay lawyers to attend the hearings. DiIorio still uses lawyers, but he does not require them to attend hearings.
DiIorio said he was out of business with his business shutting down and was devoting all of his time to fighting to maintain the company’s reputation.
He said he would also be working on starting a new business in New Hampshire, Massachusetts or Rhode Island next year.
“We will see this until the end and we will come back,” he said.
The 1st Alliance does not have active licenses, and its remaining dozen of staff were informed on October 31 that they would no longer be maintained in hopes of resuming operations at a later date.
Banking department spokesman Matthew Smith said on Thursday that the firm’s shutdown had no impact on the ongoing hearing. Prior to Thursday, there had been a handful of court days with the state interviewing only one witness, the department’s lead examiner in the 1st Alliance case.
He said the lawyer for the banking department showed that the screening officers working for the 1st Alliance performed credit checks and performed tasks that could be seen as negotiating the terms of the loan.
“We think it takes an application. Under Connecticut law, you need a license to conduct this kind of activity, ”Smith said.
Most enforcement cases submitted by the banking service are resolved through settlements, so the current hearing process is unusual. After the administrative hearings, which are conducted by a hearing officer appointed by the ministry, a decision can be appealed to the Superior Court.
The case began with what the state calls a whistleblower complaint last year. Reviewers held interviews with 1st Alliance staff and settlement talks in July 2018 collapsed before the state issued notice of its intention to revoke the company’s license at the end of 2018.
“The department will continue to work for a fair resolution of the allegations against the 1st Alliance, but must ensure that companies doing business in Connecticut follow the same rules,” Smith said in a statement Thursday.
1st Alliance had received a $ 3.5 million incentive program from the state’s Department of Economic and Community Development to relocate its call center to a vacant building in Putnam. About $ 2 million of the funding was repaid and the remaining $ 1.5 million was converted into a loan, but DiIorio said the company did not have the capacity to repay it.