By the Division of Banks

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE BROKER
LICENSING
Docket No. 2004-032

FINDINGS OF FACT AND TEMPORARY ORDER TO CEASE AND DESIST


In the Matter of
THEODORE C. JARRETT, JR., individually,
MARK L. MCCARTHY, individually, and
MULBERRY MORTGAGE COMPANY, INC.,
Springfield, Massachusetts

Mortgage Broker
License No. MB2414; MB2508; and MB3487


The Commissioner of Banks ("Commissioner") having determined that THEODORE C. JARRETT, JR., MARK L. MCCARTHY, and MULBERRY MORTGAGE COMPANY, INC. ("Mulberry Mortgage" or the "Corporation"), located at 101 Mulberry Street, Springfield, Massachusetts 01105 have engaged, or are engaged in, or are about to engage in, acts or practices constituting violations of Massachusetts General Laws chapter 255E, and applicable regulations found at 209 CMR 42.00 et seq., hereby issues the following FINDINGS OF FACT AND TEMPORARY ORDER TO CEASE AND DESIST ("TEMPORARY ORDER") pursuant to General Laws chapter 255E, section 7(b).

FINDINGS OF FACT

  1. The Division of Banks ("Division"), through the Commissioner, has jurisdiction over the licensing and regulation of persons and entities engaged in the business of a mortgage broker in Massachusetts pursuant to Massachusetts General Laws chapter 255E, section 2.

  2. Mulberry Mortgage is, and at all relevant times, has been a corporation doing business in the Commonwealth of Massachusetts. Mulberry Mortgage is licensed by the Commissioner as a mortgage broker as required by Massachusetts General Laws chapter 255E, section 2. The Commissioner issued Mulberry Mortgage's initial license to engage in the business of a mortgage broker at 101 Mulberry Street, Springfield, Massachusetts 01105 on September 25, 2001, according to records maintained on file with the Division.

  3. Mulberry Mortgage maintains additional licensed locations from which the Corporation conducts its mortgage broker business at 350 Woodland Street, Holliston, Massachusetts 01756 and at 1650 Longmeadow Street, Longmeadow, Massachusetts 01106. In accordance with Massachusetts General Laws chapter 255E, section 5, Mulberry Mortgage has obtained from the Commissioner, and thereafter maintained, mortgage broker license number(s) MB2508 and MB3487, respectively, for such additional locations.

  4. THEODORE C. JARRETT, JR. is, and at all relevant times has been, the President, Treasurer, Secretary, Director, and principal stockholder of Mulberry Mortgage.

  5. According to the Mortgage Broker Annual Report for the Year Ended December 31, 2003 which was submitted to the Division by Mulberry Mortgage on March 5, 2004, MARK L. MCCARTHY has been employed by Mulberry Mortgage, on a part-time basis, since March 1, 2002.

  6. On September 2, 2004, a federal Grand Jury, impaneled in the United States District Court, District of Massachusetts, returned an indictment against ten individuals (the "Defendants") charging them with sixty-two counts of wire fraud and one count of conspiracy to launder money arising out of their participation in a multi-million dollar mortgage fraud scheme. The individuals charged in the Grand Jury indictment included THEODORE C. JARRETT, JR. and MARK L. MCCARTHY.

  7. The charges set forth in the Grand Jury indictment allege that the Defendants participated in a scheme of purchasing distressed properties and thereafter rapidly reselling such properties at artificially inflated values, a practice generally referred to as 'land flipping.' The execution of the 'land flipping' scheme was supported, in part, by the origination and processing of false and fraudulent loan applications through various lending institutions to obtain loans for prospective buyers and by the generation of false and fraudulent income information that artificially inflated the true income of prospective buyers.

  8. On September 23, 2004, the United States Attorney's Office issued a Press Release which announced the return of the above indictment and that the ten individuals charged therein had been arrested as of September 23, 2004. ( Ten Individuals Indicted for Participation in Multi-Million Dollar Mortgage Fraud Scheme in Springfield, Press Release, United States Attorney's Office, District of Massachusetts, September 23, 2004.) The Press Release further identified the roles of THEODORE C. JARRET, JR. and MARK L. MCCARTHY in the alleged scheme as having both worked in the mortgage business and having assisted in finding financing for prospective buyers.(See id. at 2.)

  9. On September 24, 2004, an article appearing in The Republican, Springfield [Massachusetts] Edition newspaper described the arrests of the Defendants and the nature of the allegations set forth by the Grand Jury indictment. The newspaper article was observed by a Division examiner and was reported to management personnel of the Division for review by the latter.

  10. The Division's regulation at 209 CMR 42.12(1)(b) states, in part, that:

    (1) [A] Licensee shall notify the Commissioner immediately, and in writing within one business day, of the occurrence of any of the following significant developments: . . . (b) [F]iling of a criminal indictment any way related to the mortgage lender or brokerage activities of a Licensee, including but not limited to, the handling and/or reporting of moneys received and/or instruments sold.

  11. As of the effective date of this TEMPORARY ORDER, the Division has not received notification from Mulberry Mortgage of the occurrence of the events referenced above in Sections 6 and 7 of this TEMPORARY ORDER.

    CONCLUSIONS OF LAW

  12. Based upon the information contained in paragraphs 1 through 11, the charges set forth in the Grand Jury indictment referenced in Section 6 of this TEMPORARY ORDER are related to the licensed activities conducted by THEODORE C. JARRETT, JR., MARK L. MCCARTHY, and MULBERRY MORTGAGE COMPANY, INC. under the Corporation's mortgage broker license numbers MB2414, MB2508, and MB3487.

  13. Based upon the information contained in paragraphs 1 through 11, Mulberry Mortgage failed to notify the Commissioner in writing, within one business day, that a criminal indictment had been filed against THEODORE C. JARRETT, JR., and MARK L. MCCARTHY in the United States District Court, District of Massachusetts, in violation of the Division's regulation 209 CMR 42.12(1)(b).

  14. Based upon the information contained in paragraphs 1 through 11, THEODORE C. JARRETT, JR., MARK L. MCCARTHY, and MULBERRY MORTGAGE COMPANY, INC. have failed to demonstrate the character, reputation, integrity, and general fitness that would warrant the belief that the business will be operated honestly, fairly, and soundly in the public interest in violation of Massachusetts General Laws chapter 255E, section 4 and the Division's regulation 209 CMR 42.06(2)(c).

  15. Based upon the information contained in paragraphs 1 through 11, the Commissioner has determined that:

    (a) THEODORE C. JARRETT, JR., MARK L. MCCARTHY, and MULBERRY MORTGAGE COMPANY, INC. have engaged, or are about to engage in, acts or practices which warrant the belief that they are not operating honestly, fairly, soundly and efficiently in the public interest in violation of standards governing the licensing and conduct of a mortgage broker including, but not limited to, the provisions of the Division's regulations at 209 CMR 42.00 et seq.; and

    (b) The public interest will be irreparably harmed by delay in issuing an ORDER TO CEASE AND DESIST to THEODORE C. JARRETT, JR., MARK L. MCCARTHY, and MULBERRY MORTGAGE COMPANY, INC.

  16. Based upon the information contained in paragraphs 1 through 11, had the facts and conditions found therein existed at the time of Mulberry Mortgage's original mortgage broker license application, the Commissioner would have been warranted in refusing to issue such license. Further, the facts and conditions set forth in paragraphs 1 through 11 present sufficient grounds for the revocation of Mulberry Mortgage's mortgage broker licenses, numbers MB2414, MB2508, and MB3487, pursuant to Massachusetts General Laws chapter 255E, section 6 and the Division's regulation at 209 CMR 42.07(2)(b)(1).

    ORDER TO CEASE AND DESIST

    After taking into consideration the FINDINGS OF FACT and CONCLUSIONS OF LAW stated herein, it is hereby:

  17. ORDERED that THEODORE C. JARRETT, JR., MARK L. MCCARTHY, and MULBERRY MORTGAGE COMPANY, INC., and any and all employees, independent contractors, or agents operating on behalf of Mulberry Mortgage, and their successors or assigns, shall immediately cease engaging in the activities of a mortgage broker, as defined under Massachusetts General Laws chapter 255E, section 1, relative to any residential property in Massachusetts, not otherwise expressly permitted by the terms of this TEMPORARY ORDER. Therefore, THEODORE C. JARRETT, JR., MARK L. MCCARTHY, and MULBERRY MORTGAGE COMPANY, INC. are ordered to immediately cease soliciting or accepting, either directly or indirectly, any residential mortgage loan applications from consumers for residential property located in Massachusetts.

  18. IT IS FURTHER ORDERED that MULBERRY MORTGAGE COMPANY, INC. shall immediately place any fees previously collected from Massachusetts consumers relative to any pending mortgage loan applications in a separate escrow account maintained at a federally insured bank.

  19. IT IS FURTHER ORDERED that MULBERRY MORTGAGE COMPANY, INC. shall place the Corporation's entire open application list to a qualified lender with no loss to applicants. The open application list to be placed with a qualified lender shall include all transactions in which the Corporation was performing in the capacity of a mortgage broker. MULBERRY MORTGAGE COMPANY, INC. shall obtain the prior approval of the Commissioner before placing such applications to the qualified lender.

  20. IT IS FURTHER ORDERED that MULBERRY MORTGAGE COMPANY, INC. shall submit to the Commissioner a detailed record, prepared as of the date of submission, of all of the Corporation's pending residential mortgage loan applications on property located in Massachusetts. The records to be produced shall be submitted to the Commissioner within five (5) days of the effective date of this TEMPORARY ORDER and shall include all information on file, regarding the Corporation's open application list, including but not necessarily limited to, the following:

    The names of all individuals from whom THEODORE C. JARRETT, JR., MARK L. MCCARTHY, and MULBERRY MORTGAGE COMPANY, INC. have accepted an application for a residential mortgage loan; the applicants' addresses and telephone numbers; the amount of all prepaid loan fees submitted by the customer; the amount of each loan; application status (i.e. filed, submitted to lenders, cleared to close, etc.); scheduled closing dates; and a list identifying the applicable lender with whom the applicants' application was placed. The latter list should include telephone numbers of contact persons familiar with the Corporation's submitted loans.

  21. IT IS FURTHER ORDERED that MULBERRY MORTGAGE COMPANY, INC. shall immediately secure all pending mortgage loan application files and, to the extent that any original documents must be forwarded to the relevant mortgage lender pursuant to Section 19 of this TEMPORARY ORDER, a copy of such document, correspondence, or paper relating to the mortgage loan shall be retained in the Corporation's books and records and shall be available to the Commissioner, in their entirety, upon request.

  22. IT IS FURTHER ORDERED that this TEMPORARY ORDER shall become effective immediately and shall remain in effect unless set aside, limited, or suspended by the Commissioner or upon court order after review under Massachusetts General Laws chapter 30A.

  23. IT IS FURTHER ORDERED that a hearing will be scheduled on this matter to determine whether or not such TEMPORARY ORDER shall become permanent and final only upon receipt of a written request for such a hearing from THEODORE C. JARRETT, JR., MARK L. MCCARTHY, and MULBERRY MORTGAGE COMPANY, INC. within twenty (20) days of the effective date of this TEMPORARY ORDER. If no hearing is requested within this twenty (20) day period, this TEMPORARY ORDER shall become permanent and final until it is modified or vacated by the Commissioner.

By ORDER AND direction of the Commissioner of Banks.

Dated at Boston, Massachusetts, this 22nd day of October, 2004.

By: Steven L. Antonakes
Commissioner of Banks