Temporary Order to Cease and Desist  5K Mortgage Corporation

Date:	01/25/2008
Organization:	Division of Banks
Docket Number:	2008-004
Location:	Florence, MA

5K Mortgage Corporation, Florence, MA - Temporary Order to Cease and Desist

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE BROKER
LICENSING
Docket No. 2008-004

FINDINGS OF FACT AND TEMPORARY ORDER TO CEASE AND DESIST

In the Matter of
5K MORTGAGE CORPORATION
ANTHONY J. ANDERSEN, individually
LAURA ANDERSEN, individually
Florence, Massachusetts

Mortgage Broker License No. MB2971

The Commissioner of Banks ("Commissioner") having determined that 5K MORTGAGE CORPORATION, LLC, ANTHONY J. ANDERSEN, and LAURA ANDERSEN (collectively, "5K Mortgage Corporation" or the "Corporation"), located at 28 Sylvan Lane, Florence, Massachusetts, 01062 has engaged in, or is engaging in, or is 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).

A. 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. 5K Mortgage Corporation is, and at all relevant times, has been a Corporation doing business in the Commonwealth of Massachusetts. 5K Mortgage Corporation engages in the business of a mortgage broker at 28 Sylvan Lane, Florence, MA 01062.
3. 5K Mortgage Corporation is licensed by the Commissioner as a mortgage broker as required by Massachusetts General Laws chapter 255E, section 2. According to records maintained on file with the Division, the Commissioner issued 5K Mortgage Corporation's initial license to engage in the business of a mortgage broker in Massachusetts on or about January 6, 2003.
4. Anthony J. Andersen is the president, director and fifty percent shareholder of 5K Mortgage Corporation.
5. Laura Andersen is the vice-president and fifty percent shareholder of 5K Mortgage Corporation.

   (i) Felony Indictments/Convictions Affecting a Determination of the Licensee's Financial Responsibility, Character, Reputation, Integrity and General Fitness to Engage in the Licensed Business as to Anthony J. Andersen

6. Massachusetts General Laws chapter 255E, section 4 states, in part, that:

   Upon the filing of an application for a license, if the commissioner finds that the financial responsibility, character, reputation, integrity and general fitness of the applicant, and of the partners or members thereof if the applicant is a partnership or association, and of the officers, directors and principal employees if the applicant is a corporation, are such as to warrant belief that the business will be operated honestly, fairly, soundly and efficiently in the public interest consistent with the purposes of this chapter, he shall thereupon issue the applicant a license to engage in the business of a mortgage lender or mortgage broker. If the commissioner shall not so find, he shall not issue a license and he shall notify the applicant of the denial.

7. Massachusetts General Laws chapter 255E, section 6 states, in part, that:

   The commissioner may suspend or revoke any license issued pursuant to this chapter if said commissioner finds that: (i) the licensee has violated any provision of this chapter or any rule or regulation adopted hereunder, or any other law applicable to the conduct of its business; or (ii) any fact or condition exists which, if it had existed at the time of the original application for such license, would have warranted the commissioner in refusing to issue such license.

8. On February 16, 2007, a federal Grand Jury, impaneled in the United States District Court, Northern District of New York, returned an indictment against Mr. Andersen charging him with thirty felony counts, including: multiple counts of submitting false statements to a financial institution in violation of 18 U.S.C. §§ 1014, 2; one count of bank fraud in violation of 18 U.S.C. §§ 1344(1), (2), 2; multiple counts of money laundering in violation of 18 U.S.C. §§ 1956(a)(1)(A), 2, 18 U.S.C. §§ 1956(a)(1)(B)(i), 2 and 18 U.S.C. §§ 1957, 2; and one count of conspiracy to commit offense(s) against the United States, or to defraud the United States, or any agency thereof, in violation of 18 U.S.C. § 371.
9. On February 27, 2007, Mr. Andersen was arraigned pursuant to the criminal charges set forth in the February 16, 2007 indictment referenced above.
10. On June 22, 2007, a federal Grand Jury, impaneled in the United States District Court, Northern District of New York, returned a superseding indictment (the "superseding indictment") against Mr. Andersen and Laura Andersen, charging Mr. Andersen with the identical thirty felony counts as referenced in Paragraph 8 of this Temporary Order. The superseding indictment differed from the February 16, 2007 indictment in that Ms. Andersen was added as a defendant and charged with certain of the counts set forth in the February 16, 2007 indictment and with one additional felony count added to the indictment which pertained only to Ms. Andersen's alleged activities, as further described in Section (ii) of this Temporary Order.
11. On October 9, 2007, Mr. Andersen entered a Plea and Cooperation Agreement ("Mr. Andersen's Plea Agreement") and changed his plea from "Not Guilty" to a plea of "Guilty" as to two of the counts set forth in the superseding indictment. Specifically, Mr. Andersen pled guilty to: one count of submitting false statements to a financial institution for the purpose of influencing the financial institution's action on loan applications in violation of 18 U.S.C. §§ 1014, 2; and one count of money laundering involving monetary transactions over $10,000 in violation of 18 U.S.C. §§ 1957, 2. Mr. Andersen's sentencing has been scheduled for February 11, 2008.
12. Pursuant to Mr. Andersen's Plea Agreement, Mr. Andersen admitted to the following facts which establish his guilt, as more fully set forth in Mr. Andersen's Plea Agreement, which is incorporated by reference and made a part of this Temporary Order as though fully set forth herein:
    1. Mr. Andersen submitted to a financial institution a loan application and supporting documentation in the name of another individual for a loan for 555-557 2d Avenue, Troy, New York that contained materially false and fraudulent representations as to the identity of the borrower, the borrower's qualifications, the value and profitability of the properties, and the intended distribution of the loan proceeds.
    2. Mr. Andersen obtained a loan for 3 Diack Place, Troy, New York from a financial institution by means of materially false representations as to the identity of the borrower, the borrower's qualifications, the value and profitability of the properties, and the intended distribution of the loan proceeds. Thereafter, knowing that the loan proceeds had been obtained by means of such false representations, Mr. Andersen caused approximately $141,402.18 from the loan proceeds to be transferred by wire from the closing attorney's bank account to Mr. Andersen's bank account.

    (ii) Felony Indictments/Convictions Affecting a Determination of the Licensee's Financial Responsibility, Character, Reputation, Integrity and General Fitness to Engage in the Licensed Business as to Laura Andersen

13. On June 22, 2007, A federal Grand Jury, impaneled in the United States District Court, Northern District of New York, returned the superseding indictment referenced in Paragraph 10 of this Temporary Order against Mr. Andersen and Ms. Andersen, charging Ms. Andersen with multiple felony counts, including: two counts of aiding and abetting Mr. Andersen in the submission of false statements to a financial institution in violation of 18 U.S.C. §§ 1014, 2; one count of aiding and abetting Mr. Andersen to commit bank fraud in violation of 18 U.S.C. §§ 1344(1), (2), 2; one count of making materially false, fraudulent statements in a matter within the jurisdiction of the U.S. Department of Justice and the U.S. Department of the Treasury in violation of 18 U.S.C. §§ 1001(a), 2; and one count of conspiracy to offense(s) against the United States, or to defraud the United States, or any agency thereof, in violation of 18 U.S.C. § 371.
14. On June 29, 2007, Ms. Andersen was arraigned pursuant to criminal charges set forth in the June 22, 2007 superseding indictment.
15. On October 9, 2007, Ms. Andersen entered a Plea and Cooperation Agreement ("Ms. Andersen's Plea Agreement") and changed her plea from "Not Guilty" to a plea of "Guilty," as to one of the counts set forth in the superseding indictment. Specifically, Ms. Andersen pled guilty to making false statements to federal law enforcement agencies, in violation of 18 U.S.C. §§ 1001(a), 2.
16. Pursuant to Ms. Andersen's Plea Agreement, Ms. Andersen admitted to the following facts which establish her guilt, as more fully set forth in Ms. Andersen's Plea Agreement, which is incorporated by reference and made a part of this Temporary Order as though fully set forth herein:

    Ms. Andersen knowingly and willfully made materially false, fraudulent statements and representations in an interview conducted on February 14, 2006 by Special Agents of the Federal Bureau of Investigation and the Criminal Investigation Division of the Internal Revenue Service, U.S. Department of the Treasury. To wit, Ms. Andersen falsely stated, among other things, that she never signed any type of mortgage-related paperwork on behalf of anyone else and that Mr. Andersen had never requested that she forge signatures or falsely complete any part of any mortgage application package.

    (iii)Failure to Timely Notify the Division of the Occurrence of Significant Developments

17. The Division's regulation at 209 CMR 42.12(2) states, in part, that:

    A Licensee shall notify the Commissioner immediately, and in writing within five business days, of the occurrence of any of the following significant developments: . . . (b) Criminal felony indictment or conviction of any of the Licensee's officers, directors, principal stockholders, or affiliates.

18. On May 17, 2007, the Division received 5K Mortgage Corporation's 2007 Mortgage Broker License Renewal Application ("License Renewal Application"). Through the License Renewal Application, 5K Mortgage Corporation sought the renewal of its Massachusetts mortgage broker license for the twelve-month period ending May 31, 2008.
19. The License Renewal Application, which was signed under the pains and penalties of perjury by Mr. Andersen on May 16, 2007, included the following question, numbered (4)(A): "In the past twelve months, has the licensee, or any control affiliate or control person: (1) been convicted of or plead guilty or nolo contendere ("no contest") in a domestic, foreign, or military court to any felony? (2) been charged with any felony?" The answer to the question provided by Mr. Andersen was "Yes." In explanation of the affirmative answer, Mr. Andersen stated that, in February, he had been charged with a felony in the U.S. District Court for the Northern District of New York "stemming from a real estate development firm I owned . . . back in 2001."
20. By e-mail dated May 23, 2007, the Division requested further details regarding the felony charges referenced in the License Renewal Application.
21. In response to the Division's e-mail referenced above, Mr. Andersen's legal counsel, Dennis B. Schlenker, Esq. submitted a written statement dated May 30, 2007. Mr. Schlenker stated that the case was in the pre-trial stage. He also noted that, Mr. Andersen pled "Not Guilty" to the charges and intended to vigorously defend against the charges.
22. The Division refrained from taking any adverse regulatory action against 5K Mortgage and Mr. Andersen while the aforementioned criminal charges remained pending in order to afford Mr. Anderson the due process of law.
23. On or about November 19, 2007, a representative from the Division attempted to contact Mr. Andersen by telephone and left a voice mail message requesting an update on the case and any further information regarding the resolution of the charges against him.
24. By letter dated December 10, 2007, Mr. Andersen notified the Division of his Plea Agreement dated October 9, 2007, as described in Paragraph 11 of this Temporary Order.
25. At no time prior to the License Renewal Application did 5K Mortgage Corporation notify the Division of the felony indictment against Mr. Andersen dated February 16, 2007 or of the superseding indictment dated June 22, 2007.
26. 5K Mortgage Corporation did not notify the Division of Mr. Andersen's Plea Agreement until approximately two months after the plea agreement was entered and only after such information was requested by the Division.
27. At no time did 5K Mortgage Corporation notify the Division of the June 22, 2007 superseding indictment against Ms. Andersen or of Ms. Andersen's Plea Agreement dated October 9, 2007. In fact, information obtained by the Division during the investigation of the charges entered against Mr. Andersen disclosed the existence of the superseding indictment entered, in part, against Ms. Andersen, vice-president and co-owner of 5K Mortgage.

    B. CONCLUSIONS OF LAW

28. By engaging in activities which resulted in Mr. Andersen's pleading guilty to the felony charges of making false statements for the purpose of influencing the action of a federally insured financial institution, in violation of Title 18, United States Code, Section 1014 and 2, and engaging and causing to be engaged in monetary transactions involving over $10,000 in property derived from specific unlawful activities, in violation of Title 18, United Stated Code, Sections 1957 and 2, Mr. Andersen has failed to demonstrate the financial responsibility, character, reputation, integrity, and general fitness that would warrant the belief that 5K Mortgage Corporation will be operated honestly, fairly, soundly, and efficiently in the public interest as required by Massachusetts General Laws chapter 255E, section 4 and the Division's regulation 209 CMR 42.06(2)(c).
29. By engaging in activities which resulted in Ms. Andersen's pleading guilty to the felony charge of making false statements to federal law enforcement agencies, in violation of Title 18, United States Code, Section 1001(a) and 2, Ms. Andersen has failed to demonstrate the financial responsibility, character, reputation, integrity, and general fitness that would warrant the belief that 5K Mortgage Corporation will be operated honestly, fairly, soundly, and efficiently in the public interest as required by Massachusetts General Laws chapter 255E, section 4 and the Division's regulation 209 CMR 42.06(2)(c).
30. By failing to notify the Commissioner, in writing, within five business days that on February 16, 2007, Mr. Andersen, president and fifty percent shareholder of 5K Mortgage Corporation was indicted on 30 felony counts in the United States District Court for the Northern District of New York, 5K Mortgage Corporation violated 209 CMR 42.12(2)(b).
31. By failing to notify the Commissioner, in writing, within five business days that on June 22, 2007, Mr. Andersen, president and fifty percent shareholder, and Ms. Andersen, vice president and fifty percent shareholder of 5K Mortgage Corporation were indicted on 31 felony counts, collectively, in the United States District Court for the Northern District of New York, 5K Mortgage Corporation violated 209 CMR 42.12(2)(b).
32. By failing to notify the Commissioner, in writing, within five business days that on October 9, 2007, Mr. Andersen and Ms. Andersen entered into separate "Plea and Cooperation Agreements" in the United States District Court for the Northern District of New York, pursuant to which Mr. Andersen and Ms. Anderson pled guilty to federal felony offenses, 5K Mortgage Corporation violated 209 CMR 42.12(2)(b).
33. Based upon the information contained in Paragraphs 1 through 27, had the foregoing existed at the time of 5K Mortgage Corporation's original mortgage broker license application, such conditions would have warranted a denial by the Commissioner of the license application and are grounds for the suspension or revocation of 5K Mortgage Corporation's mortgage broker license number MB2971 pursuant to Massachusetts General Laws chapter 255E, section 6.
34. Based upon the information contained in Paragraphs 1 through 27, the Commissioner has determined that:
    1. 5K Mortgage Corporation, a corporation owned and operated by Anthony J. Andersen and Laura Andersen, has engaged in, or is about to engage in, acts or practices which warrant the belief that the Corporation will not be operated 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
    2. The public interest will be irreparably harmed by delay in issuing an ORDER TO CEASE AND DESIST to 5K Mortgage Corporation.

    C. ORDER TO CEASE AND DESIST

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

35. ORDERED that Anthony J. Andersen and Laura Andersen, individually, and 5K Mortgage Corporation, its officers, directors, employees, independent contractors, or agents operating on behalf of the Corporation, 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, Anthony J. Andersen and Laura Andersen, individually, and 5K Mortgage Corporation 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.
36. IT IS FURTHER ORDERED, that 5K Mortgage Corporation shall immediately place any fees previously collected from Massachusetts consumers, relative to any pending mortgage loan applications accepted at any office location, into a separate escrow account, designated for such purpose and maintained at a federally insured bank.
37. IT IS FURTHER ORDERED that 5K Mortgage Corporation shall immediately place with one or more qualified broker(s) or lender(s), as appropriate based on the status of the application and with no loss to applicants, all of its pending Massachusetts residential mortgage loan applications. 5K Mortgage Corporation shall obtain the prior approval of the Commissioner before placing such applications to the qualified broker(s) or lender(s).
38. IT IS FURTHER ORDERED that 5K Mortgage Corporation 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:

    All information on file as of the date of submission regarding 5K Mortgage Corporation's open application list, including but not limited to, the following: The names of all individuals from whom 5K Mortgage Corporation has 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; rate lock status; and a list identifying the applicable broker(s) or lender(s) with whom the applicants' application was placed. The latter list should include telephone numbers of contact persons familiar with the Corporation's submitted loans.

39. IT IS FURTHER ORDERED that 5K Mortgage Corporation shall immediately secure all pending residential mortgage loan application files and shall make such files, in their entirety, available to the Commissioner upon request.
40. 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 General Laws chapter 30A.
41. IT IS FURTHER ORDERED that a hearing will be scheduled on this matter to determine whether or not such ORDER shall become permanent and final only upon receipt of a written request for such a hearing from 5K Mortgage Corporation within twenty (20) days of the effective date of this ORDER. If no hearing is requested within this twenty (20) day period, this 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 25th day of January, 2008.

By: Steven L. Antonakes
Commissioner of Banks