State investigating Moses Lake mortgage broker

Branch manager claims Bellevue office at fault

MOSES LAKE — The state's Department of Financial Institutions is investigating a Moses Lake mortgage broker for potential violation of the Mortgage Broker Practices Act of Washington.

After conducting an investigation, the department's division of consumer services allege respondents Phoenix, Ariz.-based Freestand Financial Holding Corp., the company's president and designated broker Jesse A. Gee and branch manager Donald Parker conducted unlicensed activity from an unlicensed location, operated and advertised under an unlicensed name, engaged in prohibited acts by making a knowingly false statement to the department and failed to respond to a directive in timely fashion.

Gee declined to comment, saying he wanted to get advice from his legal representation and noting the matter will be contested at a hearing.

According to department documentation, the respondents reportedly never applied for or received a license from the state to conduct business under the name of Basin Brokerage at 413 Sharon Ave. East, where they have been located since March 7. The company also allegedly advertised under the name in local print media, including the Columbia Basin Herald, and maintains a Web site.

Parker said no loans were closed under the name Basin Brokerage, which served only as a Web name and used for advertising. He said it was never a business entity.

"The sign on my wall says Freestand Financial, my business cards say Freestand Financial," he said.

The office closed everything under Freestand Financial, he said, and worked as a net branch connected to the Freestand Bellevue office.

Parker said a representative at the other office canceled the Department of Financial Institutions license in March "without consideration of us over here in Moses Lake." After several months, he received a letter and has been dealing with the department.

"The issue with (Department of Financial Institutions) was that we had closed six loans after the license was canceled in Bellevue," he said.

Parker said he has an attorney and there would be no hearing.

The documents show the respondents allegedly assisted at least seven borrowers at the Moses Lake location in applying to obtain residential mortgage loans on property in the state of Washington. The seven borrowers paid fees to Freestand, with an amount totaling more than $20,000.

The documents claim Parker called the department May 2 and spoke with a staff member, asserting he submitted a branch license application in March. Documents show the department reporting it had not received such an application. During the same conversation, Parker allegedly asserted the name Basin Brokerage was not used in any context other than the Web site, while the documents indicate Parker reportedly used the name in print advertisements and telephone directory listings.

The department released a statement of charges and a notice of intention to enter an order to revoke the license, impose a fine, prohibit respondents from the industry and collect an investigation fee. Respondents may make a written request for a hearing.

Once a hearing is requested, said department Division Director Chuck Cross, the matter is referred to the Attorney General at the state's Office of Administrative Hearings.

"Nothing happens very fast," he said. Cross explained the time between a request and trial can range from six months to two years.

If found guilty, licenses are revoked, Cross said, noting the company holds a license, but not to do business out of the location in Moses Lake.

"Which indicates to us that clearly, if you have a license already, you know that you need a license any place you do business," he said. "It's hard to believe they didn't know they were violating the law when they were doing it."

If found to be in violation, Cross said the department would seek to cause Basin Brokerage to pay a fine and restitution to consumers following a discovery process. Parker would be prohibited from being in the business for five years, if found in violation, he added.

Cross said the Basin Brokerage situation is "not an uncommon" type of enforcement action.

"This by no means falls into our category of huge or really large enforcement actions," he said.

Cross noted about 25 staff hours were put into the case, whereas larger cases might involve hundreds or thousands of hours.

"This is very, very serious … but this isn't a really big case," he added.

Basin Brokerage doesn't have to do anything until the matter is litigated and final findings are determined, Cross explained.

"If they are violating the law, it's very much in their best interest to cease doing that, because it would just compound their problems, but there has been no final finding. The matter hasn't been adjudicated," he said.

Parker said the office is not doing anything right now, and said Freestand didn't do their job as a broker to maintain licenses and support branches. He is in the process of countersuing for back wages, loss of time and his good name, he said.