Lender on its last step | Connecticut and region


The unusually acrimonious and increasingly public feud between an East Hartford mortgage lender and the state’s banking regulators entered a new and inauspicious phase on Thursday as the company, 1st Alliance Lending, announced it had ceased lending operations and reduced its workforce to 17 employees.

In a brief press conference outside the 1st Alliance suite at 111 Founders Plaza, CEO John DiIorio accused vindictive and rogue officials within the Banking Department of sabotaging what was once a ” thriving and strong local organization ”, forcing it to downsize. from a high of 178 in 2018.

“This is a good example of an out of control bureaucracy,” said DiIorio. “They pursued us too aggressively, they tried to impose a gag order on us, and they refused repeated attempts to sit down and settle the case.”

Flanked by his remaining 17 employees, the founder of the 1st Alliance recounted a series of alleged abuses perpetrated by auditors, which he said included sending state marshals to his sales area and toasting staff starting out – some working their first job – and suggesting to them that their interests do not “align” with those of the company.

He also complained that bank investigators had effectively condemned his business by issuing a notice of intent to revoke the company’s mortgage lender license in December.

“It was a move they knew would force me to settle or kill the business,” DiIorio said.

The banking department, however, strongly denied that it had chosen the 1st Alliance for special examination or that its investigative tactics were unnecessary or hostile.

“It is the department’s goal to apply the law fairly to all regulated entities so that they have the opportunity to prosper and prosper here in Connecticut,” the agency spokesperson said. , Matthew Smith. “The department will continue to work towards a fair resolution of the allegations against the 1st Alliance, but must ensure that companies doing business in Connecticut follow the same rules.”

The banking department began its audit of 1st Alliance Lending in May 2018 after receiving a whistleblower complaint centered on unlicensed mortgage origination activity.

From the start, the dispute has been based on competing interpretations of licensing laws passed by the state and the federal government in the wake of the subprime mortgage collapse and the ensuing financial crisis between 2007. and 2009. The banking department maintains that 1st Alliance circumvented these rules by using unlicensed “mortgage loan consultants” to open discussions with potential clients, but DiIorio said these employees were far from negotiation or approval. of a loan.

Last summer, the banking department proposed a settlement that would have allowed 1st Alliance to eventually resolve the allegations, but the two sides offered very different characterizations of the deal.

DiIorio said he refused to sign the department’s consent decree because it came with a fine, a requirement for the 1st Alliance to follow Connecticut licensing laws in other states, and a gag order which would have effectively prohibited him from expressing himself on the procedure.

The banking department said it was not looking for gag orders in consent decrees. Instead, regulators typically ask parties to an approved settlement to refrain from denying state claims or making public statements that give the impression that the claims have no factual basis.

Bank officials also clarified that the deal would not have forced the 1st Alliance to admit wrongdoing.

DiIorio said he couldn’t offer a potential motive behind the banking department’s allegedly abusive behavior, but said his conduct was unlike anything he had encountered since the formation of the 1st Alliance in 2004.

“I can’t tell you what drove it, but I can tell you it was extremely atypical,” he said.

The CEO also stressed that he did not view the back-and-forth bitter a sign that Connecticut is generally hostile to business and reserved praise for officials at the State Department of Economic and Community Development, who had obtained loans for the business in the past.

“I want to make sure this doesn’t become a rage against the state,” he said. “We are talking about a handful of people who have acted in bad faith.”

1st Alliance will have the opportunity to plead its case at an administrative hearing on September 24. If the company loses that offer, DiIorio said, it will refer to the state court system.

“We’re here until it’s over,” he said, adding that he hopes to revamp the company’s business model in the weeks and months to come using his remaining staff.

The near implosion of the 1st Alliance represents a brutal and once unthinkable reversal for a local company that has been committed for years to revitalizing the Rockville section of Vernon by building a new headquarters there.

About seven years ago, 1st Alliance began planning for a large commercial development stretching from West Main Street to the former Market Street location, across from Park Street in historic downtown Rockville. The complex would have covered 350,000 square feet, with 200,000 square feet set aside for office space on the second and third floors of the building.

The lender said “mom and pop” businesses would occupy most of the first tier.

The 1st Alliance and then-mayor George F. Apel presented the move as an opportunity to breathe new life into the region, which had seen years of decline as local textile factories closed their factories.

“We don’t want to reinvent Rockville – we don’t have the illusion of greatness – we want to revitalize it,” DiIorio said in 2013. “We want to create jobs in downtown Rockville.”

In 2014, the company ditched plans for a brand new building and instead refocused its attention on two existing structures: the Amerbelle Mill on East Main Street, which once housed the American Dyeing Corp., and the adjacent Daniel’s Mill. .

The city took possession of the sprawling industrial complex and began major environmental remediation work to set the stage for the 1st Alliance’s move, with crews even demolishing a significant part of Amerbelle’s facility on Brooklyn Street. Company officials, however, began to look at other sites in the area as costs associated with the move to Rockville increased.

The lender ultimately chose to stay in East Hartford.

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