A California mortgage banker whose business failed a year ago amid the housing collapse and is facing a fraud and embezzlement lawsuit by former branch managers is now leading the industry’s effort to lobby Congress for the $700 billion Wall Street bailout.
John A. Courson, 66, ran Central Pacific Mortgage out of Folsom, a suburb east of Sacramento, before it collapsed in February 2007, The Sacramento Bee reported this week. In July, he was named chief operating officer for the Mortgage Bankers Association of America in Washington, D.C., and is set to become the association’s president in January.
The association represents 2,400 companies and 370,000 people from mortgage companies, brokers, banks, thrifts and insurance companies. According to federal filings reviewed by the Bee, the association spent $2.2 million and employed nine lobbyists in Washington during the first six months of the year.
Last week, Courson sent letters to members of the House and Senate urging them to support the Bush administration’s plan to use taxpayer money to buy and resell troubled mortgage-backed securities. The legislation failed in the House on Monday.
“We would encourage both parties and both chambers to set aside the issues that will only bog down the process and pass a clean bill that will stabilize the markets and help keep families in their homes without permanently damaging the real estate finance system,” Courson wrote.
After Central Pacific Mortgage collapsed, 11 former branch managers in California, Maryland and Florida sued Courson for $879,000. They accused the veteran mortgage banker of defrauding them out of wages and benefits in a lawsuit filed in the U.S. District Court for Eastern California in Sacramento.
According to court filings, the branch managers believed they had separate accounts set aside for salaries, sickness and vacation pay. They were told the money was gone when Central Pacific went under, according to the Bee.
Florida branch manager Jenny Mann said she was surprised to learn that Courson found a job representing the mortgage industry before Congress. Mann alleges she lost $20,000.
“When I saw he was appointed chief operating officer, I nearly died,” Mann said. “Don’t they know he did this to us? I would have assumed he would never work in this industry again.”
Courson, a resident of the tony Rancho Murieta community outside Sacramento, denied wrongdoing in that case as well as the other complaints filed against him and other Central Pacific executives.
A call to Courson on Tuesday from The Associated Press was referred to a spokeswoman for the Mortgage Bankers Association, which issued a statement from Kieran Quinn, chairman of the association’s board. Quinn noted Courson’s knowledge of the industry, as well as his “business savvy and political skills.”
“John has worked tirelessly on behalf of our industry for more than 40 years serving as an advocate to ensure the simplification of the mortgage process and safe and affordable housing for all Americans,” Quinn stated.
Courson’s attorney, Mark Van Brussel of Sacramento, declined to comment, citing pending litigation.
In addition to its official statement, the Mortgage Bankers Association also gave the AP a written response to the Bee article from another of Courson’s attorneys, John E. Jacobs of Southfield, Mich. Jacobs said he has represented Courson for more than 35 years.
“There is no truth to the fraud or embezzlement allegations,” he said in the statement.
The Bee said Courson’s net worth dropped to $1.75 million in 2007 from $8.3 million in 2005.
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