Bill Edwards, a St. Petersburg businessman and majority shareholder of Mortgage Investors Corp., loaned the company millions of dollars even after it stopped making new loans.
Edwards loaned the money to allow the company to maintain its corporate records and pay the cost of defending it in a lawsuit before the US Supreme Court. This is evident from documents filed by mortgage investors in a voluntary Chapter 11 bankruptcy filing.
The company filed for bankruptcy in Tampa Federal Bankruptcy Court on May 14. The company has $ 148,553 in cash, used office furniture and equipment, old customer and sales lists, domain names, copyrights and trademarks. It owes more than $ 8 million in debt, most of it to Edwards, who, according to the filing, owes $ 7.5 million.
Edwards is a well-known corporate executive in St. Petersburg. He is the CEO of Edwards Group and the owner and operator of the downtown Sundial mall. His Big 3 Entertainment Group runs the Mahaffey Theater. He previously owned the Tampa Bay Rowdies Sale of the soccer team to the Tampa Bay Rays in 2018.
Connected: Catalyze 2021: Bill Edwards
Mortgage investors refinanced and serviced mortgage loans that were guaranteed by the U.S. Department of Veterans. It was one of the largest VA loan refinancers in the country, employing more than 500 people when the Federal Trade Commission filed a 2013 complaint against the company alleging telemarketing violations.
Mortgage investors agreed to pay a civil penalty of $ 7.5 million The company stopped lending in October 2013, raising concerns about the cost of regulatory compliance and uncertainties about the impact of future laws and regulations on the mortgage loan business. In June 2014, the company sold its remaining mortgage loan portfolio.
Almost all of the employees were laid off in 2013, but a handful stayed in office for the next five years to resolve post-mortgage loan issues and defend ongoing litigation, the bankruptcy filing said. After the mortgage investors’ cash ran out, Edwards loaned the company money because the company was unable to continue paying the legal fees itself.
After considering alternatives, the company’s employees determined that liquidating the Chapter 11 filing is the best way to pay off debts and serve the interests of creditors. The company will liquidate its remaining assets and use the proceeds to make distributions to creditors.
Next to Edwards, the largest creditors are DLA Piper, a Philadelphia law firm that owes $ 389,314, and several other professional services firms.
The company also lists potential litigation arising from a whistleblower lawsuit. Plaintiffs Victor Bibby and Brian Donnelly are mortgage brokers who specialize in VA mortgage loans. They first filed a lawsuit against mortgage investors in 2006 alleging the company charged veterans inadmissible acquisition fees and then bundled the inadmissible fees with the allowable ones. In 2011, according to court records, mortgage investors began transferring assets to their shareholders. According to the records, mortgage investors have sent Edwards more than $ 242 million.
In 2016, Bibby and Donnelly amended the complaint to add a fraudulent claim transfer against Edwards.
A district court dismissed the fraudulent referral lawsuit for lack of status and gave the mortgage investors a summary judgment. But on February 11thth The U.S. Circuit Court of Appeals overturned the district court’s summary judgment, saying Edwards could be included in the False Claims Act lawsuit. according to Law.com Daily Report.
Mortgage investors intend to appeal to the US Supreme Court, the bankruptcy filing said.