Update - 2009-01-04: The Orange County Register reports Citi has given former Quick Loan Funding founder and CEO Daniel Sadek a loan modification on his property at 65 Briar Lane in Irvine, CA - a modification on which he is now $34,888 in arrears.
What should amaze anyone is not the default, but rather that someone like Sadek got the loan modified at all! From the article:
"Most borrowers would have a hard time getting a hearing from a bank if they were already in default on a million dollars in other debts.
Records on file with the Orange County Clerk-Recorder show that Sadek faces $1.5 million in debts, including:
- State Franchise Tax Board liens totaling $545,922 in taxes and penalties.
- Orange County tax collector liens totaling $8,998.
- Liens from the Newport Coast homeowners association, for $1,588, and The Marquee Park Place Homeowners Association in Irvine, for $7,517, both for monthly association fees.
- Court judgments from Wells Fargo Bank, for failure to make payments on leased equipment ($603,289) and Wells Fargo ($294,341) for other debts. Wells Fargo has placed writs of attachments on Sadek's Newport Coast home, an undeveloped Newport Coast lot, his condo in Irvine and 65 Briar Lane."
According to the article, Sadeks' attorney Thomas Borchard said he was "unaware of the Citi loan modification." We wonder if Citi told him to sell the Maybach! Doubtful though... it's probably wrapped up in another company with the restaurants.
Click to read the rest of the Register's article here.
Update - 2008-07-12: The Orange County Register says "State revokes all lending, escrow licenses of Sadek."
We looked for the status online: Quick Loan Funding (expired), Loyalty Funding Inc. and Sadek Inc. (DOC shows active), both show as NBA (No Business Address, a non-working license), Platinum Coast Escrow (pdf) is under a 'Discontinue' Order dated June 27, 2008.
Although a quick records search like above appears to show no 'revoked' licenses, you can visit here and view all of the Orders... all 3 of the above companies have had their licenses revoked by order, and Platinum Coast has a 'Discontinue' order.
According to the Register, Sadek says "that's not true." According to the Mortgage Lender Implode-O-Meter, the truth is staring him right in the face.
Update - 2007-12-23: In an article published December 23, 2007:
"...with Citigroup's support by funding the loans, he pioneered lending to home buyers with credit scores of less than 450."
The above is a quote from South Africa's Financial Daily Business Report.
The article starts out simple:
"One week in 2002, Daniel Sadek was $6 000 (R42 000) short of covering the payroll for his new subprime mortgage company, Quick Loan Funding. So he flew to Las Vegas and put a $5 000 chip on the blackjack table.
Sadek says he was dealt a jack, then an ace - blackjack. Quick Loan Funding would survive and, for a while, prosper..."
Click here to read the entire article.
Original Post - 2007-08-16: A number of readers have written in today to inform us that Quick Loan has ceased operations. One ex-employee noted:
Quick Loan Funding shut their doors today.. final paychecks were handed out and only about a half dozen people are left to clean up what's left of the pipeline (mostly in the escrow department)
Sad day.. Company from more then 800 people to nothing in 18 months.
Another ex-employee submitted the following regarding the events leading up to Quick Loans closure:
... QLF's Citi warehouse line got cut to $25 million as of Monday 08/12/07, Daniel Sadek decided to layoff 50-70% of the company to cut costs.
Original post to Ailing/Watch list from 2007-04-20:
This is perhaps one of the most colorful stories about a lender we've seen. Here's a taste of the lead-in, from the article above:
Daniel Sadek played Orange County's subprime lending boom like a card shark dealt the ace and jack of spades.
Just five years ago he was selling cars.
Then, in January 2002, he anted up $250 for a state lender license and started selling home loans through his company, Quick Loan Funding.
Over the next five years, Quick Loan wrote $3.8 billion in mortgages, lending money fast—and often on onerous terms—to people with shaky credit.
Sadek used the earnings to live the high life, buying a fleet of Ferraris, Lamborghinis and Porsches, dating a soap opera starlet and producing movies. He flew private jets to Las Vegas, where he gambled with high rollers at the Bellagio Resort.
The article details the company's loose and potentially fradulent practices that have sent it into a deep downward arc:
His staff, once 700 strong, has shriveled to about 125. Monthly loan volume plunged to $30 million from a record $218 million in December 2005.
"I've sold all my cars to keep the company going," says Sadek, 38. "Every property I own is mortgaged to the max."
Oh, the irony. And some of the offenses and incidents:
Quick Loan has been accused of predatory lending, deceptive underwriting and fraud in at least eight lawsuits. In addition, Department of Corporations records show 33 complaints against Quick Loan, most alleging unfair business practices. Most of the lawsuits were settled out of court. And state regulators have never disciplined Quick Loan.
Roman and Maria Partida of National City won a $28,696 settlement last November after they sued Quick Loan for understating the interest rate on a $150,000 mortgage. They received notice of the higher rate 16 months after they signed the loan agreement.
Within days of her call to the company, Nava-Oleson was offered a $530,000 loan to consolidate all her debts and refinancing costs. The papers she signed in September 2005 raised her total mortgage to $543,000, the total boosted by loan fees and a 9.75 percent interest rate.
Nava-Oleson, who recently started working as a mortgage account executive, believes that given her credit score she could get the same loan today for a 6.75 percent interest rate. That would slash her monthly payments by almost one-third.
Nava-Oleson sued Quick Loan for predatory lending last year. The lawsuit alleged Quick Loan double-billed Nava-Oleson for a $475 appraisal and questions $1,500 in other charges.
Jeff Lazerson of Laguna Niguel, president of MortgageGrader.com, a company that evaluates mortgages online, says Quick Loan's revenues "seem eye popping. Mortgage profits are always at the consumer's expense."
Nava-Oleson's mortgage included a prepayment penalty—six months of interest, or more than $28,000—if she refinanced within two years. She will keep paying the loan until August.
Prepayment penalties are banned in 10 states, according to the Center for Responsible Lending. They're legal in California. That's one of several reasons companies like Quick Loan thrive here.
Mai-Hanh Tran, who worked as a senior loan funder, alleged in an Orange County Superior Court suit that she was fired in January 2005 in part because she complained about "a pattern of unlawful and deceptive practices by QLF employees and agents," including forging borrowers' signatures on loan documents and violating truth in lending laws by under-disclosing fees.
Quick Loan countered that Tran was fired for chronic tardiness and failing to meet loan quotas. Tran's suit was dismissed last year after a confidential settlement.
In another suit pending in Orange County Superior Court, Tabatha Owens of Temecula alleges she was fired as Quick Loan's director of training after she attempted to get the company to comply with industry disclosure and truth-in-lending laws.
The suit says managers told employees to ignore her, when Owens attempted to stop loan officers from fabricating borrowers' incomes and "bullying, lying to or harassing consumers."
Sadek says people sued because they saw a deep pocket, because they were jealous of his success and because they are prejudiced against him because he's from the Middle East. He says if he had broken any laws, someone in the state would have taken action.
I like the part about "success" for a guy who blew $50 million producing a vanity movie. And as for the "poor immigrant defense"—I guess both sides can apparently play that game.