Ditech.com Founder Resigns Amid Probe

J. Paul Reddam, 44, a former philosophy teacher who stars in Ditech.com's ubiquitous television commercials, has not been charged with any wrongdoing. A spokesman for the company, a unit of General Motors Corp., said Reddam voluntarily resigned as Ditech's chief executive. He declined to comment on whether Reddam's departure was related to the ongoing federal probe, which is being led by the U.S. attorney in Pennsylvania.

On Monday, agents for the Federal Bureau of Investigation raided Ditech.com's headquarters along the San Diego Freeway and arrested two managers, Gregory Kenneth DeLong, 41, and Vincent Pozzuoli, 36, both of Newport Beach. A third Ditech.com manager, Jay David Marx, 36, of San Juan Capistrano, was expected to be arrested Monday night, said a U.S. attorney spokesman, Thom Mrozek.

Ditech.com, a 5-year-old company that made $4.3 billion in loans last year, has earned a national reputation for aggressively marketing higher-risk home-equity loans. More recently the company has made a big push on the Internet, offering quick loan approval over the Web.

Ditech spokesman Rick Gillespie said the federal probe should have no impact on the company's borrowers. "No customers were affected by these alleged activities," he said Monday.

But the arrests and investigation are a setback to the fast-growing company and were viewed by some rivals as another blot on Orange County's mortgage lending industry. Last month, Irvine-based First Alliance Corp. filed for bankruptcy amid investigations into its lending practices.

"I'm starting to get concerned about the overall health of our industry's reputation," said Anthony Hsieh, president of Huntington Beach-based LoansDirect.com, a rival of Ditech.com.

According to a grand jury indictment, the Ditech.com managers allegedly solicited kickbacks from ATM Corp. of America, a Pittsburgh company that provides title insurance, notary closings and other mortgage services to Ditech.com.

Last December, the three men threatened to stop using ATM's mortgage services unless the company agreed to pay them and put the father-in-law of Jay Marx on ATM's payroll as a "ghost employee," according to the indictment. Ditech.com accounted for about 20% of ATM's business.