Ameriquest Capital Corp. and the Greenlining Institute have had a rewarding friendship -- an odd coupling of an Orange County-based mortgage giant and a Berkeley-based activist network known for criticizing big corporations.
Ameriquest donated $350,000 to the institute in little more than two years and kept up a steady dialogue about the advocacy group's concerns about the mortgage industry. The Greenlining Institute, in turn, endorsed Ameriquest's pledges to treat borrowers fairly.
But lately, the relationship has been strained.
In March, the institute returned a $100,000 donation from Ameriquest after a Times story detailing ex-employees' allegations of improper sales tactics and the disclosure that authorities in 25 states have raised questions about the lender's conduct. Lawsuits in California and at least 20 other states accuse the company of misbehavior, including fraud, falsifying documents and bait-and-switch tactics.
John Gamboa, the Greenlining Institute's executive director, said his organization had no choice but to stop taking the money because Ameriquest had failed to adequately answer Greenlining's repeated requests for a response to the allegations.
On Friday afternoon, Gamboa said the company called him and agreed to work with the institute on an independent review of Ameriquest's lending practices.
An Ameriquest spokesman said the company's consent to a review showed that if someone had concerns, it was willing to "work to resolve them."
"We take any allegation of flawed business practices seriously," the company said in a statement. "If we find problems to fix, we will fix them."
Ameriquest's contributions to the Greenlining Institute and donations it makes to other fair-lending groups are not unusual: Citigroup Inc., Bank of America Corp. and others have funneled millions of dollars in grants and billions of dollars in special loan programs through groups that in some cases had previously accused them of discriminating against minorities and financially strapped consumers.
Some observers worry that such financial connections compromise the independence of nonprofits that monitor corporate behavior.
"It creates an issue when you're taking money from a company that you're supposedly a watchdog over," said W. Michael Hoffman, executive director of the Center for Business Ethics at Bentley College in Waltham, Mass. "It creates a clear conflict of interest that I'm not sure you can overcome."
Ira Rheingold, general counsel of the National Assn. of Consumer Advocates, an attorneys group, says activists who see themselves as partners with corporate executives can lose touch with their constituencies.
"The attitude becomes: 'We have friends who are bank presidents and vice presidents.... Let's cut a deal with them because we always cut deals with them,' " he said.
Defenders of financial ties between lenders and activists say the relationships give advocacy groups the economic punch they need to fight for change in the marketplace -- and cultivate partnerships that give activists a voice in the nation's boardrooms.
The Greenlining Institute is one of at least seven nonprofit watchdog groups that have shared in millions of dollars in donations from Ameriquest over the last decade. The seven received about $800,000 among them last year, according to the organizations.
None of the other groups said they planned to return the money, and most expressed continuing respect for the company.
"I don't expect any company to be perfect," said Shanna Smith, chief executive of the National Fair Housing Alliance, which has received $100,000 from Ameriquest in the last two years. "But I do expect that when the flaws are identified, they correct them. And Ameriquest has that attitude."
Smith noted that she had rebuffed overtures from other lenders that had failed to gain her trust, going so far as to turn down a $600,000 settlement offer a decade ago from Countrywide Financial Corp. in connection with alleged lending discrimination. Countrywide did not respond to a request for comment.
The Leadership Conference on Civil Rights received $250,000 from Ameriquest for training and other organizational needs last year. Other contributions from Ameriquest over the years have helped the group lobby for stricter lending laws and more customer-friendly policies, said Executive Director Wade Henderson.
"In no way does it come with strings attached," Henderson said of the money from Ameriquest. "In no way does it inhibit our ability to engage in advocacy around our core principles."
Smith and Henderson said their organizations' fair-lending efforts had been bolstered by a consumer education initiative that began in the 1990s with $1 million in seed money from Ameriquest's corporate forebear, Long Beach Mortgage Co. The money was set aside as part of a settlement of a Justice Department lawsuit that accused the company of gouging elderly, female and minority borrowers.