Providing a rare glimpse inside the executive suite at Ameriquest Capital Corp., a lawsuit filed Friday accused billionaire owner Roland E. Arnall of thwarting efforts to reform the Orange company's predatory practices in the selling of mortgage loans.
The suit was filed by Wayne A. Lee, a longtime executive for Arnall who claimed that the company reneged on a deal to pay him $30 million after he left in 2005. Arnall is now U.S. ambassador to the Netherlands but retains his ownership stake in Ameriquest.
Lee, 46, claims that he quit in frustration a year after Arnall made him chief executive of the Ameriquest Capital unit that oversaw its Ameriquest and Argent mortgage loan subsidiaries. Lee said Arnall "repeatedly blocked" his efforts to implement reforms after allegations of deceptive and fraudulent lending practices at Ameriquest.
Arnall ultimately told Lee that he "should not involve himself in the affairs of Ameriquest Mortgage" and instead should focus on Argent, the Orange County Superior Court suit says.
Bernard LeSage, an attorney for the company, called the suit "a ridiculous work of fiction."
"It is disappointing that Mr. Lee is attempting to use baseless and inflammatory allegations to extract money to which he is not entitled," LeSage said in a statement. "The company will vigorously contest his claims."
Lee's lawsuit was filed against Ameriquest Capital and does not name Arnall.
Ameriquest is a specialist in the selling of "sub-prime" loans to people with checkered credit histories, employment gaps or other issues that bar them from getting lower-cost prime loans.
Without admitting wrongdoing, the company agreed in January 2006, to pay $325 million to settle predatory lending charges brought by the attorneys general of 49 states. The settlement came after the Los Angeles Times reported claims that employees at Ameriquest branches throughout the country had used deceptive tactics to put borrowers in loans with excessive interest rates and hidden fees.
At the 2005 Senate confirmation hearing for his ambassadorship, Arnall contended that the misdeeds were the work of rogue employees and that he had worked to stop abuses.
Lee's suit presents a different scenario.
The former executive became president of Argent in 2001 and built it into "one of the most successful and respected mortgage companies in the country," the suit says. Argent makes loans through independent brokers whereas Ameriquest, at the time, made loans directly to consumers through a national network of company-run branch offices.
