Some Mortgage Originators Skip State Licensing

Garnett referred questions to Lee's attorney, who did not respond.

Recently, the Georgia Department of Banking and Finance revoked the mortgage-broker license for 1st Continental for engaging in net branching in violation of its rules and for operating branches with unapproved branch managers. Net-branching in not allowed in Georgia.

To combat widespread mortgage fraud, Georgia has been aggressively going after individuals and companies in violation of its mortgage laws.

The state issued cease-and-desist orders for Lee and two of his companies for operating a mortgage business without a license. The orders were issued in May of this year and November of last year. The companies Lee operated in Georgia were Debt Management Consultants, also known as DMC and DMC Processing, and Debt Elimination Group, which also did business under the name the Processing Center.

Several former workers, who all spoke on condition of anonymity for fear of retribution, say Lee has violated the Georgia cease-and-desist orders. Documents show people working for Lee -- whose fees get funneled through his company -- have continued to originate loans in Georgia even after the cease-and-desist orders.

"That order means nothing to him," one former associate said. "Absolutely nothing."

Lee did not respond to questions about the cease-and-desist orders.

Lee registered Financial Independence in Delaware the same month the Georgia cease-and-desist order became final for Debt Management Consultants. Financial Independence is doing business out of the same office DMC and Debt Elimination Group did.

To become a member of Lee's network, recruits must pay a $100 fee. Former insiders say Lee tells his members that they don't need to be licensed because they are "document collectors." He instructs people to say Financial Independence is an "independent marketing company," sources said.

"Basically, we are taking mortgage applications," a former member said.

Lee was licensed to operate as a loan officer in North Carolina in 2002. But the North Carolina Banking Commission revoked the license after discovering that Lee had failed to disclose misdemeanor convictions, including one for an assault of a woman.

Lee did not respond to questions related to his convictions. In a hearing at the time, however, he testified that he thought the application question related only to money or banking crimes. The question asked if he had been convicted of an offense indicating "moral turpitude."