Prosecute the Mortgage Sharks

Dirk Adams, chief executive of Home Savings, said that Thompson was not employed by the bank and that Home Savings had no business relationship with CashFlow.

Thompson did not respond to e-mails or telephone calls for comment.

Sarah Bloom Raskin, Maryland's commissioner of financial regulation, said the state is continuing to aggressively investigate the Lee case.

In Maryland, unlicensed loan officers can be fined up to $25,000 and imprisoned for up to five years, or both.

Lee denies that Financial Independence ever arranged mortgage loans. He also said he had nothing to do with CashFlow, though the company has the same Georgia address and telephone number as Financial Independence. One company document welcoming new employees to CashFlow says Lee is its founder.

With Lee's history of regulatory run-ins, one would think financial institutions would avoid doing business with him. And yet Lee has continued to do business with banks and licensed mortgage brokers who fail to detect questionable actions by him and the people working for his companies.

Last year, Wachovia, the fourth-largest U.S. bank, funded 196 loans totaling about $54.2 million that Lee brought to the financial institution, according to an e-mail sent to Lee by Scott Davenport, a former national account executive with Wachovia.

"With the majority of the volume conducted in the 3rd and 4th quarter of last year, you easily would have been No. 1 with a full year of volume," Davenport wrote to Lee in the e-mail, its veracity confirmed by Wachovia. "Let's keep up the great work and push for a great 2008."

Davenport sent the e-mail several months after The Washington Post and other publications reported that cease-and-desist orders had been issued against Lee in Maryland and Georgia for originating loans without a license.

Soon after I inquired about Wachovia's business transactions with Lee, Davenport was fired. Wachovia confirmed that Davenport was terminated but declined to comment why.

Wachovia spokesman Don Vecchiarello said in a statement: "In its wholesale channel, Wachovia deals directly with numerous mortgage broker companies. We do not control the manner in which brokers identify potential loan applicants. However, it is Wachovia's policy not to do business with or through any individual or company that has been the subject of disciplinary proceedings by state licensing authorities."

It's not only the disciplinary actions that are bothersome about this operation. Key Financial Corp., based in Clearwater, Fla., was listed as the customer contact on a Maryland loan application taken by Thompson of CashFlow and processed by Wachovia. Although the loan was not funded because the appraisal was too low on the homeowner's property, the borrower was still dealing with an unlicensed loan officer.