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Are Ex-Con Brokers Too Risky? Scandal Fuels Proposal

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By CATHERINE DOLINSKI

The Tampa Tribune

Published: August 11, 2008

TALLAHASSEE - The outcry over Florida's mortgage brokering scandal has fueled tough new talk about keeping felons out of the business, no matter what crime they committed.

Florida law bars anyone convicted of felonies directly related to mortgage brokering from holding a license in that field.

That rule did not stop thousands of felons from obtaining such licenses, according to the Miami Herald, which revealed that some ex-con brokers went on to defraud consumers and banks out of $85 million from 2000 through 2007.

Now, Attorney General Bill McCollum wants to change the state clemency process for felons seeking restoration of their civil rights after prison. His proposal: a ban on most or all felons, regardless of their crime, from holding a mortgage brokering license for seven years after they complete their sentences.

"I believe that if you have a major felony conviction, whether it's cocaine trafficking or mortgage fraud, you should not be in a position of trust such as a mortgage broker would have, with access to personal financial data and with opportunity to steal from people," McCollum said.

"It seems me that there should be a period of time after which you come out of prison that you're not given the right to have a license in professions that have that type of quality."

So far, his colleagues on the state clemency board have reacted coolly. Gov. Charlie Crist called for compassion Tuesday during a Cabinet meeting and said afterward that he wasn't interested in sweeping change that would affect all felons.

'Good Guys' Want Changes

But the outcry sparked by the Miami Herald investigation may win support for the attorney general's plan from the thousands of mortgage brokers in Florida with clean records who want the state to clear their collective name.

"What this investigation did to us good guys, the white-hat wearing brokers, is that it devalued our license," said D. Ritch Workman, president of the Florida Association of Mortgage Brokers.

"There needs to be an iron wall between the consumer and a felon in dealing with mortgages."

McCollum's plan is consistent with his objections to the April 2007 change in the clemency law. That month, he cast the lone vote on the state clemency board against making the restoration of civil rights - including the right to professional licensing - for felons nearly automatic after they complete their sentences.

Since then, 115,000 felons have had their rights restored, compared with 56,000 requests processed in 2006-07 and 49,000 in 2005-06.

The reform was a particular priority for Crist, who had committed to the change during his 2006 election campaign.

"The debt for a person's wrongs can be paid in full. People can be forgiven by their creator," he said in April 2007.

McCollum said two weeks ago that the ongoing mortgage brokerage scandal demands that the board revisit that decision. He noted the example of Scott Almeida, a former drug trafficker who figured prominently in the Miami Herald's expose in July.

Convicted of cocaine trafficking - but nothing directly related to mortgage brokering - Almeida obtained a license in the field after his release in 2002. In the years that followed, according to the Herald, "he arranged nearly $3 million in fraudulent loans and fleeced 30 people - many of them elderly and disabled."

He will serve 10 years in prison, having pleaded guilty in October.

McCollum announced last month that Orson Benn, former vice president of Argent Mortgage Co., faces as much as 105 years in prison for his involvement in a mortgage fraud scheme involving Almeida. The $13 million fraud scheme extended into Hillsborough, Pinellas and Polk counties.

Some Point To Role Of Regulators

Larry Spalding, lobbyist for the American Civil Liberties Union of Florida, called McCollum's desire to rewrite the rules of clemency for all felons "a sound-bite solution."

The state, Spalding said, needs to hold both its regulators and the employers of mortgage brokers more accountable.

"The key to this is proper hiring techniques and doing proper background investigations," said Spalding, who was disappointed that the Cabinet did not fire Don Saxon, the state's top regulator of mortgage brokers, two weeks ago. "To me, the focus should be on the people in charge."

Alex Sink, Florida's chief financial officer, said she is not far philosophically from McCollum. She, too, wants to tighten up the licensing rules.

But she thinks the correct reform route is through the Office of Financial Regulation, not the clemency board.

Sink is urging Saxon to more aggressively police the mortgage brokering field, starting with a rule change to clarify which job-related felonies disqualify an applicant for a license. The current rules, she said, are too vague.

"In this case, the focus does need to be on people who have been convicted of financial-related crimes," Sink said. "Just like you don't want to give firearms authority back to someone who has committed armed robbery," which clemency rules prevent.

Rehabilitation Versus Recidivism

Crist lauded Sink's approach, which he described as combining compassion and common sense.

If a felon's crime is unrelated to the job, he said, "then we need to give people that second chance. Otherwise we might be forcing them back into a life of crime, and that's not what we want to do. We believe in rehabilitation."

McCollum argues that focusing just on rules will only reach "around the edges" of the problem. Citing recidivism data showing that 50 percent of convicts return to a life of crime within five years of release, McCollum said the stakes are too high to allow any felons into mortgage brokering right away.

It remained unclear whether Charles Bronson would support McCollum's approach. The agriculture commissioner said he does not want to unfairly penalize felons who committed unrelated offenses.

But if McCollum or investigators produce evidence suggesting that other kinds of felons are likely to commit fraud, Bronson said, he would have to consider that. For now, he is waiting for more input from state investigators.

The urgency of the situation may well justify the kind of change proposed by McCollum, said Workman, though he noted that his organization has yet to favor one approach to reform over the other.

"What I want is quick, decisive action," he said. "If that means we purge all white-collar criminals from our ranks, great. If it means removing all criminals, that's probably better. But what we have to have is swift action - we have to reinstate trust in the profession."

'A Bit Of A Broad Brush'

The issue is a difficult one for Bill Newton, director of the Florida Consumer Action Network, who sat on the state's foreclosure prevention commission.

"I would generally support the attorney general on this, for consumer protection," Newton said. "But there may be unintended consequences. It's a bit of a broad brush; there are many felonies that had nothing to do with fraud, that give you no reason to think they'd be involved in mortgage fraud.

"You might be preventing someone from rehabilitating themselves and getting their lives back on track."

Reggie Mitchell, a lawyer with People for the American Way, blasted McCollum for using the mortgage crisis as a pretext for applying the brakes to civil rights restoration.

"He saw this as an opening since it's a hot political topic," said Mitchell, whose organization advocated for automatic rights restoration.

"It's an emotional appeal, not a logical one. We know that nationwide the majority of people that created the foreclosure crisis are not people previously convicted of a crime. This is simply a drop in the bucket of the larger problem of foreclosures."

McCollum, who intends to raise the issue again at the next clemency board meeting, said he intends to propose a short list of occupations, including but not limited to mortgage brokering, that are too security sensitive for access by felons immediately upon their release.

One possibility, he said, is restricting felons' eligibility for real estate agent licenses because they authorize people to walk in and out of other people's property.

A spokeswoman for the state Realtors association had no comment on the idea.

McCollum acknowledged that he is seizing an opportunity.

"But I certainly would not have raised this but for the fact that it has direct bearing on the issue at hand. I'm interested in the safety and security of the people of Florida; that's what they elected me to do. I would be very remiss if I didn't do this."

Reporter Catherine Dolinski can be reached at (850) 222-8382 or cdolinski@tampatrib.com.

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