Judge releases $4M in frozen Lend America accounts

Lend America office building in Melville. (December 2009) Lend America office building in Melville. (December 2009) Photo Credit: Ed Betz

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A state judge Wednesday released $4 million in frozen Lend America bank accounts, giving 500 laid-off employees their last two days of pay and funding 27 refinance deals.

Wednesday's order came in the case of EAM Land Services, a Syosset title insurance company, versus the Melville-based lender that closed Dec. 1 after federal authorities barred it from making federally insured loans amid fraud allegations. EAM had the defunct company's bank accounts frozen after discovering the original loans had not been paid off on 67 refinance deals involving Lend America.

Out of $5 million left in Lend America's accounts, State Supreme Court Justice Stephen Bucaria in Mineola directed up to $3.7 million to the loans, $191,000 to paychecks and about $100,000 to payroll taxes. Under the order, EAM's law firm would disperse the money from a segregated escrow account and send the judge reports.

The paychecks are slated for rank and file employees, not the executives, and won't cover commissions on loans.

"It's hard to believe," said Gary Goodman of Jonesboro, Ill., one of the 27 borrowers covered by the court order. After making November payments to Lend America and his CitiFinancial mortgage, Goodman said he's not celebrating until the court order results in the full repayment of his old loan next month: "I'm not so sure anymore who you can trust."

EAM's attorney, Joseph Maniscalco, said he plans to ask the court to address the remaining refinance cases by reducing the loan amounts to whatever the borrowers actually got, from cash-out checks to credit bills paid off.

Federal and state investigators are trying to find out what happened at Lend America. In October, federal prosecutors filed a 155-page civil fraud suit against the company, but executive vice president Michael Ashley has denied the charges.

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