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In 1988 Barton (Barry) Greenberg was sent to prison for six years and eight months following his conviction for embezzling $44 million in the Diamond Mortgage Corporation case. He was released in August of 1994 and immediately got back into the thick of things: questionable things.
Greenberg’s wife, Joann Rovin-Greenberg, acquired a majority share in First Fidelity Mortgage about the same time. Attorneys now claim that there was simply an option to purchase subject to FIB approval, and since the approval was never granted, Robin-Greenberg never really had control. No matter; allegations are that the focus of the company began to change as soon as Greenberg came into the picture.
He stands accused of creating a massive, unofficial sales network – numbering close to 500 – to sniff out loan applications and mortgages. In some cases, individuals were required to pay thousands of dollars to become special city loan officers. One woman was offered the option to earn commissions from any loans brought in from a particular zip code and closed within 30 days – for a mere up-front payment of $55,000. Once the woman paid the fee and attained the wealth-promising position, she quickly learned that none of the loans ever closed within the required amount of time. She also found out that special loan officers had little control and were actually prevented from finding out the status of an application after it was submitted.
Michigan minority churches and their parishioners were targeted and many ministers were brought into the company to act as special loan officers. High up-front fees were charged, and many times, the promised loans were never funded. Sometimes the fee was called a retainer, other times a returnable deposit, but the fact remained that the promised money was never delivered. In one instance the papers did arrive and the loan was approved, but the terms were exorbitant. Not only did the church pay $4,000 in up-front fees for a requested $120,000 loan, but the terms called for another $12,000 fee to be pre-paid to a mortgage company associate plus another $18,000 be paid directly to First Fidelity. That adds up to $32,000 in acquisition fees – over 25 percent of the requested mortgage. When the church refused the terms, the deposit was not refunded. Many other churches tell similar stories, but attorneys for Greenberg in this newest flurry of accusations tell a different story. Problems resulted, they say, from a series of ill-fated experiments. Further, Greenberg and First Fidelity have parted company due to differences of policy, and Greenberg is no longer employed.
And once again, just as in 1988, the judicial system will be left to sort out the matter. First Fidelity has been stripped of its operating license by the Michigan Financial Institutions Bureau pending a hearing. Ironically, this is the very same agency that was originally set up after the Diamond Mortgage Corporation case – specifically to prevent such blatant abuse from ever happening again.
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