DFPI’s REES Task Force Awarded CLA Outstanding Achievement in Public Law for Multi-State Real Estate Fraud Investigation
On Oct. 3, the California Lawyers Association (CLA) awarded its 2022 Outstanding Achievement in Public Law (OAPL) Award to the DFPI’s Real Estate Educational Services (REES) task force. The REES team led an historic 45-state agency task force in conjunction with the Conference of State Bank Supervisors (CSBS) to uncover qualifications fraud by over 600 mortgage loan originators nationwide. The investigation determined that Real Estate Educational Services (REES), owned by Danny Yen, knowingly conducted an education fraud scheme in which he distributed course completion certificates to licensees for courses they did not attend or complete.
The task force team’s innovative use of resource sharing and creation of a nationwide settlement process resulted in over 500 settlements with implicated loan originators. The settling loan originators in over 40 states agreed to pay around $1.2 million in penalties, complete additional education, and surrender their licenses for a period of time. DFPI reached disciplinary settlements with over 170 licensees and revoked nine loan originator licenses. The DFPI and other financial agencies continue to advance disciplinary proceedings against non-settling loan originators.
Additionally, in settlement of an administrative action brought by the DFPI in coordination with actions by Maryland and Oregon, Danny Yen and his family members agreed to cooperate with the financial agencies and provide testimony against implicated non-settling loan originators. The Yen family further agreed to a lifetime restriction from direct and indirect involvement in businesses that provide mortgage lending-related education. In addition to a monetary penalty, the Yen family agreed to a non-compliance penalty of $15 million should they fail to fully cooperate with the financial agencies’ investigation.
DFPI’s task force team consisted of Senior Counsels Blaine Noblett (fmr.), Allard Chu, Boryana Arsova, and Marlou DeLuna; Senior Financial Examiner Welmond Chow; Special Administrator of CRMLA Licensing Meircee Boulahroud, and Senior Legal Analyst Monica Ahrens. Investigator Michael Strickland conducted the physical investigation.
For additional information, read the CLA Press Release.