Florida Office of Financial Regulation launches investigation into mortgage investment deal

Attorney: IRS interest payouts 'make absolutely no sense'

By Mike Holfeld - Investigative Reporter

ORLANDO, Fla. - The Florida Office of Financial Regulation launched a preliminary investigation Monday into Five Star Elite Services, of Orlando, after News 6 uncovered evidence the company is offering a questionable investment deal that promises to deliver thousands of dollars to home mortgage loan borrowers.

The offer claims to pay loan borrowers from the Internal Revenue Service through a real estate mortgage investment conduit, or REMIC.

“Imagine getting a 6 figure refund from the IRS that can be applied to pay off student loans, child support and credit card debt and get your home free and clear in the process," the company’s web site said.

Paul Williams, 65, of Orlando, a recent amputee, said the regional director of Five Star Elite Services, David E. “Gumby” Daniels, made that promise to him.

[RELATED: Click here to file a complaint with the Office of Financial Regulation]

Williams, who was hoping to pay off medical bills with the funds, told News 6 he invested $3,000 with Elite last year to conduct a forensic history of his home mortgage loan.

Williams said he was told that would pay for the forensics review, and the return on his investment would start arriving in January. He hasn't received anything.

Williams said he was told that the REMIC would provide $60,000 or more because his mortgage was sold from its originating financial institution to other loan institutions.

A check of state records with the Department of Business and Professional Regulation and the Office of Financial Regulation found no evidence Daniels currently holds or ever held a license to sell stocks, bonds or real estate trusts.

News 6 alerted the Florida Office of Financial Regulation Friday.

On Monday, Florida Office of Financial Regulation investigator Alex Toledo interviewed Williams and determined the investment allegations needed to be reviewed further.

"I’ve confirmed that based on our communication with Mr. Williams, we have opened a preliminary investigation into this matter," Jamie Mongiovi, OFR’s director of communications, said in an email.

Five Star Elite Services's website explains the REMIC “holds commercial and residential mortgages in a trust and issues interest in these mortgages to investors.”

Williams told News 6 that Davis claimed only 12 investors a year had access to the REMIC program.

The key word is “investors,” according to veteran real estate attorney Moses Dewitt, of the Dewitt law firm.

“After the definition of what a REMIC is and mortgage-backed securities, the rest of it makes absolutely no sense,” Dewitt said. “I think they’re basically trying to say you can be like the investors on Wall Street; you can get a return on these mortgages, but it doesn’t work that way.”

Through an attorney, Davis declined to comment on Williams’ allegations or his REMIC investment.

“An interview is not an appropriate forum to discuss or resolve Mr. Williams assertions,” his attorney wrote.

It’s not clear how many local homeowners paid money with the hopes of a return from a REMIC trust.
Mongiovi said the OFR wants to hear from other consumers who may have invested into a REMIC or other investment product offered by Five Star Elite Services.

“Please help us get the word out by inviting your viewers to file a complaint with OFR, “ she said.

To file a complaint visit www.flofr.com or call  850-487-9687

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