The Subprime Wolf Of Wall Street: Trained by Veteran of Jordan Belfort, World Business Lenders is Pitching Loans with Annual Interest Rates as High as 125 Percent
Doug Naidus made his fortune selling a mortgage company to Deutsche Bank AG months before the U.S. housing market collapsed. Now he’s found a way to profit from loans to business owners with bad credit.
From an office near New York’s Times Square, people trained by a veteran of Jordan Belfort’s boiler room, call truckers, contractors and florists across the country pitching loans with annual interest rates as high as 125 percent, according to more than two dozen former employees and clients. When borrowers can’t pay, Naidus’s World Business Lenders LLC seizes their vehicles and assets, sometimes sending them into bankruptcy.
Naidus isn’t the only one turning to subprime business lending. Mortgage brokers and former stock salesmen looking for new ways to make fast profits are pushing the loans, which aren’t covered by federal consumer safeguards. Goldman Sachs Group Inc. (GS) and Google Inc. are among those financing his competitors, which charge similar rates.
“This is the new predatory lending,” said Mark Pinsky, president of Opportunity Finance Network, a group of lenders that help the poor. “And the predators, just as they did in the mortgage market, have gotten increasingly aggressive.”
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Naidus, 48, chief executive officer of World Business Lenders, declined to be interviewed. Marcia Horowitz, a spokeswoman at public relations firm Rubenstein Associates Inc., said the company explains loan terms in plain English and takes steps to ensure that borrowers understand.
“World Business Lenders’ sales and marketing techniques, as well as the interest rates it charges and the default rates it experiences, are generally consistent with those throughout the industry,” Andy Occhino, general counsel for the company, wrote in a May 21 letter. “In serving the underserved small-business community along Main Street USA, World Business Lenders complies with all applicable laws and endeavors to ensure a positive experience for its customers.”
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Horowitz, the spokeswoman for World Business Lenders, said the company works with borrowers to avoid defaults.
“If the default cannot be cured, World Business Lenders enforces its rights under the loan documents, including the recovery of the pledged collateral,” she said.
Wall Street banks are helping the industry expand by lending originators money. They’re starting to package the loans into securities that can be sold to investors, just as they did for subprime-mortgage lenders.
OnDeck Capital Inc., a lender with funding from Google’s venture-capital arm and PayPal Inc. co-founder Peter Thiel, sold $175 million of notes backed by business debt last month in a deal put together by Deutsche Bank. Interest rates on the loans ranged from 29 percent to 134 percent, according to a report from credit rater DBRS Ltd., which labeled most of the deal investment grade.
Representatives for Thiel, Google Ventures and Goldman Sachs, which lends money to OnDeck, declined to comment.
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Brokers are popping up around the country to originate loans on behalf of lenders including OnDeck and World Business Lenders. The companies pay fees to the brokers of about $6,000 for finding people willing to take a $50,000 loan, according to current and former brokers, most of whom asked not to be identified to preserve their job prospects.
Some stock brokers have jumped to business loans after getting kicked out of the securities industry by regulators.
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World Business Lenders put up job listings seeking former brokers, and they came. A February orientation schedule provided by a former employee shows that training is run by Bryan Herman, who got his start under Stratton Oakmont Inc.’s Belfort, the con man portrayed in “The Wolf of Wall Street.” Herman later ran his own boiler room in the 1990s and avoided jail by informing on other brokers when he was charged with fraud in 1998, court records show. Another salesman was released from prison in 2010 after serving about a year for penny-stock fraud.
Herman has paid for his crimes, according to his lawyer, Marty Kaplan.
“It’s really like saying Bill Clinton smoked dope in college,” Kaplan said. “Who cares?”
Full article from Bloomberg here…
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4closureFraud.org
Ray Shelton, on June 12, 2014 at 5:13 pm said:
Dear Elizabeth Warren, Senators and Congressmen, President Obama.
American homeowners need protection from US Bank, SN servicing and their third parties. Did their attorneys Andrew Braaksma supervised by Paul Mckenna out of Coral Gables Florida knowingly submit forged documents to the Federal and State courts? Have they committed the crime of Uttering Forgery ? Are they just another law firm like the dis barred David Sterns, the “foreclosure King? It is clear that small Fines, the OCC, nor law enforcement have yet to stop the forgeries and falsified document being submitted to our courts by US Bank and their attorneys. A few judges will not go against the banks bad behavior but many Judges know the truth now and things are changing. We believe that serious interstate crimes have be violated and law enforcement needs to intervene, arrest and prosecute the attorneys and the bank officials who may be committing the crimes. Then you will see an end to the rape and fraud on our American Courts and families.
However…We can end this mess very quickly…We need state and national laws that simply says that no family / home owner can ever have their home taken and no Family can be evicted from their home until the home owner gets the final price that the bank legitimately auctioned the home for. Home owner should always have the last right of refusal no matter when an auction or sale takes place.
Set up rules to guarantee emergency low cost funding for the buy back by the home owner at rates that are mandated to help the home owner not put them in a harness of heavy interest. That only creates a guaranteed payment failure that is nothing more then hard labor payment servitude doomed for failure. Bankers have made slaves of the American Poor and Middle Class and that must change. Why should overseas countries, foreign companies and corporations buy our homes. They are taking in some cases a fortune in hard work, equity and deposits. Stop putting families on the street. Leaders of America and law Enforcement, Please defend and fight for justice for the American Families
Defaulting on loans can be crippling. The simple fact of life is, if it sounds too good to be true, then it probably is. Everyone is looking to trick the system, I feel terrible for all that got suckered in.
I was definitely blind sided . The entity that was calling me several times and asked me to refinance was the vehicle used to property launder my mortgage to Wells Fargo , A company I would have never had a loan with ! The red flag should have been when I told them to not even talk to me about an armed loan and they tried giving me one anyway ??? They set so many people up for the fall that way !!!
The truth of the Scam is coming out but what’s very disturbing is the powers created for our protection and the Courts are not holding them accountable ?!?! and now the people like myself , who didn’t take a bad loan and had plenty of equity in our houses are losing them to these bastards who perpetrated the Crime .
Families were and are being financially slaughtered and some ending up in divorce . Just in my home town their were two 12 year old daughters of the Republic who called my 12 year old daughter , in tears , because their families were falling apart and they were losing everything . These are hard working people on Main Street America having their American Dream stolen from them .
The magnitude of what’s going on is a disgrace to this Nation and for what it stands for but if the truth really comes out about what happened , and believe me we are really pushing for it !! then their are going to be a lot of pissed off people wondering what the hell our elected officials are doing after taking an oath of office to protect our Constitutional Rights and failing so miserably !!!
Until these Bastards get burned for the First round of predatory lending , they are going to keep on doing it . Remember this , They don’t call it the ” LONG ARM OF THE LAW ” for nothing !!!
We are banding together here in N H under the LLC , N H HOWLS-Home Owners With Legal Support . Contact information will be forth coming……
As long as these cases are kept in the Civil Arena , the Crimes that are being committed against Home Owners will never be prosecuted !?!?
They have stripped us of our Equity and taken our Homes , It’s time the TRUTH is told and the people that committed these crimes be held accountable !!!