Defunct mortgage firm to take state to court over delayed ruling
The owner of a defunct East Hartford mortgage firm has prepared a lawsuit that he’s set to file in state court to force the Connecticut Department of Banking to issue a final decision on the firm’s license revocation — more than two years after the state filed the charges.
The department investigated the firm, 1st Alliance Lending LLC, in 218 on suspicion it used unlicensed personnel to process mortgage applications. In December of that year, the department issued a notice of its intent to revoke the firm’s license to operate in Connecticut.
John DiIorio, who founded 1st Alliance Lending in 2004, denies wrongdoing and has said his company, which has more than 170 employees and a deal with the state to expand, collapsed because of excessive delays in the department’s case.
Hearings began the following September and extended intermittently over months. A final postbriefing hearing was not completed until October, 2020, putting the Department of Banking on the clock to get a decision out within three months under state statute.
On Thursday, the department extended its deadline for making a decision in the case to midApril, invoking an executive order issued last year by Gov. Ned Lamont that allows state agencies to tack three months onto their deliberations in deference to the extra demands of working remotely during office closures as a result of the COVID-19 pandemic.
The 1st Alliance legal action is pegged primarily to a section of state law that requires agencies to “proceed with reasonable dispatch to conclude any matter pending,” setting a 90-day window after final evidence is filed which will expire on Jan. 18.
In pushing back the decision date under Lamont’s executive order addressing agency business during the pandemic, the department cited the complexity of the case, thousands of pages in related transcripts and evidence, and repeated requests by 1st Alliance for more material to support its case. That included documents with proprietary financial information that DiIorio and 1st Alliance requested through the Freedom of Information Act.
The department “has continued to work earnestly on reaching a resolu
tion,” spokesman Matthew Smith said in an emailed response Friday. “Given the volume of documents to review and the unprecedented challenges created by a global pandemic, ... (this) short extension will ensure that the hearing officer will be able to evaluate the numerous exhibits, documents and testimony in this case allowing for a fair and informed decision on the matter.”
In a Friday interview, DiIorio maintained the banking department has had sufficient time and resources to render a decision, and that he now
plans to push forward with a lawsuit in Connecticut Superior Court.
He did not rule out additional legal action for monetary damages. Under state law, individuals and entities have a few channels to file claims against the state, including through the Office of the Claims Commissioner which can sign off on cases going into the court system or push those involving large monetary claims to the Connecticut General Assembly for final resolution.
In dismissing a 1st Alliance lawsuit last year centered on a dispute over a
$200,000 bond revocation, a state judge ruled that the company failed to establish that state banking commissioner Jorge Perez’ decision was “arbitrary or capricious or characterized by abuse of discretion,” as worded by New Britain Judge John L. Cordani. Perez is named as a defendant in the newest lawsuit along with a department hearing officer.
DiIorio founded Phoenix Home Lending last year in Sturbridge, Mass., but said regardless of the outcome of the Connecticut case he has no plans to launch another venture in his home state. The previous company, 1st Alliance, has no active operations and no longer employs people in Connecticut.
“We will see this through — we’re tired, we’re frustrated, but not deterred,” DiIorio said Friday. “The facts are as clear as they are, the fact that we’re 765 days into this and Connecticut hasn’t issued a decision. ... Connecticut doesn’t want to make a decision — if they did, they would have by now.”