Both the SEC and the FBI’s bank fraud division are reportedly probing the shuttered reverse mortgage lender
A once-prominent reverse mortgage company that suddenly shut its doors last month is under investigation by the Securities and Exchange Commission and the FBI, according to claims made by its creditors.
Virginia-based Live Well Financial, as recently as February a top-10 reverse mortgage company, suddenly ceased operations May 3. The company gave almost no explanation for the closure, merely citing “unexpected circumstances.” Live Well laid off more than 100 employees – including founder and CEO Michael Hild.
The company was promptly sued by an employee who claimed that it hadn’t paid her or her coworkers what they were owed, and one of its creditors, Flagstar Bank, claimed the lender owed it $74 million.
Now Flagstar, along with Mirae Asset Securities and Industrial and Commercial Bank of China Financial Services, is pushing Live Well into an involuntary Chapter 7 bankruptcy filing, according to a report by RichmondBizSense. According to court filings, each of the creditors has been approached by either the FBI, the SEC, or both regarding Live Well. All three creditors are “cooperating in those entities’ investigations,” according to court filings.
Flagstar said that it had received a subpoena from the SEC on May 9 – the week after Live Well closed its doors – and that the regulator was investigating both Live Well and its representatives, including Hild, RichmondBizSense reported. Flagstar said that it was contacted by the bank fraud division of the FBI regarding Live Well on June 4.
The creditors also told the court that Live Well has been unresponsive to their inquiries since it ceased operations, according to RichmondBizSense.
“Live Well has stonewalled the petitioning creditors’ every attempt to obtain information regarding the repayment of the obligations, the circumstances surrounding the abrupt shutdown of Live Well’s business and Live Well’s intentions regarding the preservation of its assets,” the creditors said in a court filing. “This is not merely the failure to return a phone call; this is active concealment…”
The creditors also alleged that Hild, who founded Live Well in 2005, used the company to line his own pockets – a charge Live Well has denied, according to RichmondBizSense. However, Live Well did acknowledge that the SEC is currently investigating its bond portfolio operations. The company did not comment on the reported FBI investigation.
