Embattled home lender gives heavily to politicians;

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Ameriquest, a big donor to both parties, accused of duping low-income borrowers

The San Francisco Chronicle

A giant Orange County mortgage company accused of duping low-income homeowners has pumped more than $7 million into California politics since 2002, including contributions to Republican Gov. Arnold Schwarzenegger, Democratic Attorney General Bill Lockyer and dozens of other state legislators, members of Congress and political committees.

Ameriquest’s top executive, Roland Arnall, also has been one of President Bush‘s top fundraisers, generating $12 million for the president’s political efforts during the past four years. On July 28, Bush nominated Arnall, a billionaire who was ranked No. 106 in the 2004 Forbes magazine list of the wealthiest Americans, as ambassador to the Netherlands.

Since Schwarzenegger took office in 2003, he alone has pulled in more than $1.5 million from Ameriquest, Roland Arnall and his wife, Dawn. Ameriquest also has given $1.5 million to groups backing the governor’s political efforts and, along with the Arnalls, has contributed $1.5 million to the California Republican Party.

Ameriquest recently gave the governor a block of prime tickets and a luxury box for the Rolling Stones’ opening concert on their U.S. tour — for Schwarzenegger’s use as a fundraiser.

“They’re generous donors, and we’re grateful for their support,” said Marty Wilson, the governor’s chief fundraiser. Ameriquest’s legal problems “are not our area of concern. The governor has expressed no particular concern about taking Ameriquest’s contributions.”

Arnall, 66, had been a major Democratic donor before he began raising and contributing money to Bush and Schwarzenegger. But Democrats haven’t been forgotten. Ameriquest contributed nearly $400,000 to the California Democratic Party in 2004 and 2005. The mortgage lender spent thousands on airfare, hotel rooms, food, gifts and football tickets to send Assembly Speaker Fabian Nunez (D-Los Angeles), and other Democratic Assembly members to Honolulu for a party fundraiser at this past February’s Pro Bowl.

Ameriquest, the nation’s largest privately held mortgage lender, is under growing legal scrutiny for its business practices in the fast-growing sub-prime lending market, which typically targets borrowers with credit problems and not enough income to qualify for conventional loans.

On the day Arnall was nominated as ambassador, the company reported that it was putting aside $325 million to settle predatory lending claims in 30 states, including California.

A Connecticut case against Ameriquest was settled for $7 million last month, and a class action lawsuit filed in San Mateo Superior Court was settled in June for as much as $50 million. Another potential class action suit is pending in federal court in San Francisco.

The suits accused Ameriquest employees of forging loan documents, pumping up appraisals, providing phony credit and employment histories and changing the terms of loans. In the San Mateo case, the company was accused of “bait-and-switch” tactics, in which borrowers found themselves facing higher interest rates, loan charges and payments than they originally were promised.

It wasn’t the first time the company had run into trouble. In 1996 the company, then known as Long Beach Mortgage Co., paid $4 million to settle a federal suit claiming the lender discriminated against minority, female and elderly borrowers by charging them higher loan fees. In 2000, Ameriquest also settled a predatory lending dispute with ACORN, a national coalition of community organizations.

The mortgage lender admitted no wrongdoing in the settlements, arguing that it had tightened its lending procedures and provided credit to people who otherwise would not get it.

The flood of contributions to politicians of both parties has no connection with the company’s legal problems, an Ameriquest spokesman said.

“We support candidates who share our belief in the importance of maintaining a strong economy, job creation and reasonable regulation of lenders to protect consumers,” a company spokesperson said in a written response to The Chronicle’s questions.

One of those candidates is Lockyer, a veteran Bay Area politician whose office has been investigating Ameriquest for alleged predatory lending practices since December 2003. Lockyer, who has made consumer protection the hallmark of his two terms as attorney general, took $250,000 in contributions from the mortgage lender for his 2002 re-election campaign and another $21,200 — the maximum allowable — in November 2003 for his since-abandoned campaign for governor.

“The attorney general doesn’t let campaign contributions get in the way of his duty to follow the law,” said Tom Dressler, a spokesman for Lockyer. “The ability of the office to do its job on behalf of consumers could be restricted if (Lockyer) had to recuse himself every time a contributor’s case came up.”

While Lockyer hasn’t taken any contributions from Ameriquest since the state investigation began, he was a guest at the holiday party the Arnalls held last year at their Holmby Hills estate in Los Angeles, even as Justice Department officials were contemplating a multimillion-dollar suit against their company.

“The relationship between Lockyer and the Arnalls goes back a ways, and we don’t believe it’s inappropriate for him to go to their house for a Christmas party,” Dressler said.

The money Ameriquest contributes to politicians buys access ordinary citizens don’t have, said Bob Stern of the Center for Governmental Studies in Los Angeles.

“Do you think that Lockyer is not going to take a phone call from Ameriquest if they gave him $250,000?” he asked. “He’s not necessarily going to agree with them, or he might not drop the suit, but (Ameriquest) has a chance to make their case.”

Political position, rather than party lines, guides Ameriquest’s giving.

For years, Ameriquest and the Arnalls were among former Democratic Gov. Gray Davis‘ biggest boosters. They gave thousands to Davis’ campaigns, and Roland Arnall, a former California State University trustee, was on the transition team when Davis was elected governor in 1998.

Ameriquest in July 2003 pumped $100,000 into “Taxpayers Against the Governor’s Recall,” which was fighting Republican efforts to oust Davis from office.

But Davis lost the October 2003 recall election, and Schwarzenegger became governor. A month later, Ameriquest gave $100,000 to Schwarzenegger’s “Total Recall Committee” and the maximum $21,200 to the governor’s campaign committee.

The mortgage lender spreads its wealth widely. Since 2004, for example, Ameriquest has given money to 23 of California’s 40 state senators and 53 of the 80 Assembly members.

That list includes legislators as conservative as Assemblyman Ray Haynes, R-Murrieta (Riverside County), and as liberal as state Sen. Carole Migden, D-San Francisco.

“This is a classic case of trying to buy political cover from both sides of the aisle,” said Jamie Court, president of the Foundation for Taxpayer and Consumer Rights in Santa Monica. “Who’s left to prosecute? The company and the CEO have basically conflicted every public official out.”

There are no hard feelings when it comes to Ameriquest’s generosity, either. In 2001, Migden, then an assemblywoman from San Francisco, drafted a bill aimed at fighting predatory lending practices by capping the interest rate on sub-prime loans, banning balloon payments and barring companies from hiding their fees inside the loan. Ameriquest and other subprime lenders fought the bill and forced Migden to make some compromises before it was passed by the Legislature and signed by Davis.

But just a few months later, in March 2002, Ameriquest gave Migden $10,000 for her campaign for the state Board of Equalization. When she ran last year for state Senate, the mortgage lender provided a $3,200 check.

“What they give is pocket change,” Migden said, especially with the new limits on campaign contributions. “If you look at the numbers, they’re not so consequential. If they give you $1,000 a year, they’re not adopting your kids.”

Companies like Ameriquest are rich enough to spread their contributions around in a state as politically divided as California, she added, making themselves a visible political player.

“They want to feel comfortable to sit down and ask for an appointment,” Migden said.

Even last year, when Roland Arnall was one of Bush’s top fundraisers and Dawn Arnall was a co-chair of the host committee for the Republican National Convention in New York City, Roland Arnall gave $10,000 to the Democratic Congressional Campaign Committee, which sought to win back control of Congress from the Republicans.

“Businesses want to succeed,” said Larry Noble, executive director of the Center for Responsible Politics in Washington. “They want to make sure they get access and a hearing, regardless of who’s in office. They’re very bottom-line oriented.”

The Arnalls’ largesse:

Some of the California politicians who have received campaign contributions since 2002 from Ameriquest Mortgage Co. and its top executives, Roland and Dawn Arnall:

Gov. Arnold Schwarzenegger: $1.5 million

Attorney General Bill Lockyer: $271,200

State Sen. Don Perata, D-Oakland: $78,200

Democratic State Controller Steve Westly, who is running for governor: $58,000

State Treasurer Phil Angelides, who also is in the 2006 governor’s race: $15,000

State Sen. Jackie Speier, D-Hillsborough, a candidate for lieutenant governor: $5,000

State Sen. Chuck Poochigian, R-Fresno, a candidate for attorney general: $8,000

State Sen. Abel Maldonado, R-Santa Maria: $9,500

Assemblyman Mark Leno, D-San Francisco: $1,500

Assemblyman Leland Yee, D-San Francisco: $3,500

Assemblyman Joe Nation, D-San Rafael: $9,400

Los Angeles City Attorney Rocky Delgadillo, a Democratic candidate for attorney general: $2,500

Rep. Tom Lantos, D-San Mateo: $9,000

Rep. Loretta Sanchez, D-Garden Grove: $2,000

U.S. Sen. Dianne Feinstein, D-Calif.: $1,000

San Francisco Mayor Gavin Newsom: $500
Source: state and federal campaign finance reports

The flow of campaign cash:

Ameriquest’s support for Gov. Arnold Schwarzenegger doesn’t always have his name on the check. In a number of cases, the mortgage lender provided money to groups that turned around and contributed to the governor and his political allies. Here’s an example of how the money flowed:

Ameriquest has donated $600,000 of the $1.4 million collected since January by CALBUSPAC, the political arm of the California Chamber of Commerce.

Ameriquest contributed $268,000 to The New Majority, a Republican group based in Orange Country, which has raised $1 million this year.

Ameriquest also provided $200,000 of the $510,000 the California Business Properties Association raised for its political fund.

That committee gave $175,000 to the California Republican Party and $555,000 to Citizens to Save

California, the group that qualified Schwarzenegger’s initiatives for the November special election.

The New Majority then donated $345,000 to Citizens to Save California.

The group gave $100,000 to Citizens to Save California.

In each case, the contributions to Schwarzenegger’s political effort were made with no indication of Ameriquest’s involvement, which wasn’t reported until the required state contribution reports were filed at the end of July.
E-mail John Wildermuth at [email protected]

Consumer Watchdog
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