Central States Mortgage shifts loans to other providers

Employees and customers of Central States Mortgage Co. in Wauwatosa were greeted Monday morning by a sign informing them that the business has suspended operations.

The sign was posted in the door of the company at 10425 W. North Ave.

The sign stated, "Effective Sunday, March 8, Central States Mortgage is suspending operations."

A skeleton crew continued to work at the office Monday morning.

In a news release, Dean Wilson, chairman of CSMC Inc., the corporate parent of Central States, said the company is no longer originating loans for credit unions. The company is continuing operations with a small number of staff to help transition its operations to other providers.

"While the decision to close was a difficult one, it was necessary and in the best interest of our shareholders," Wilson said in the release. "Our goal is to assist our customers now such that this development does not affect service to their members."

CSMC Inc., the Wauwatosa-based parent company of Central States Mortgage, recently filed a lawsuit against its founding shareholders, with allegations of racketeering and wire fraud activities that cost the company more than $15 million in losses.

In a civil case filed in Milwaukee Circuit Court, CSMC alleged that former chief executive officer Richard Jungen, his wife Elaine Jungen, who also served as president and secretary, former chief financial officer Jerome Poehnelt, former senior vice president of sales Kevin Dwyer and former vice president for production Charles Miller, intentionally created and took part in a fraudulent scheme.

The complaint alleges that the Jungens, Poehnelt, Dwyer and Miller founded Interim Funding LLC in 1997. Interim is an end purchaser of mortgage loans that were originated by CSMC. According to the suit, the defendants, through their controlling interests in both organizations, caused CSMC to purchase delinquent or foreclosed mortgages. Many of the distressed or foreclosed mortgages were then repurchased by CSMC because of a funding scheme created by the defendants, the case states.

Richard Jungen was fired from CSMC last July 31, while Elaine Jungen, Dwyer and Miller were fired on Nov. 7. Poehnelt was fired on Sept. 15.

Richard Jungen is a former member of the Better Business Bureau of Wisconsin board of directors.


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