By John Dickerson
Mortgages Ltd. executives held a much-anticipated conference call with investors this morning, to explain the company’s fate after the death of CEO Scott Coles on June 2, a suspected suicide. At stake is $925 million from more than 2,700 investors. Many in the business community think the money could be gone or close to gone.
The conference call began at 11 a.m. and failed to directly address the health of Mortgages Ltd.'s portfolio. You can hear a recording of the call by clicking here.
The key information given was that the company has hired a consultant to make sense of what's left and that “there are some important changes. We are not making new loans on new projects, and...we are not accepting new capital from investors, including reinvestment of interest.”
That announcement wasn't made by a Mortgages Ltd. executive, but by consultant Morrie Aaron, president of MCA Financial Group.
The fact that Mortgages Ltd. hired a consultant to sort things out is bad enough, but the statement that the company won't consider new loans or new investors also means it has more or less stopped doing business, new business anyway.
Laura Martini, senior vice president of Mortgages Ltd., started the phone call and let Aaron announce the bad news, albeit in a paced, Enron-esque manner.
“What we need most right now is calm and support from our investor group while we go about our mission, which is to protect the interests of our stakeholders,” Aaron said.
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Aaron said investors who’ve been putting their interest earnings back into the company will no longer have that option. Some in the business community have posited that such re-investment plans opened the door to a Ponzi-type pyramid, where investors who asked for their money could be paid with the recent re-investments of their fellow investors--even if the company were losing money.
“The mission that the senior management team, the employees and I have before us is simple, to protect the interest of our stakeholders. In today’s economic environment, it will not be an easy mission, but please be assured that the effort and requisite skills will be deployed to accomplish the mission,” Aaron said.
Aaron also said the three multi-million dollar lawsuits from borrowers against Mortgages Ltd. have been settled, or are on their way to settlement.
Martini ended the conference call by urging investors to calmly communicate their questions: “In closing, I want to remind you that we are working diligently to respond to your many questions and concerns.”