The founder and part owner of appraisal management vendor AppraiserLoft resigned as CEO this week, saying he wants to pursue new business ventures in mobile technology application development.
The resignation of Aman Makkar came as San Diego-based company has faced criticism from some appraisers who say they have not been paid in a timely fashion for work completed on AppraiserLoft’s behalf – a problem the company’s new interim CEO says he has made his top priority.
It also comes at a critical time for Makkar, whose payment of some $1.4 million to settle a case unrelated to his work at AppraiserLoft is slated to be the subject of a court hearing this month.
Patrick MacFarland of Des Moines, Iowa, one of the appraisers who says he has not been compensated within AppraiserLoft’s own 30-day standard, told National Mortgage News that the company owes him about $1,500. In June, he said he was owed approximately $6,500, with some invoices dating as far back as six months.
“Their website says that they pay appraisers 30 days after an assignment is completed and in my experience, that never occurred,” MacFarland said. “So they pay me, but it’s never been as prompt as they promised and it’s never been without me haggling considerably.”
MacFarland said he would no longer accept assignments from the company. “Obviously if you can’t get paid without shaking them down daily, you’re going to think twice about doing anything for a company like that,” he said.
Another appraiser, who asked his name not be published because he still takes assignments from the company, shared a similar experience. “They owe me the money and they won’t return calls or emails and I’m getting to the point where, do I burn the bridge to get the $1,500?” the appraiser said. “Or do I just suck it up and let them pay me 90, 120, 150 days after I complete the assignment?”
Shane Copeland, AppraiserLoft’s senior vice president of national sales, assumed the role of interim CEO, a position that may become permanent after AppraiserLoft completes an executive search. In the meantime, he says he has implemented new policies to address billing and vendor payment issues.
“We’ve had to improve our accounts receivable process, which we’ve done,” he said. “We’ve replaced that team to put more emphasis on collections with clients and having a shorter leash with them when they don’t pay. We put together a 90-day plan to have every appraiser that we have within our panel completely paid up. Going into November, hopefully sooner into October, we’ll have zero back pay and then from that point forward, going to a 15-day net, as opposed to a 30. It’s my top priority.”
For Makkar, another important date is on the near-term horizon. On August 8, a U.S. District Court judge will be reviewing whether Makkar has complied with terms related to a settlement of allegations that he received fees for referring clients to MAK 1, an investment pool that the Securities and Exchange Commission and other regulators claim was a Ponzi scheme.
In a lawsuit filed in U.S. District Court in April 2010, a court-appointed receiver alleged that Makkar invested $50,000 with MAK 1 and recruited “over 25 investors to invest approximately $5 million with MAK 1 between October 2008 and February 2009.”
The suit alleged that Makkar received more than $1.4 million in fees, “primarily through his direct participation in MAK 1’s business activities.” The receiver’s lawsuit, commonly known as a “clawback claim,” sought to recover those alleged referral fees.
The receiver’s latest interim report, filed on July 19 in U.S. District Court, said its lawsuit against Makkar was settled by a global settlement agreement on Feb. 15, 2011. That agreement, according to court documents, requires Makkar to return $1.4 million, which increases to $1.5 million if payments are not completed by Sept. 30, 2011.
“To date, Mr. Makkar has delivered $425,000 to the receivership. He is presently in default of the payment schedule set forth in the settlement agreement and we are pursuing all available remedies to bring him into compliance with that schedule,” the report said.
Makkar, in an interview with NMN, said that he has now fully resolved the matter, including the required payment, under the terms of a confidential agreement.
“Certain things are filed as a matter of formality and there’s a lot of stuff, a lot of settlements that go on in the background that do not get posted because they’re called confidential settlements,” Makkar said.
The attorney representing the receiver, Benjamin Daniel of the San Diego-based law firm Ballard Spahr, did not return telephone calls and emails seeking comment.
According to U.S. District Court records, a teleconference is scheduled for Aug. 8 between the attorneys representing Makkar and the receivership with U.S. Magistrate Judge William Gallo. Ahead of the meeting, Gallo has ordered written letters from each side explaining “the status of settlement payments.” Makkar declined to comment on why Gallo is holding the status conference.
The alleged leader of the MAK 1 scheme, Mohit Khanna, has pleaded guilty to one count of conspiracy to commit mail and wire fraud and one count of filing a false tax return. Khanna late last year was sentenced to 41 months in prison and ordered to pay nearly $16 million in restitution.
In a written response to the suit filed in June 2010, Makkar’s lawyer said his client acted in good faith and without knowledge of any fraud. “Defendant Makkar was himself a victim of the fraud alleged by plaintiff and acted without knowledge of its illegality,” the filing said.
