STEVEN K. PAULSON
Associated Press

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March 3, 2010
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Colo. senator investigated for mortgage fraud

DENVER - A Colorado state senator and the mortgage company where he works are being investigated for allegedly misleading consumers by sending out advertising flyers that look like official tax documents, a state official said Wednesday.

Investigators believe Republican Sen. Ted Harvey and American Home Funding - the Greenwood Village company where he works as a broker - violated state laws by sending the ads, said Colorado Division of Real Estate Director Erin Toll.

"I can confirm for you there's an open investigation and my staff investigators believe it violates advertising laws," Toll said. She refused to comment further, citing the ongoing investigation.

The flyer features the Statue of Liberty and Federal Housing Administration notice codes that rate the notification "Urgency: HIGH" and warns that "a call to action is required." It has a notice in small print on the side that says it's not a government document.

An accompanying letter tells recipients that FHA records indicate they have good credit, which could make them eligible for FHA programs, and that the company is approved by the U.S. Department of Housing and Urban Development to handle applications.

Harvey said the notices are no different than those from other financial institutions. He rejected suggestions that he or the company broke the law.

"I am part of the company that sent this out, but I knew nothing about this complaint. This advertising is no different than the type of advertising that companies do all the time," Harvey said.

Harvey said he got into a dispute with the division about a month ago after he proposed legislation that would remove Toll's authority to investigate mortgage brokers and set up a board, similar to boards in the same division that hear complaints against real estate agents and appraisers. The legislation also would have set up an appeals process.

The dispute escalated when a member of Toll's staff showed disrespect when he tried to explain his proposed bill, Harvey said. He said he shook his finger in the staffer's face to get their attention, but he denied trying to intimidate the staffer.

Barbara Kelley, executive director of the Department of Regulatory Agency, Toll's boss, rejected the proposed legislation in a letter dated Feb. 18, which was obtained by The Associated Press under the Colorado Open Records Act. She told Harvey and other lawmakers that the division is following state law, which requires that a director oversee the mortgage loan originators program, because the board system is too expensive.

Senate President Brandon Shaffer, D-Longmont, said he was unaware of the investigation.

"This is unfortunate and we'll let the process run its course," Shaffer said.


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The VailDaily Updated Mar 3, 2010 06:15PM Published Mar 3, 2010 06:13PM Copyright 2010 The VailDaily. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.