Yet Moore has rarely provided details about how he made his money. At an Oberlin College debate before the March 2000 primary, he was simply introduced as a business owner. On the campaign trail, he eschewed specifics of his company's dealings in favor of anecdotes about the millions he'd earned, the investments he'd made, and the honesty and integrity he'd learned. Newspaper profiles stated that he owned a company called Lenders Diversified, but they never explored what it did.
A suit filed in U.S. District Court soon after Moore's election gets much more specific. While the case isn't scheduled for trial until next March, U.S. Northern District Judge Paul Matia has granted it standing under RICO, the Racketeer-Influenced and Corrupt Organizations Act, best known for toppling mobsters and drug lords.
Like Moore's financial dealings, the suit has received little media attention. Even people who follow Lorain County politics have paid it little heed. Yet the suit makes serious allegations about Moore and the business that jump-started his political career. Customers claim that Moore's company lied to them, tricked them into signing bad loans, and left them holding the bag.
In short: It alleges that Moore made his money through fraud.
When Moore ran for commissioner in 2000, his only political experience was serving as sophomore class president in high school. Slightly paunchy, with a receding hairline, he lacked the polish of the incumbent, an eloquent lawyer named Michael Ross.
But Moore had his patter down cold. "I started my own company in Lorain County with less than $1,500," he told voters at the Oberlin debate. "And with that, I created more than 350 jobs throughout the Midwest in just six years and improved the quality of life for each of those employees." He closed by calling for voters to reclaim their county from "career politicians." (Moore declined Scene's interview requests.)
The businessman-is-better idea was several decades old by the time Moore employed it, but it tapped a reservoir within voters. At the time, blue-collar Lorain County still languished under old-fashioned party bosses and patronage. Even as developers tilled farmland into cul-de-sacs in Avon and Sheffield, the aging manufacturing cities of Lorain and Elyria maintained their stranglehold on county politics.
Prior to 2000, the few Republicans who slipped into office did so under extraordinary circumstances. "Republicans here don't win races," says county Democratic Chairman Thomas Smith. "We lose races."
Even beyond his Republican affiliation, Moore was an outsider. He grew up outside Flint, Michigan. He told voters he did chores on a family farm and worked his way through college refinishing furniture. For seven years after college, he said, he traveled across the Midwest, shaping up a finance company's "problem" branches.
In 1990, he took a job managing a branch of the Household Finance mortgage company and settled in Elyria. "I told my wife that we are home," he said at the Oberlin debate. "This is Middle America and a place to raise a family." Two years later, the story goes, Moore scraped together $1,500 and started Crystal Mortgage.
Crystal essentially played the middleman. The company lined up loans with separate mortgage companies, then guided customers through the paperwork, all in exchange for a fee. Crystal increased its sales a whopping 2,929 percent from 1993 to 1997 and topped Case Western's Weatherhead 100 list of the fastest-growing local companies two years in a row. Moore opened offices in Cincinnati and Dayton, then Michigan, Kentucky, and Indiana. Crystal's 1997 tax returns list $7.8 million in sales.
Moore invested in several Amherst restaurants he later called "very expensive hobbies." A company he formed in 1997 purchased nine pieces of property in Lorain County. His wife started a company called Bayside Title, which took over much of Crystal's title business.
The Moores weren't the only ones benefiting from Crystal's success. According to court filings in an unrelated lawsuit, brokers working for Crystal made as much as $100,000 annually in commissions and bonuses.
In November 1997, Moore sold Crystal to New York-based ContiFinancial, though he stayed on as the company's president. As part of the deal, Crystal brokers were required to place at least 80 percent of their customers with lenders owned or affiliated with ContiFinancial.
ContiFinancial was a notoriously aggressive high-risk lender. The company specialized in borrowing huge amounts of money, then lending it out at high interest to buyers with poor credit histories. During the mid-'90s boom, it was one of the nation's largest high-interest mortgage lenders.
But when markets began to dip, ContiFinancial's backers lost interest in its high-risk strategy, and the company's balance sheet plummeted from $646 million in the black in March 1998 to $478 million in the red nine months later, according to The New York Observer. ContiFinancial collapsed in May 2000, taking Crystal Mortgage along with it.
But Moore was apparently ahead of the game. In November 1999, he registered a new brokerage operation, Moore Financial Enterprises, with the state. It would do business under the name of Lenders Diversified. Nine months later, just before winning the general election, Moore registered Lenders Diversified offices in Warren, Canal Fulton, and at East 40th Street in Cleveland, according to state records.
Although Crystal's bankruptcy came in the midst of Moore's campaign, news of it never reached local newspapers. It allowed Moore to paint himself as a keen business mind and his opponent a financial mess. When The Chronicle-Telegram in Elyria reported that Ross had been late paying his water bill seven times in the previous year, Moore called for Ross's resignation. "It's time for Michael Ross to step down so he can get his personal finances in order before he does any damage to the county," he said. He made no mention of Crystal's bankruptcy. One month later, The Chronicle endorsed "successful businessman" Moore.
Indeed, money from Crystal filled Moore's campaign coffers. He floated his candidacy $52,000 in loans, freeing himself from the rigors of begging for $25 donations like other politicians. Moore was able to spend twice as much as Ross. He orchestrated a $14,000 billboard blitz and cable TV ads that cost $4,000 to produce and $8,600 to air. In November, he was able to slip past Ross and into office with a slender 234-vote margin.
Despite his new company and new career, the failure of Moore's first business wouldn't go away. Unhappy customers weren't about to disappear just because he had been elected commissioner. They were convinced that the man who so touted his market savvy was really in the business of screwing people.
When Willie and Dinah Williams first contacted Crystal Mortgage in the spring of 1999, they owed just $50,000 on their modest Lorain home, with $420 monthly payments.
The Williamses wanted to purchase a Pearl Road bar called the Cavalier Club; they figured either a second mortgage or home equity loan would do the trick. But they had flawed credit, and the banks weren't interested, according to a lawsuit the couple would later file.
Crystal broker Willie Hollins offered a solution. He told the couple to refinance through Crystal, according to the Williamses' suit. The company would then arrange for a separate bank to make a business loan. Hollins said he had a bank lined up for the second loan, and the couple could get home refinancing at roughly the same interest rate they already enjoyed. Payments would still be about $420, he said. All the Williamses had to do was pay Crystal a $3,000 broker's fee.
The couple agreed, apparently trusting Hollins enough to not bother with double-checking his promises. In July 1999, they signed off on the paperwork. Hollins promised to return with details about the second loan in a few days. (Through their attorney, the Lorain couple declined comment.)
Then the Williamses heard nothing. A vice president at Crystal assured Dinah that the business loan would be ready in a few days, but days turned into weeks. She desperately telephoned Hollins, but he didn't return her messages. When she finally reached him, he told her he needed pictures of the bar. Dinah delivered them. Then Hollins disappeared again.
(Hollins could not be reached for comment. He no longer works for Moore, has not responded to complaints filed against him in the lawsuit, and didn't appear for his deposition in April.)
When Dinah called Hollins once more on August 5, a receptionist said he was unavailable. But Dinah had lost all patience. She marched into Crystal's offices and found Hollins in his office. He told her that he had bad news: The business loan had fallen through.
Dinah went to see Moore himself. He promised to help and gave her the phone numbers of other lenders, according to the suit. But when she asked him for the paperwork from her refinancing loan, she alleges that he gave her an incomplete file. When she repeated the request a day later, Moore said he couldn't find the papers.
By then, the Williamses had looked at the fine print. The mortgage was nothing like what Hollins had promised. The interest rate was nearly two percent higher, at 10.8 percent, and their $420 monthly payments had shot up to $620. Thanks to Crystal, the couple had exchanged an affordable mortgage for a more expensive one, all to obtain a business loan that Crystal never produced.
Worse, at the end of 15 years, the Williamses would still owe approximately $57,000 on their home. After 15 years of paying an extra $200 every month, they would actually owe more than their original debt of $50,000.
Alleging fraud, the Williamses filed suit in Lorain County Common Pleas Court in September 1999.
David and Madeline Tyree of LaGrange found a home in Carlisle Township. They were told it was structurally sound, with new floors, a good heating system, and new plumbing. So they agreed to purchase it for $75,000.
The seller connected the Tyrees to Crystal in July 1999, and they were assigned to Hollins. He prepared a new purchase agreement. Curiously, the Tyrees allege that he inflated the purchase price to $80,000, claiming they had made a down payment they never made. With such provisions, Hollins said, the couple's monthly payments would be $550.
Why the Tyrees agreed to let the broker arbitrarily falsify their purchase price remains to be seen; through their lawyer, they declined interview requests.
But then the terms began to change. A few days after the meeting, Hollins announced he would have to go "as high as $650." The Tyrees agreed.
Five days later, Hollins called again. He said he couldn't get a $650 payment and would have to go higher. David Tyree told him to cancel the deal.
Later that day, a Crystal vice president summoned the Tyrees to her office. She said she had spoken with Hollins, the couple claims, and had gotten them a loan at $650 per month. The deal would close the next day.
The Tyrees paid Crystal $3,000 in fees, plus another $1,500 in closing costs. They were happy with the transaction -- until they learned that their monthly payment was $756.69, well beyond what they had agreed to pay.
But the biggest surprise still lay ahead. When they took possession of the property, they found it in terrible shape. The home was so damaged by septic waste backup, water leaks, and bug infestation that it was unlivable. John Sabo, a Lorain County sanitarian, confirms that the county has declared the home's septic system a nuisance. Unless the entire system is replaced, he says, the county considers the home uninhabitable.
Five months after the Williamses' suit, the Tyrees filed one, too.
It's easy to blame the Tyrees' mess on poor judgment. They, like the Williamses, should have scrutinized their mortgage documents before signing. Then again, mortgage paperwork is so voluminous and drenched in legalese that even those who do read it must trust the broker's translation. That makes unsophisticated borrowers the preferred target of predatory lenders, says Cleveland attorney Richard Nemeth.
"These people are prowling, and they're looking for people they deem to be vulnerable," he says.
The problems with the septic system might seem like a dispute between the Tyrees and the seller -- except for the appraisal. Mortgage brokers must hire appraisers to guarantee that a home is worth its sale price. Crystal hired appraiser Denise Yusko, who certified the home at $86,000.
While one home on the Tyrees' street was appraised by the county for $86,000, most were appraised for around $60,000, and one was as low as $34,000, according to county records. The county appraised the Tyrees' home at just $44,660. (Yusko's attorney, Todd Raskin, declined comment.)
"Crystal selected an appraiser to prepare an appraiser report which would falsely certify that the fair market value of the [home] was $86,000," the Tyrees' suit alleges. "In fact, Crystal knew that the actual fair market value of the [home] was substantially less than $86,000."
It's a common scam, Nemeth says. After all, appraisers have every incentive to please lenders. The more frequently they certify a value that meets the sale price, the more business mortgage companies throw their way. "The appraisers who give fair valuations of a house are penalized," Nemeth says. "The people giving them business are lenders who want the loan to go through."
The two suits might have continued separately, but for Crystal's bankruptcy in May 2000. With that, the litigation was put on hold. But in March 2001, the couples filed jointly in U.S. District Court in Cleveland.
Their suit charges that Moore ran a corrupt enterprise that profited through fraud, and that he "directed, controlled and/or ratified the actions and omissions of Defendant Hollins and others employed by Crystal." It also alleges that Moore used the profits of his fraud to set up his new company, Moore Financial Enterprises, and asserts that the new company should be liable for Crystal's damages.
It's a high-stakes case, and both parties have agreed to an order that bars them from talking about details with the media. "A great deal of the documents and information that have been exchanged in the case cannot be shared with others," Moore's lawyer, Charles Pawlukiewicz, wrote to Scene.
"Mr. Moore does feel, however, that the plaintiff's allegations are inaccurate and that the end result will be favorable to him."
William D. Beyer, a former U.S. attorney representing the Tyrees and Williamses, also declined comment.
Joan Pettinelli, Beyer's co-counsel, believes the Tyrees and Williamses are not alone. She argues that Moore, Hollins, and Crystal committed similar acts against at least a dozen additional victims, according to documents filed in January. They, too, seemed to trust Crystal's word all too easily.
Helen Vaurice owns a duplex on East 105th Street in Cleveland and takes in elderly people who need special care. When a neighbor approached her about buying his property, the slender 72-year-old jumped at the chance to expand.
Vaurice worried whether her credit was good enough, but then the neighbor connected her to Crystal. She paid Crystal $300 for a home appraisal and $2,700 in fees, and the company signed her up for a $54,000, 30-year loan.
Vaurice admits she should have been smarter. She repeatedly asked the neighbor to show her around the house, she says, but he had renters, and it never seemed to be a good time. Relying on the home appraisal, she agreed to buy the home sight unseen, she says.
Like the Tyrees, her excitement ended after she took possession. "When she signed the papers, they did not reflect what she had understood the deal to be," says Nemeth, who handled Vaurice's subsequent bankruptcy. The fees were higher than she'd been promised, there was a pre-payment penalty, and the interest rate was variable: While it started at 12 percent, it could go as high as 18.5 percent.
Even worse, the home had leaks and water damage everywhere. Crystal's appraiser had said the home was worth at least $54,000; Vaurice couldn't understand how. "I put lots of money into it," she says. "I put banisters in, I tried to get it up to par. But it was so leaky."
In January 1998, Vaurice defaulted on the loan and filed for bankruptcy. In July, appraisers hired by the Cuyahoga County Sheriff valued the house at just $36,000. It sold at a sheriff's sale in November 2001 for $30,000, according to county records.
"I don't know what kind of fool I am, but I believed everything they told me," Vaurice says. "Now I never believe anything anymore."
Patty Evans feels the same way. She and her husband, Rick, were once satisfied Crystal customers. They used the company to refinance their home in 1998, so when they got behind on bills and needed to refinance again a year later, they called Crystal. This time, they were connected to Hollins.
Hollins promised he could get a better rate than the 8 percent they were paying. Patty Evans says Hollins told her not to make the next house payment. "He said, 'By the time it's due, we'll have the refinancing done, and you can skip that month anyhow.'"
Then, two days after the bill was due, Hollins made a frantic call. "He said, 'Why haven't you made your payment?' He told us they were ready to go into foreclosure, and we were going to get stuck with a higher rate. He said we'd have to go with what we could get."
Hollins claimed he had been lucky to get a rate around 8 percent, the same as their existing mortgage. He insisted they sign immediately to lock in the deal.
Evans believed she had no choice. "Your credit's ruined, and you've got to get something together, and you're panicking," she says. "They put the fear into you that you're losing your house, and they don't even give you time to read it. They said, 'We've got to get this faxed over by 4 p.m., and it's quarter after three now!'"
After Hollins left, the Evanses read in disbelief what they had signed. Their new mortgage had a 10.79 percent interest rate, Patty says. Payments increased from $700 to $825 a month. And at the end, they would owe a lump-sum payment that was more than they originally paid for the house.
Legally, the Evanses had three days to change their minds. Patty Evans spent three days desperately trying to find Hollins. "They tell you he's out of town, he's here, he's there, here's his cell -- but it's not in service -- and here's his pager, but that doesn't help, because he has to call you, and he doesn't."
A week later, Hollins turned up. It was too late; the deal had closed. "Now I'm stuck," Patty Evans says.
The higher monthly payment destroyed the family's finances. "I get a paycheck for $835, and then I write a check for $825," Evans says. "We're always running a month behind. And once you get a month behind, you're stuck."
Congress passed the RICO Act in 1970 to stop the Mafia. Its provisions were an immediate hit with prosecutors, who found they could build a case against mobsters for simply using telephones -- wire fraud -- to carry out their business.
Civil attorneys didn't discover the possibilities until the mid-'80s, says RICO expert Jeff Grell, a Minneapolis attorney. "Some creative attorney somewhere said, 'This could be used all over the place,' and that got the ball rolling." Criminal RICO cases bring down drug kingpins; civil RICO cases are just as likely to target insurance or tobacco companies.
With the lax laws governing the mortgage industry, it was only a matter of time before lawyers began applying RICO to shady brokers. "It's a useful tool if you can show a pattern and practice and criminal acts," says Diane Citrino, a senior attorney with Housing Advocates. "What limits you is that it's hard to do if you only have one victim. It doesn't fit every case."
Even with multiple victims, RICO suits remain complicated, Grell says. Since the heady days of the late '80s, legal precedents have limited RICO's reach. Just to get to trial, lawyers today must convince judges that they can show a pattern of criminal conduct.
In October 2001, Judge Matia ruled that the Williamses and Tyrees' suit could proceed under RICO. The allegations fit the legal requirements, he wrote, since "the defendants' acts of fraud involved the same participants (Moore, Hollins, and Moore Financial Enterprises), a common purpose (inducing vulnerable borrowers to enter loan agreements), similarly situated victims (borrowers with impaired credit), and many of the same methods of commission (misrepresentation and improper fees).
"If these alleged facts are proven," Matia added, "it appears likely that these facts will support a finding of a scheme to defraud."
The stakes are high. Not only are Beyer and Pettinelli asking for triple damages, they want an order dissolving Moore Financial Enterprises and banning Moore and his associates from working in the mortgage business again.
But despite its importance and Moore's status as a public figure, the suit has received little attention. The Plain Dealer has written nothing. Cleveland magazine's lengthy May profile of Moore, "Man on a Mission," spoke of his "business sense and common sense," but the suit was never mentioned.
Even the dog-eat-dog Lorain County newspapers have largely ignored the story. The Lorain Morning Journal's sole story was printed a week after the suit was filed. It ran just eight paragraphs and began with Moore calling the suit "frivolous and unjust."
"Now that I'm a county commissioner, they want to harass me," he was quoted as saying. The newspaper never mentioned that the suits were first filed before Moore was even considered a viable candidate.
In the meantime, Moore has gained a reputation as a savvy politician. He convinced the other commissioners, both Democrats, to slash the size of the county's new justice center from $51 million to $25 million. And he won headlines for proposing to name the center after the Brownhelm Township clerk believed to be the nation's first elected black official. In the Cleveland magazine story, he likened himself to Teddy Roosevelt. "I admire his anti-Establishment, 'Walk softly and carry a big stick' stance," he said.
Yet the lawsuit may prove explosive. "If you look at how Commissioner Moore got into office, criticizing the incumbent for misuse of the county credit card and a few hundred dollars, that pales in comparison to the magnitude of racketeering charges," says Jack Kilroy, a Democratic committeeman and candidate for commissioner in 2000.
Yet Republicans are equally quick to dismiss the suit. "No one even talks about it in Lorain County," says County GOP Chairman Bob Rousseau. "He was in the lending business, and he only has one or two upset customers? These lawyers put ads in the newspapers asking for anyone to come forward who was mistreated by him. That gives you an idea of how strong their case is.
"And unfortunately for Dave, I'm sure he'll spend a fortune defending himself from a lawsuit that's totally frivolous."
Crystal's victims wouldn't agree. They continue to struggle with high monthly payments just to keep their homes. The Williamses lost their chance to purchase the bar. The Tyrees still pay for a house they can't live in. Vaurice filed for bankruptcy.
Knowing that Moore is now a county commissioner only makes it worse, Patty Evans says. She'll never forgive him. "We work every day," she says. "But we'll never get ahead."
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