Newly obtained documents from Wisconsin regulators show gubernatorial candidate Kevin Stitt personally signed background-check documents for Gateway Mortgage Group in 2008 that did not disclose previous regulatory actions against his company in three other states.
The Stitt campaign previously called the omission a “clerical error.” But the background questionnaire shows Stitt signed the form,which, in response to a question about whether Gateway had ever been involved in a disciplinary action in any state, indicated, “No.”
Also, an exchange of emails involving Gateway’s in-house attorney and Wisconsin officials at the time show the failure to disclose went beyond checking the wrong box on the application form.
When Gateway applied for a mortgage license in July 2008, Wisconsin officials did a background check and found undisclosed disciplinary consent orders involving Gateway in Mississippi, Nebraska and North Carolina. Asked about any other undisclosed orders, Gateway provided information on three orders in those three states. But Wisconsin officials discovered another undisclosed action against Gateway in Nebraska.
“The department also found the attached consent order that was issued by the state of Nebraska in 8/06 (August 2006),” said a Sept. 17, 2008, email from an official with Wisconsin’s Department of Financial Institutions. “Why was this order not disclosed in either the original application, or subsequent request(s) for Gateway to provide us with information pertaining to orders that were not disclosed?”
Gateway’s attorney sent a response a month later regarding the second Nebraska violation.
“This order was not disclosed because this order is not recent and was unknown to Gateway’s licensing department,” John A. Douglas, Gateway’s in-house counsel, said in an Oct. 21, 2008, email. Douglas worked at the company from 2007 to September 2010.
Donnelle Harder, a spokeswoman for the Stitt campaign, said in an email, “This is a process error from nearly a decade ago that was addressed, Gateway was granted its license, and the company remains in good standing with the state of Wisconsin today. Centralized license management was implemented in 2012, and there have been no further mishaps.”
Harder did not elaborate on Stitt’s signing the background form with the disclosure lapse or how Gateway’s licensing department wasn’t aware of the 2006 regulatory action in Nebraska.
Wisconsin regulators released the application’s background-check form and related emails in response to a public-records request from Oklahoma Watch. The three-page background check includes 20 boxes where applicants are asked if there have been any financial and regulatory actions against companies or themselves. “No” was checked on all the boxes and Stitt signed the document in two places.
The Wisconsin application came just a month after a regulatory action in Mississippi, six months after one in Nebraska and less than a year after a consent order in North Carolina. Stitt signed all of those consent orders or settlements.
To resolve the Wisconsin matter, Gateway paid a $4,000 fine under a consent order and was then granted a license to do business there in January 2009.
The emails released by Wisconsin officials indicate there were discussions between Gateway’s attorney and regulators, but don’t provide details or describe Gateway’s explanation for responding “No” to the question about past disciplinary actions.
In running for governor, Stitt has cited his business success as a reason voters should elect him to the office. Gateway now operates in 41 states and has 1,200 employees.
In all, Gateway faced consent orders in eight states from 2005 to 2011. Most of them involved unlicensed mortgage brokers making loans or Gateway failing to register as a mortgage company, although there was a case of a mortgage fraud scheme in Illinois. Gateway disciplined or fired the employees involved.
The consent orders not disclosed to Wisconsin involved not notifying regulators of a branch office and making loans while Gateway’s license was expired for seven months in Nebraska. The Mississippi case involved an unlicensed branch office. The North Carolina order disciplined the company for having unlicensed loan officers and making a loan with higher than allowed fees and charges.
Stitt, a political novice who has loaned his campaign $3.28 million and raised another $3.1 million, faces former Oklahoma City Mayor Mick Cornett in the Aug. 28 runoff for the Republican nomination. The winner will face former Democratic Attorney General Drew Edmondson and the winner of a Libertarian Party runoff between Rex Lawhorn and Chris Powell.