All the Devils Are Here [129]
“I started thinking, well, just a few hours ago you were saying this was just a few bad apples,” recalls Miller. “When that didn’t work, you changed direction.”
Cox, for his part, was seething. After the dinner, he sent $50 to Ameriquest to reimburse them for his meal. Ameriquest told him that the cost was actually $98 per person. He forked over the remaining $48 with a note that said, next time, his treat—at a fast-food restaurant.
On January 23, 2006, the AGs announced that Ameriquest had agreed to pay $325 million to settle allegations from forty-nine states that it had engaged in extensive consumer abuse. (Ameriquest didn’t operate in Virginia because the state requires detailed financial disclosure by the main shareholder of any company doing business there, which Arnall refused to provide.) Ameriquest denied all the allegations but agreed to make major changes in its business, including changing how appraisals were handled, eliminating incentives to sales personnel to include prepayment penalties or any other fees, and charging the same interest rates and discount points to customers with similar credit profiles. It also set up a fund to make restitution to customers who could show they had been ripped off by the company. Most of the AGs were happy; they felt this established a model that the rest of the industry would have to follow. Indeed, after the settlement, New Century wrote in its annual report that if it had to follow the guidelines Ameriquest had agreed to, “some of our practices could be called into question and our revenues, business, results of operations and profitability could be harmed.” Which, in effect, was an admission that the entire industry had been built on a foundation of fraud.
As if to prove the point, Ameriquest never really recovered from the settlement. “Corporate is making a big push now to clean up its dirty image because of the heat coming down (they even took the Red Bull machines out of the offices),” wrote one employee on the consumer Web site Ripoff Report in the spring of 2005. (This employee added, “Good luck to everyone who is fighting this devil of a company. You will need it.”) A few months later, on the same site, someone who called himself Eric and said he was an Ameriquest executive wrote, “We will not come out stronger, the company will be better, cleaner, and less profitable.... The glory days are over in this company, so pack up your glory and head elsewhere.”
In May, less than five months after the settlement was struck, Ameriquest announced that it was closing all 229 retail branches and eliminating 3,800 jobs, and would henceforth operate through four large regional call centers. “It seemed kind of heartless because they made such a big deal out of team, family, and then, all of a sudden—boom,” says one employee who was laid off. “The way it was done was especially impersonal.” Each department was called into a conference room to hear the news via a conference call—which wasn’t even live, but rather a tape loop that played over and over again. At headquarters, the mood was bleak. “Once the AGs really starting digging around, and more information became available to employees, that’s when people really began to question who we were and what we were doing as an organization,” says a former executive.
Aseem Mital, a veteran of Ameriquest’s parent company, ACC, became CEO in June.