All the Devils Are Here [84]
And what happened when complaints about these practices leached into public view? Once again, Arnall fell back on his old playbook: he spent whatever it took to make them go away. In late 1999, the grassroots organization ACORN picketed twenty Ameriquest offices, accusing it of deceptive lending tactics. Ameriquest responded by committing to fund $360 million in ACORN-originated thirty-year fixed-rate loans. ACORN stopped picketing. (Very few of the loans were ever made.) In 2001, a group of Ameriquest borrowers filed a class action lawsuit against the company—the first of many. In settling, Ameriquest agreed to pay up to $50 million in reimbursement. Three years later, the state of Connecticut charged Ameriquest with violating a state law regarding refinancings. The company paid $670,552 to settle the charges. In 2005, Connecticut announced a second settlement over the same issue. Ameriquest blamed the problem on new employees who didn’t know the rules. It paid $7.25 million to move on. “Roland was not a cheapskate,” says Greenlining’s Robert Gnaizda. “He spent money if he thought it would be helpful.”
As Ameriquest became the country’s dominant subprime lender, Arnall himself became extraordinarily wealthy. In 2004, he made the Forbes 400 list of richest people in America, with a net worth of $2 billion. The following year, the magazine estimated his net worth at $3 billion, ranking him seventy-third on the list. (He tied with Yahoo co-founder David Filo.) By then, he and his second wife, Dawn Arnall, owned a $30 million, ten-acre compound in Los Angeles, and a 650-acre ranch in Aspen, snuggled between two ski resorts. The former property had been owned by Sonny and Cher in the 1970s; the latter was the second most expensive home in the country, according to a list compiled in 2004 by Forbes magazine. It cost Arnall $46 million.
Through it all, he never changed. Although Ameriquest had a far higher profile than Long Beach ever had, Arnall himself remained in the shadows. His companies never went public. Others served as their chief executives. He remained ever demanding, yet ever gracious, respectful even of the company janitors. The wealthier he got, the more he spent on quiet philanthropy—and on political contributions, mainly to Republicans.
And from his office in ACC’s bland twelve-story headquarters in Orange County—the epicenter of the subprime industry—he never, ever spoke about the practices that permeated the branch offices. Headquarters, in fact, acted as if the company were a paragon of subprime virtue, rather than a place that oozed with sleaze and fraud. In July 2000, for instance, Ameriquest publicly committed to a set of best practices, which included promises to let two years pass before refinancing any loans and to refrain from offering loans with balloon payments and negative amortization. The following year, Ameriquest’s chairman, Stephen Prough, testified before the Senate banking committee; Ameriquest had been invited to testify because many in Washington considered Ameriquest a model subprime lender.
Yet the evidence suggests that the best practices were mainly honored in the breach. One example: after an exhaustive analysis of public records, the Los Angeles Times determined that nearly one in nine 2004 Ameriquest mortgages was a refinancing of an existing Ameriquest loan less than twenty-four months old—precisely what the company had promised it wouldn’t do. (ACC says that many of Ameriquest’s borrowers were not pushed into these refinancings but came to the company of their own volition. The Times also noted, however, that Ameriquest’s refinancing rate was higher than that of six competitors included in its analysis.)
The question of how much Arnall knew about his company’s sordid lending practices is something