I'm sorry that I am disturbing so many people


Google “Hard Money Lenders” of California.

Start plugging in their names.

The majority, not all of them, of them are licensed as money lenders. One of them used to have a lending license but it was revoked.

If you still can’t find one (I find that hard to believe), I’ll come back here and lay 5 or 6 on you in a heartbeat to show you their info and websites.

Again, it does not need to be licensed in California. And here’s why this is so important:

First, Aurelius at Seeking Alpha has planted the seed that since Center Street Lending is not licensed in California, you should see this as a red flag; there must be something wrong with an organization that is unlicensed even though as a private lender it does not have to be licensed in California.

Second, you then suggest in your own writings that since Center Street Lending does not provide a license number on its website (again, a number it does not need to have to do business in California), that it is therefore inferior and not a “legit” business (or at the very least not an organization on the same, higher, ethical level as other businesses in California that are licensed).

You then go on to write (my emphasis): Center Street Lending is fully ware [sic] of lax regulation in the “hard money” (legalized loan sharking) business.

Where is your evidence that Center Street Lending is a loan shark? Hard money lenders serve a very specific need in a completely legal business. Its clients cannot get loans through traditional lenders for a variety of reasons (and no, not because they’re all deadbeats). Do you think that its clients should go unserved? Is Capital One a loan shark for charging customers 29% on their credit card debt?

Third, whether or not Center Street Lending is licensed (or charges high loan rates) has nothing at all to do with BofI. BofI is doing nothing unethical (and certainly nothing illegal) by providing a loan to Center Street Lending.

Aurelius may want you to believe that Center Street Lending may (there’s that word again) somehow be skirting regulations (he names none of them because there are none) by using BofI as some sort of front and partner in deceit (well, see here, BofI is a licensed bank and it’s acting as a front for this unlicensed lender to get around regulations)… and he seems to have succeeded even though the accusation is completely without merit.


mauser96 wrote:
Remember Apple stock, a barrage of shorts after Cook took over. The shorts made money, those who continued to hold made money, those who bought at the height of the attack made even more money. Those who bought at higher prices and panicked at the “Cook is no Jobs” “Apple can’t innovate” “Apple is dead” bits lost money.

I held my AAPL because I had confidence in the product.

You’re memory is wrong. Apple didn’t go down after Tim Cook became CEO on August 24, 2011.

Closing prices
8/24/2011: $53.74
8/31/2011: $54.98
9/30/2011: $54.97
10/31/2011: $57.83
11/30/2011: $54.60
12/31/2011: $57.86
1/31/2012: $65.21

After that it took off. So I’m not sure what you might be illustrating, other than that our memories are fallible.



The point I was responding to was one you raised when you couldn’t find any licensed “hard money lenders” on that California database.

I am telling you I can find a half-dozen or more and print them out here in one-hour should this guy/gal call me out to do so.

And your contention that private lenders don’t have to be licensed at all in California is incorrect too. Don’t fret, I was suspecting that was maybe the case too until I did some further re-reading.

(I read a 29 page California State House White Paper about this licensing brouhaha from I believe 2012, which I somehow lost in the transfer of this post from Google Docs. I apologize. I will try to find it again and paste in my next response. But the one thing I did find from reading it is all money lenders have to have one or the other licenses to lend money in California, even if you are private investors pooling your money. If caught without a license, the State will send you a cease and desist order. If you fail to comply, they send in the people with badges, with alphabet names, etc.)

Still. after re-reading a Sac Bee article, I think we can now lay to rest why some of these “hard money lenders” are licensed as Realtor’s and some licensed as “money lenders.” Regardless, to lend money in California, legally, you absolutely, positively better have a license from one of these legal licensing agencies:

Here’s the link:


Headline: ‘Hard money’ lending has sordid past in Nevada County

My note:First some background on the problems the state had with “hard money lenders” in the last go-round:

The recession laid bare the dangers of hard money lending. As large, risky loans went bad, many investors lost their money and were left with nearly worthless land. Unlike banks, brokers carry no insurance and receive no bailouts. Regulatory and legal filings show that hard money investors lost more than $50 million in Nevada County.

Law enforcement agencies have tried, with limited success, to address what they see as a statewide problem of large proportions. State officials recently ordered a Sacramento hard money operation, VLD Realty, to cease operations. A Santa Rosa broker has been accused of stealing millions from investors. The U.S. attorney’s office indicted a Monterey County broker in late 2009 for operating a Ponzi scheme.

At the market peak in 2005, roughly 340 of the biggest hard money brokers in California loaned $5.8 billion. While that represents a small slice of the overall lending picture, the California Department of Real Estate spends disproportionate resources investigating and disciplining bad hard money brokers, officials said.

A Bee review of licensing records found that one in four of the biggest hard money brokers operating when housing prices peaked has been accused of wrongdoing or sanctioned by the department in the past decade – a far higher rate of violations than for conventional mortgage brokers.

Next, from the same article, this paragraphs on licensing:

Hard money brokers operate under a weak, loosely monitored set of regulations riddled with loopholes and jurisdictional confusion and conflicts. The state Department of Real Estate oversees some brokers while others fall under the purview of the Department of Corporations. Activities one agency deems illegal might be permitted by the other."

My latest research shows BOFI does business with licensed “hard money lenders” of both persuasions.

(Aside: For those wondering how the term “hard money lending” came about, it comes from the onerous terms of the loans that are “hard to swallow.” I learned that from the Sac Bee article too.)

So Center Street Lending has a Realtor’s license as I once noted in an earlier post. Now we know they can legally lend money.

Still, this doesn’t mean Center Street Lending is doing business in an upright way. I’m not giving these louts a “Get Out Of Jail” card or “Pass Go, Collect $200” option. (“Hey look, guys, I got my driver’s license! Let’s crack some beers and take my Monte Carlo SS out to the highway and see how fast we can go!”)

So let’s revisit Center Street Lenders, owners of a Realtor’s license in California, licensed one of two ways to “legally” set up shop as a “hard money lender” in that state. (But I’ll bet not for much longer.)

Let’s look at just one big borrower of Center Street Lending and see what kind of person qualifies for big loans from them, sometimes, using BOFI loans.

Center Street Lending has made 86 loans in four years worth $20 million to just one con-man who:

a) Was convicted of five felonies earlier this Century

b) Was sentenced to two years in prison.

c) Was forced to pay $1.2 million restitution as part of this sentence

d) Changed his name to hide his past (Christopher Lee became Rashid Khalfani, I kid you not.)

e) Recently pled guilty to “forgery” (2013). (p.s. Despite this, Center Street continued lending to Khalfani.)

f) The SEC has currently frozen his assets

g) Is being sued, and the receiver in this suit, accuses this con-man of running a Ponzi scheme. (Well, hell, why not? Let’s go big, or let’s go home to prison, right?)

h) Furthermore, this receiver claims Center Street, knowing of this man’s past fraud and current peccadillos, still lends him money to to pay off old loans they’ve extended him AND to suck in more non-savvy private investors. (Many of these non-savvy private investors are elderly retirees. Some of these “hard money lenders” have been prosecuted in the past for “elder abuse” in California, according to news articles.)

In the receiver’s court-documented words about Center Streets Lending’s enabling (my word) this charlatan, Rasheed Khalfani, to continue business as usual, the receiver claims Center Street . . .

" . . .could have and should have known that Capital Cove could not turn a profit on the properties that it was purchasing when considering all of the liens placed against the properties, the cost of refurbishment, the carrying costs for the properties including insurance, taxes and interest, as well as the closing costs, commissions, late fees, and taxes to be paid upon the sale of the properties."

Again, this is just one background check on one huge series of very dangerous and shady loans to one hell of a brazen scam artist. How many more are out there waiting to implode in the long arms of the law?

Knowing this, knowing that BOFI is working with or “sponsoring” loans to Center Street, knowing that Garrabrant’s credentials (law degree) and past work history, do you not wonder how BOFI’s CEO can still assure investors his company does diligence with a conservative bent?

Seriously, would you call this smart underwriting or “safe” asset quality? Would you?

Knowing just that one story about Center Street, I asked investors yesterday would they lend money out of pocket to Center Street? No one answered me.

Let me amend that. Would you lend Center Street money for just a day with a promise to pay you high interest for the one day loan?

How about this: Would you lend money to a Mafia member or a housing project drug dealer who promises you a huge return on your money 24 hours from now?

You see where this might get dangerous to your wealth - and health?

The Mafia guy might kill you.

The drug dealer might get arrested.

And the “hard money lender” might all of a sudden have its assets locked up while the Feds and state start discovering “How did these crooks get their funding?”

And then that’s when the SHTF for the stock prices of BOFI and especially when authorities inspect their books and now “Whoops, you seem to have a lot of these “hard money loan” deals hidden from view. We’d like to take a look at everything you got.”

(There’s precedent for this, loads of precedent. Again, the Bee says one in four hard money lenders fell afoul of the law, went bankrupt, fleeced banks and other lenders with Ponzi Schemes, and in most all cases, investors lost “ALL” of their savings to these loan sharks. Many of he characters involved are still serving prison terms.)

Again, BOFI is not just extending loans to Center Street Lending. And Center Street Lending is not the only “hard money lender” with criminality running through its DNA, which BOFI gives loans to, gladly.

I will discuss more of your points raised in a look at some of BOFI’s other business partners in “hard money lending” in the next part of my response later. Oh, and wait until I explain “legalized loan sharking” to you in spades when it comes to some of these companies versus say a credit card company with high APR.

I’ve got some football to watch.



Hi RockOYates,

First of all it sounds like you have done some great research on hard money lending which I think we can all learn a bit from reading.

Second I think comparing BOFI lending to Center Street to them loaning to a mafia or drug lord might be a bit of a stretch.

Third do you know without a shadow of a doubt the extent of the relationship with Center Street or any of the companies BOFI is said to be associated with in these articles? The only thing I saw in the short article linking BOFI to Center Street was a single document listing BOFI as the secured party. Going by what little I know about these documents wouldn’t that mean BOFI has a lien against some asset of Center Street? Maybe I misunderstand secured party? This document is also dated April 2014. Now I could understand the possible concern if there was multiple documents for several years maybe even from 2015. Since there is only one document what is to say they made a single loan with them and quit? My point is that we just don’t know enough to make an intelligent judgement on the situation. The article states there is $300 million in question. How much of that went to Center Street? I have a hard time believing it all would have went to them. What assets do they have liens against? Is it possible any money that was loaned to Center Street is actually backed by assets that meet BOFI lending criteria and are actually consistent with what they report to shareholders? Maybe these are some good things to ask the CEO the next time we get the chance. I just want to point out there is a lot of unknowns and until we get them I would like to reserve judgement on how evil or not BOFI may be.



RockOYates: But the one thing I did find from reading it is all money lenders have to have one or the other licenses to lend money in California, even if you are private investors pooling your money. If caught without a license, the State will send you a cease and desist order. If you fail to comply, they send in the people with badges, with alphabet names, etc.)

Okay then, let’s search the California Enforcement Actions and Orders database for Center Street Lending.

Here is the main database: http://www.dbo.ca.gov/ENF/Default.asp

Here is the page with businesses beginning with the letter “C”: http://www.dbo.ca.gov/ENF/List/C/Default.asp

Here is the link to search the entire database: http://www.dbo.ca.gov/ENF/search.asp

Do a search for Center Street Lending and tell me what you find.

BTW, here is the company’s Mortgage Loan Origination license in California: http://www2.dre.ca.gov/PublicASP/pplinfo.asp?License_id=0188…

RockOYates (emphasis mine): A Bee review of licensing records found that one in four of the biggest hard money brokers operating when housing prices peaked has been accused of wrongdoing or sanctioned by the department in the past decade – a far higher rate of violations than for conventional mortgage brokers.

Interesting. In order to inflate and sensationalize that figure to 25 percent, the writer has included any brokers even “accused” of wrongdoing. I wonder what happens to that number when those who were accused of wrongdoing but were found innocent are removed from the total? And the use of the phrase “operating when housing prices peaked” is interesting as well, no doubt inflating the number of bad actors during one small slice of time.

For the sake of argument, though, let’s say 25% are bad actors; the flip side of that coin means that 75% are completely legitimate businesses.

RockOYates: Let’s look at just one big borrower of Center Street Lending and see what kind of person qualifies for big loans from them, sometimes, using BOFI loans.

Yes, I read the article by Aurelius on Seeking Alpha. So help me out here; are you suggesting that BofI has colluded with Center Street Lending in making fraudulent loans to Capital Cove to bilk investors? If not, then BofI is only guilty of doing what banks do… make loans.

And I’m going to make a wild guess here and suggest that Center Street Lending is going to claim in court that it is one of the harmed parties here, also defrauded by Capital Cove.

As for the rest of what you’ve written about the Mafia, drug dealers and Ponzi schemes, well, that’s just bizarre.


well, that’s just bizarre.

The word is “innuendo.” Sow FUD, get someone to sell shares, mission accomplished.

Denny (does not invest in banks) Schlesinger