February 5, 2014
By Bob Coleman
Editor, Coleman Report
“A formal enforcement action is warranted because the record demonstrates that there are significant problems in SEM’s systems or controls, substantial law violations, serious compliance problems, and serious reporting failures.”
“Substantial law violations.”
That’s a very serious statement by SBA in their 44 page enforcement order revoking the license and seizing the 504 loan portfolio of SEM Resource Capital.
In case you think you’ve read this story before, this is a different Resource Capital. Frank Dinsmore’s California-based EDF Resource Capital was closed by SBA a little over a year ago. Michigan-based SEM Resource Capital is owned by Marlies Dinsmore, yep, Frank’s wife.
And, “Marlies Dinsmore maintains her office in Folsom, California, not in Livonia, Michigan. Her office is located in the same building that houses EDF’s offices.”
Guilty by association assumes SBA. And guilty by following EDF’s lead by keeping SBA’s share of liquidated collateral proceeds, not funding the loan loss reserve, failing to fill out the required reports, and failing to operate on a profitable basis.
Here is the “evidence in the record” says SBA;
Failed to send SBA $5.6 million for its share from the sale of collateral.
Failed to send SBA $278,000 in other liquidation recoveries
Failed to send SBA $623,000 on SEM’s largest defaulted loan
Allowed a revoked CDC, EDF Resource Capital to dissipate the liquidation proceeds held in trust for SBA
Received a “going concern” opinion from its CPA
Incurring debt of $3.4 million to EDF Resource Capital
Repeatedly failed to fund its loan loss reserve
Failed to report defaulted loans on its quarterly report