State of California Begins Auditing NAMFS Members Starting With Spectrum

This Is An Article NOT About Audits But About The FUTURE!

This entry is part 7 of 7 in the series Roundtable Discussions

The National Association of Mortgage Field Services (NAMFS) woke up, last week, to tax audits flowing out from the State of California. The State of California’s Employment Development Department (EDD) began issuing out Employment Relationship Questionnaires (Form DE 1870) to Mortgage Field Services Industry Contractors throughout California earlier this month. The Questionnaire is massive and granularly drills down on very specific information calculated to determine whether or not people are misclassified employees. And in light of the fact that there have been nine federal court determinations; seven by jury verdict; and one settlement for millions of dollars which Mortgage Contracting Services (MCS) entered into several months back, and another settlement which the now defunct Buczek Enterprises entered into for six figures, the reality is this is merely pro forma.

Being misclassified as an independent contractor, when you are, in fact, and employee, has several adverse consequences that affect municipal, county, state and federal governments as well as the workers, themselves. Employers who misclassify employees are failing to provide a plethora of taxes including unemployment insurance (UI) and workers’ compensation (WC) as well as failing to pay employer withholding taxes — leaving workers with large tax bills.

Employees who believe they have been misclassified as independent contractors have several avenues for resolution. These suggestions are not intended to substitute for legal advice, nor are they intended to be an exhaustive list of available options or remedies.

First, workers can contact their state departments of revenue and labor to report suspected misclassification, including UI, WC, and tax fraud. Many states give workers the option of anonymously reporting employers who are erroneously misclassifying employees as independent contractors. Click here for a complete list of state resources for UI, WC, and tax fraud reporting.

Second, if the employer has misclassified the worker as an independent contractor and paid less than minimum wage or failed to pay overtime, then the worker can contact the U.S. Department of Labor Wage and Hour Division to report minimum wage and overtime pay violations.

Spectrum Field Services is the latest, while perhaps coincidental, casualty of the MCS – Assurant W2 -W9 litigation playing out in the Mortgage Field Services Industry. And earlier today, Foreclosurepedia received a copy of the CA EDD Form DE 1870 from a concerned source. They asked whether or not Foreclosurepedia was familiar with the audit and what the ramifications might be.

Foreclosurepedia spoke with the State of California’s EDD Tax Auditor, Mariam Safapay, in San Francisco earlier today. Safapay stated, in part,

We are contacting all 1099 Contractors. Our process, with Spectrum Field Services, to make a determination whether or not those contractors are actually employees.

Here is one of the documents which the State of California began mailing out earlier this month,

For the record, it appears to be the opinion of sources, speaking on condition of anonymity, that Spectrum considers this to be an unremarkable and anticipated tax audit. To be clear, the audit at hand, is going back three full years. And to be quite clear, it is coming on the heels of $2.2 Million in jury verdicts recently handed down against Assurant Field Asset Services in only several of over one hundred plaintiff’s cases. Additionally, MCS just paid an undisclosed settlement as did the former Buczek Enterprises for identical claims, all filed by the same law firm, Duckworth Peters Lebowitz Olivier LLP (DPLO), out of San Francisco. Throw in the Hurst v Buczek ruling in which the now defunct Buczek Enterprises paid six figures to settle identical misclassification claims, I am hesitant to sign off on the Keep Moving, Nothing To See Here proposition.

In full disclosure, Foreclosurepedia submitted the below email to the State of California’s EDD Tax Auditor, with carbon copies to Spectrum Field Services as well as Monique Olivier, Counsel, DPLO. Olivier is the tip of the spear with which DPLO executed upon multiple, successful prosecutions of the misclassification of Industry personnel. Do not let her breathtaking model appearance fool you. As opposed to the stereotype of beauty and brains distinctly separate, Olivier is top notch as I have noted in several of my discussions with she, over the years.

In light of recent federal rulings pertaining to those alleged contractors whom were 1099’d by Spectrum, will the State of California reevaluate its position with respect their current independent contractor status? Please see attached US District Court for the Northern and Central Districts of California as well as federal jury rulings determining that other, nearly identical contractors were, in fact, employees.
In fact, it is in light of these rulings successfully argued and adjudicated by the law firm DPLO, in your hometown of San Francisco, which have paved the way for Californians to be able to honorably work and for the State to providently obtain taxation upon that said work.
I am hopeful that you might take these Rulings, as well as the Hurst Ruling, from several years ago, into consideration as the Law of the Land has dramatically changed. Enforcement of that change, though, is dependent upon the taxation authority possessing current information from which to opine. Additionally, the national implications of this recent case law is of epic proportion.
I have given the courtesy of carbon copying Counsel in this missive as it was they whom prosecuted the matter as well as Spectrum Field Services in order to allow for the protection of all due process inherent in our System.
In closing, as an advocate for the rights of both Minority Females and Labor, both of whom the International Association of Field Service Technicians (IAFST) represents, I am hopeful that I will be made aware of the end result of the classification of those 1099 alleged contractors whom the State of California has issued the EDD Form DE1870 to. If it is your consideration that this is not allowed to be released to the public, please include the contact information for your California Open Records Act (Statutes of 1968, Chapter 1473; currently codified as California Government Code §§ 6250 through 6276.48) officer so that I may, forthwith, submit a request to.
Thank you.

The seriousness of this audit does not necessarily hinge upon timing — random, scheduled, or calculated. For over a quarter of a century NAMFS members have elected to keep Minority Females and Labor in the dark with respect to potential financially crippling events. In fact, if the litmus test of a margin call were used, there is NOT A SINGLE NAMFS MEMBER whom would be financially solvent. Pay when paid has long been held unconstitutional. And when juxtaposed with both state and federal Prompt Pay Acts, NAMFS Members whom continue to have that language or, at minimum, operate in that fashion, are doing such at their own peril.

We hold that a pay-when-paid provision which forces the subcontractor to assume the risk that the owner will fail to pay the general contractor is void and unenforceable as contrary to public policy set forth in the Lien Law § 34. By contrast, a pay-when-paid provision which merely fixes a time for payment does not indefinitely suspend a subcontractor’s right to payment upon the failure of an owner to pay the general contractor, and does not violate public policy as stated in the Lien Law. — West-Fair Elec. Contractors v. Aetna Cas. & Sur. Co., 87 N.Y.2d 148, 661 N.E.2d 967 (N.Y. 1995)

The reality is that the Mortgage Field Services Industry is an archaic set of unwritten, verbal acceptances upon which the shoulders of Minority Females and Labor bear the weight. Weekly, now, NAMFS members and Prime Vendors have either gone bankrupt; had involuntary bankruptcies filed against them; or as in the case of Brian Mingham, National Real Estate Solutions (NRES), just closed up shop and refused to pay anyone while NAMFS members continue to supply work to his subsidiaries.

The continued refusal of NAMFS to address issues of millions of dollars in fraud wrought upon Minority Females and Labor stands as a testament to the need for change in Leadership.

With reports now coming in about Mortgage Specialist International (MSI) issuing checks which are bouncing, it is sounding like a repeat of the SEAS fiasco. There is a connection to all of this. NAMFS. It’s former and now infamous Secretary, Heather Berghorst, defrauded over One Million Dollars from innocent victims. And that was in her SECOND BANKRUPTCY! Eric Miller knew about Berghorst’s previous bankruptcy and still put her on the NAMFS Board of Directors. Miller is the NAMFS Executive Director whose ONE HUNDRED AND TWENTY THOUSAND TWO HUNDRED AND FORTY DOLLAR PER YEAR salary consumes over EIGHTY ONE PERCENT of all NAMFS member dues. Miller put Michael Evangelo on the NAMFS Board of Directors and oh what a mess that has been!

As if hiding images of females and infants on Evangelo’s private servers where he performs inspections upon weren’t bad enough, Evangelo has now been implicated in a thinly veiled kickback scandal with respect to his third party educational platform.

Spectrum Field Services is directly associated with Evangelo. And the reality is that there has been no attempt to distance themselves from the sordid mess. Go no further than the handicapped, minor females in Eden, North Carolina, whom multiple counts of rape were filed against, longtime NAMFS contract provider, Mickey Snow. #MeToo is hitting the Industry. #BlackLivesMatter protesters are taking note. And all the while the ALL WHITE NAMFS Board of Directors — it has been ALL WHITE since NAMFS formed over 25 years ago — have continued to give Miller TEN THOUSAND DOLLAR PER YEAR PAY RAISES while Minority Females and Labor have had tens of millions of dollars stolen from them.

Deus Ex Machina. You see, NAMFS could have simply paid Minority Females and Labor what they owed and there would have never been a need for me, the Ghost in the Machine. I could have been content with jousting windmills and cutting grass.

And now that we have NAMFS associated Prime Vendors whom have defrauded a soldier whom is, as I type, fighting in Afghanistan, the reality is that a bell has been rung which may not be unrung. NAMFS has crossed a line from which there is no turning back from. And for nearly a decade now, I have fought in the trenches with the honorable men and women whom Eric Miller has purposefully turned his back upon. I say this to you, whom read this tonight, you are either with me or against me.

I do not envision a world without NAMFS. I envision a world with NAMFS refocused. I envision the NAMFS Rank and File demanding more for their One Hundred and Twenty Thousand Two Hundred and Forty dollars per year. I envision Management and Labor working equitably, with each other, and in harmony with respect to their stewardship of US Taxpayer dollars. I envision NAMFS accountability and a NAMFS Board of Directors whom allow Minorities to have the opportunity to not only participate, but grow.

I challenge those of you whom read this to join forces with Foreclosurepedia and the International Association of Field Service Technicians (IAFST) in working towards a more legitimate and prosperous Industry. While we receive some Donations, the reality is that simply contributing what you spend on coffee during your commute to the office or job site could assist in worthy projects such as the IAFST University. When you Donate to Foreclosurepedia; when you purchase our Products, the reality is that you are investing in the future. The reality is I would far rather be putting together educational platforms for each and every NAMFS member, creating a long needed backbone of curriculum which would not only increase profits and revenue, but decrease the timelines currently caused by a non uniform set of standards and modalities. What firm out there wouldn’t rather wake up in the morning excited about positive and productive discussions pertaining to breakthroughs with respect to incredible educational resources available by and through open source technology? In all honesty, a modest investment to scale up each independent and unique training module would pay for itself in the decrease of liability. And what firm wouldn’t absolutely LOVE to pitch their next RFP with real and measurable metrics, verified through blockchain digital certifications, to their potential Clients? The fact is, I have already created the infrastructure! It is here — NOW!

This article is not so much about whether or not Spectrum Field Services or the State of California are right or wrong. In fact, I both admire and respect Alan Bunker, founder of Spectrum. I am given pause when I think about the length and breadth of which he and other NAMFS members have accomplished. With that said, the time has come to have an honest discussion with respect to repairing a dissonant and at times contentious Association. The time for blame has drawn nigh. I have spent nearly a decade pointing out the abysmal failures — some purposeful and some without reason — which NAMFS has overseen. There is not a single major NAMFS Regional member whom have spoken with me whom would contend that I do not have the best interests of our Industry at heart. And no one is capable of saying that I do what I do for the riches. There is not a single Client whom I have not dramatically increased their net worth nor is there a single Client whom would contend that I have been unscrupulous in my conducting of business with they. To that point, I average $104.19 per month in Donations and roughly $1,049 per month in Consulting fees. I do what I do because I both believe in the Industry which I have dedicated my life to and I feel wholeheartedly that NAMFS is capable of rising back to its once coveted place as a respected household Industry name.

 There is no I in We nor Me in Team. I learned that lesson on the battlefield. And when one of us rise, we ALL need to rise. Education and technology are the keys to these maxims. And I am not the only one whom is discussing the need for both coupled with uniformity. Ed Delgado, President and CEO of the Five Star Institute, speaking on behalf of the National Mortgage Servicing Association (NMSA) stated this to the former Director of the Consumer Financial Protection Bureau (CFPB), Richard Cordray in June, 2017. Delgado’s Whitepaper, entitled PROPOSAL FOR STANDARDIZATION OF KEY DEFINITIONS, GUIDANCE, AND BEST PRACTICES FOR THE PRESERVATION AND MAINTENANCE OF VACANT & ABANDONED RESIDENTIAL PROPERTIES,  stated, in part, “The time for a uniform national standard on the identification and treatment of vacant and abandoned properties is now.”


Why not help sponsor an investment in the future of the Industry which not only benefits your firm personally, but additionally begins to return the promulgation of legislation to those of us whom provide the services as opposed to bureaucrats in the Beltway? Back to Basics, ladies and gentlemen. The reality is that the Winds of Change are upon us when we look at the dynamics of the Trump Administration. And whether you would like to believe it or not, the US Department of Housing and Urban Development (HUD) has been quietly allowing delegations from within the IAFST to both speak and meet privately in Atlanta. HUD, in case you forgot, also controls the Federal Housing Administration (FHA). And for those of you whom do not understand the significance of that, simply know that the Mortgagee Letter (ML) is what butters our bread, for the most part. I do not jest when I state that I have been able to facilitate meetings with receptive audiences at HUD. And now, more than ever, dialogue is both crucial and key. Pricing in the ML has not changed in nearly three decades.

If I have been capable of moving these types of mountains — and ask your colleagues whom will confirm — then imagine what more might be possible if I were allowed to focus my energies upon software and educational systems to benefit ALL PARTIES?!

I will gauge the receptiveness of this honest and heartfelt missive over the next twenty four hours. Investments in this type of infrastructure are tax deductible as business expenses. So, there is no loss of money. I have Whitepapers available discussing the wide array of software from CiviCRM, which the IAFST utilizes for our Membership platform — it is an open source (meaning FREE), membership and constituency software used to elect politicians and power tens of thousands of non profit firms — in conjunction with Moodle as the backend for the IAFST University. Moodle powers tens of thousands of universities for online education including Harvard, Yale, Duke, et al. Our servers are streaming, with redundancy, through Amazon EC2 and other configurations within Amazon. We couple this with TikiWiki — Two Million Lines of code used by entities like the European Space Agency and open source, as well — which facilitates one of the most modern, API driven work order systems on Earth. Currently, the Enterprise Vendor Management Portal (EVMP) is in beta stage streaming work orders in our Industry. To that point, the EVMP requires NO PHONE APPLICATION and additionally accommodates encrypted audio, video, and instant chat. Add to this the simple and salient fact that it meshes, easily, with all MLS systems and converts into 148 languages on the fly. This was accomplished in 2015, THREE YEARS before the Industry even contemplated video as you will read from the linked article above!

In closing, let your purchasing power be your voice with respect to whether or not you are committed to an overhaul of the Mortgage Field Services Industry. If you are Management, reach out to me directly and let’s begin a discussion to onboard you with respect to education. And remember, the IAFST University is a third party which removes that contentious Employee vs Independent Contractor issue. If you are a Member of Labor, reach out to me directly, as well, and allow me to personally introduce you and your firm to the nearly 50 NAMFS members I currently work with. They pay; they pay well; and they pay on time! Email me directly, today!

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