Patrick Quinlan, Lee Wells, Keith Pietila, Alexander Ajemian, John O'Leary, Cheryl Swain and Kevin Lasky

Litigation Release No. 17484 / April 23, 2002

Accounting and Auditing Enforcement Release No. 1546

SECURITIES AND EXCHANGE COMMISSION V. PATRICK QUINLAN, LEE WELLS, KEITH PIETILA, ALEXANDER AJEMIAN, JOHN O'LEARY, CHERYL SWAIN AND KEVIN LASKY, United States District Court for the Eastern District Of Michigan, Case No. 02-60082 (Judge Battani) (April 23, 2002)

The Securities and Exchange Commission ("Commission") announced that it filed a Complaint today in the United States District Court for the Eastern District of Michigan against seven former executives of MCA Financial Corporation ("MCA"). The defendants are Patrick Quinlan, MCA's former CEO and Chairman of the Board of Directors, Lee Wells, MCA's former President and Chief Operating Officer and member of the Board of Directors, Keith Pietila, MCA's former Chief Financial Officer and Chief Operating Officer, Alexander Ajemian, MCA's former Controller and Treasurer, John O'Leary, MCA's former Senior Vice President of Corporate Finance, Cheryl Swain, MCA's former Vice President of Marketing Syndication and Kevin Lasky, MCA's former Vice President of Portfolio Management.

MCA was a mortgage banking company headquartered in Southfield and Troy, Michigan. The Complaint alleges that MCA sold two different types of securities and engaged in a fraudulent scheme with regard to both. First, the Complaint alleges that MCA sold $71 million of securitized interests in pools of mortgage loans from 1994 through 1999 while knowingly misrepresenting the risk, rate of return and historical performance of the interests in the offering materials. The Complaint alleges that, as a result, investors lost at least $49 million. Second, the Complaint alleges that MCA engaged in the fraudulent sale of $19 million in debentures between 1994 and 1999 by including financial statements that materially inflated its assets, income and equity in registration statements and annual and quarterly reports filed with the Commission. The Complaint further alleges that MCA materially inflated its assets, income and equity by improperly: (1) recognizing gains on sale of real estate to related parties; (2) valuing certain mortgages held for resale; (3) failing to disclose related party mortgages held for resale; (4) failing to write down uncollectible related party receivables; and (5) failing to disclose MCA's potential liability in connection with the fraudulent sale of the securitized interests in pools of mortgage loans. The Complaint alleges that as a result, investors in the debentures lost all $19 million invested.

The Complaint alleges that all seven defendants violated, or aided and abetted violations of, the antifraud provisions of the federal securities laws as a result of their conduct in connection with MCA's fraudulent sale of securities. In addition, the Complaint alleges that Quinlan, Wells, Pietila, Ajemian and O'Leary violated, or aided and abetted violations of, the periodic reporting and corporate record-keeping provisions of the federal securities laws.

The Complaint seeks, among other things, injunctive relief and civil penalties against all seven defendants. In addition, the Complaint seeks to bar Quinlan, Wells, Pietila and Ajemian from acting as an officer and director of a public company in the future.

Criminal proceedings already have been instituted with respect to several of the defendants in the Commission's Complaint. Ajemian and Pietila have pled guilty to counts of mail fraud and making false statements to the Commission. Swain has pled guilty to one count of mail fraud. In addition, the Michigan Attorney General's Office has filed state felony securities fraud charges against Quinlan, Wells, Pietila and Ajemian.

The Commission wishes to thank the Office of the United States Attorney for the Eastern District of Michigan for its assistance and cooperation in this matter.

SEC Complaint in this matter.