A defunct company called Modify My Loan US LLC has not paid a penny of the record $1 million fine the state assessed last year for “scamming” 200 Minnesotans trying to save their homes from foreclosure.

Yet two of the Eden Prairie company’s former owners remain in the real estate business. The Minnesota Department of Commerce allowed them to keep their state-issued licenses.

In announcing a crackdown two years ago on “deceptive and dishonest” loan modification schemes, the Commerce Department singled out Modify My Loan US. Commerce Commissioner Mike Rothman said at the time that “companies and individuals like these think they can line their pockets with hard-earned money from consumers struggling to stay afloat. Not on my watch. We’re going to put a stop to it.”

Since 2010, the department has taken enforcement action against 36 individuals for violating mortgage modification laws. Ten of them held some kind of license with the department that enabled them to engage in real estate activity. Five of them still have those licenses.

Rep. Karen Clark, DFL-Minneapolis, and chairwoman of the Housing Finance and Policy Committee, was dismayed when informed of the Star Tribune’s findings.

“They shouldn’t be in the housing business, period,” she said. “I’m very concerned.”

The Commerce Department regulates the real estate industry by requiring licenses for various activities. A mortgage originator license is required for those who make real estate loans. A real estate broker’s license is needed for those running their own brokerage company. Agents working for other brokers need a real estate salesperson’s license.

The department said data practice laws prohibit it from talking about individual cases. Spokeswoman Anne O’Conner said that when the department issued penalties for loan modification there was “insufficient information to consider action against other licenses.” The department also said “if new facts are reported, the department will take any and all appropriate action, including reopening cases, investigation or taking action against a license.”

Last year, the department’s actions against Modify My Loan US included $15,000 fines to co-owners Maria Domek, Philip Domek and Mark Abdel, which were paid. Philip Domek was banned from the business for five years. His wife, Maria Domek, kept her mortgage origination license and is working for a mortgage company.

Abdel still has a license to sell real estate.

In separate interviews, Maria Domek and Abdel each said they weren’t involved in the day-to-day operations of Modify My Loan US at the time it got into trouble with the state.

They also noted that the Commerce Department would have revoked their licenses if they had done anything seriously wrong.

“If all of this truly took place, don’t you think we would be in jail?” Domek said.

One license without the other

As more homeowners struggled to make mortgage payments in recent years, many fell victim to companies that promised to renegotiate their loans but failed to deliver.

One of those companies was Asset Redemption Services, run by Carlos Maciel Montes. In late 2009, Samuel Lopez Gonzalez needed to sell his south Minneapolis home to avoid foreclosure. He paid $1,500 to Maciel Montes, who told him the new homeowners would be moving in soon, Lopez said in an interview. It was winter, he remembered, and he was given three days’ notice to move his wife, son and newborn daughter into a small apartment in Richfield.

The bills kept coming, however. He realized that the house had never been sold, and that he still owed the bank $30,000.

“I trusted that he [Maciel Montes] was going to help me, but he left me in a worse situation,” Lopez said in Spanish.

In 2011, Maciel Montes and his business partner Sophia Acosta were fined $5,500 for taking upfront fees and conducting unlicensed loan modifications. Their real estate broker licenses were revoked.

The Commerce Department did not take any action against Maciel Montes’ real estate salesperson license. That enabled him to start working last year as an Edina Realty agent. In a brief interview, he said he had disclosed everything to Edina Realty. He declined to comment further.

“When the Edina Realty manager hired Mr. Montes, he was focused on hiring him as a salesperson,” said Maria Verven, a spokeswoman for Edina Realty. “He was unaware of the fact that Mr. Montes ever held a broker license and that it had been revoked, since it’s unusual for someone to hold both licenses.”

She added, “We are not sure why the Department of Commerce would revoke one license without the other.”

Edina Realty said Friday that as of May 28, Maciel Montes will no longer be employed with the company.

Upfront fees criticized

The state’s case against Modify My Loan US followed a complaint by five homeowners who said they had paid $2,750 each but failed to get mortgage modifications.

Modify My Loan US was fined $1 million and its mortgage origination license was revoked. Three of its former owners faced lesser sanctions.

Maria Domek’s mortgage origination license was suspended, but that action was stayed as long as she complied with the consent order.

She said she was vindicated when a Hennepin County judge dismissed a lawsuit against her by two former clients, ruling that the upfront fees were legal. When the Commerce Department said later that the fees were illegal, she said, she signed the consent order only because fighting the case was going to cost her more money and she did not want to damage her reputation.

“You get accused, and you are always going to be considered guilty,” she said. She now works at LendSmart Mortage in Crystal. “The only factor that keeps me sane is that I know what I know.”

The Domeks left Modify My Loan US in July 2009 after Richard Steele, another owner, and Abdel accused the Domeks of embezzling money, according to the findings of an administrative law judge. Maria Domek denies any wrongdoing, but said she can’t vouch for the company’s actions after she left.

Abdel said he was a “silent partner” in the company and “never gained anything from it.”

“I was the one who turned the company in to the Department of Commerce, and I resigned when I found out,” Abdel said, but could not recall when that occurred.

What happened with Modify My Loan US had “nothing to do with the real estate license,” he said.

Eric Malmberg, Abdel’s broker at Re/Max Advantage Plus, said, “Sometimes people make mistakes. When they do, we work closely with the folks at the Department of Commerce, and we look to them to assist us in matters such as these.”

‘Wanted to help the families’

In 2010, Alejandra Sandoval, an agent with Coldwell Banker Burnet, was fined $2,500 for charging upfront fees for loan modifications and for not having a loan modification license.

In one of two lawsuits filed against Sandoval, Aurelio Benitez Gonzalez claimed that she took $1,500 for promising to obtain “more time for him to continue living in his home, time already provided by Minnesota law.”

In an interview, Sandoval said she “just wanted to help the families.”

“All they wanted was money,” she said of the lawsuits. “Only one person got a small amount out of the company, but nothing from me.”

In a statement, Coldwell Banker Burnet said the company immediately instructed Sandoval to refrain from conducting any further loan modifications after they learned that she was doing so without a loan originator license. “A review of her real estate salesperson activities shows that she follows processes correctly,” the company said. “Her real estate salesperson license with the Minnesota Commerce Department has been, and continues to be, in good standing.”