Motion for Expert Witness List in EDUARDO PANIAGUA ET AL VS. MILESTONE FINANCIAL, LLC ET AL| Trellis.Law

On November 13, 2018 a Party Statement was filed involving a dispute between Asturias, Elena, Paniagua, Eduardo, Bear Bruin Ventures, Inc., Hamilton, Zoe, Milestone Financial, Llc, Stuart, Carolyn, Stuart, William, and Bear Bruin Ventures, Inc., Does 1 To 100 Inclusive, Hamilton, Zoe, Milestone Financial, Llc, Stuart, Carolyn T., Stuart, William R., Paniagua, Eduardo, for BUSINESS TORT in the District Court of San Francisco County.

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1 MEYLAN DAVITT JAIN AREVIAN & KIM LLP
VINCENT J. DAVITT, ESQ. (State Bar No. 130649) ELECTRONICALLY
2 ANITA JAIN, ESQ. (State Bar No. 192961) FILED
444 S. Flower St., Suite 1850 Superior Court of California,
3 County of San Francisco
Los Angeles, CA 90071
Tel (213) 225-6000-Fax (213) 225-6660 10/18/2023
4 Clerk of the Court
vdavitt@mdjalaw.com I ajain@mdjalaw.com BY: RONNIE OTERO
Deputy Clerk
5
HARRIS L. COHEN, ESQ., State Bar# 119600
6 HARRIS L. COHEN, A PROF. CORP.
5305 Andasol Ave.
7 Encino, CA 91316
8 Tel (818) 905-5599 I fax (818) 905-5660
hcohenOO@aol.com
9
Attorneys for Defendants and Cross-Complainants,
10 Milestone Financial, LLC, Bear Bruin Ventures, Inc.,
William R. Stuart, Carolyn Stuart, Zoe Hamilton
11

13 SUPERIOR COURT OF THE STATE OF CALIFORNIA

14 FOR THE COUNTY OF SAN FRANCISCO

16 Eduardo Paniagua and Elena Asturias, ) CASE NO. CGC-18-571279
individuals, )
17 ) DECLARATION OF EXPERT WITNESS,
Plaintiffs, ) LORENE RANDICH, AS DIRECT
18 vs. ) TESTIMONY FOR TRIAL
19 Milestone Financial, LLC, a California )
corporation, Bear Bruin Ventures, Inc. a )
20 California Corporation, William R. Stuart, an ) Date: October 24, 2023
individual, Carolyn Stuart, an individual, Zoe ) Time: 8:30 a.m.
21 Hamilton, an individual, and DOES 1-100, ) Dept.: 611
inclusive, )
22
)
Defendants. )
23
)
24 )
RELATED CROSS-ACTIONS
)
25 )
26

DECLARATJON OF EXPERT WITNESS, LORENE RANDICH, AS DIRECT TESTIMONY FOR TRIAL
I DECLARATION OF LORENE RANDICH

2 I, Lorene Randich, hereby declare and state:

3 I am over the age of 18 and have personal knowledge as to all facts set forth herein and if called

4 upon to testify thereto I could and would competently do so.

5 Background

6 1. Attached hereto as Exhibit "l" is a true and correct copy of my curriculum vitae ("CV").

7 2. I have an active California real estate broker's license, No. 01139898. I also have a Loan

8 Originator Endorsement, from the National Mortgage Licensing System, No. 238665. I have been a

9 licensed real estate broker since 1996.

10 3. I am intimately familiar with the lending business and lending industry in California. I

11 have published articles, made presentations and belong to all the major relevant associations in that

12 industry, as reflected in my CV. Among other things, I am on the board of directors of the California

13 Mortgage Association and am a member of the California Association of Mortgage Professionals and

14 the National Associations of Mortgage Brokers.

15 4. I was employed by Redwood Mortgage Corp. from 1991 through 2020 and was the

16 Executive Vice President from approximately 2011 through December 2020and the broker of record

17 from December 2011 to September 2019. I have also been a member of the board of directors of

18 Redwood Mortgage Corp from December 2011, to the present date. I was responsible for the direct

19 oversight of all loan origination policies, procedures, marketing, training, compliance, underwriting,

20 documenting and closing and a voting member of the loan committee.

21 My Review of Documents Relating to the Subject Loan, First Settlement Agreement, and Second
22 Settlement Agreement.

23 5. In the course of forming my opinions expressed herein, I reviewed all of the docwnents

24 listed on the nine (9) page document attached hereto as Exhibit "2."

25 6. My review of the documents relate to the transactions whereby Milestone Financial, LLC

26 loaned Eduardo Paniagua money in or about March 2014 (the "Paniagua Loan"), which was secured by

27 a deed of trust against the property located at 1228 Funston Ave., San Francisco, CA 94122, and

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DECLARATION OF EXPERT WITNESS, LORENE RANDICH, AS DIRECT TESTIMONY FOR TRIAL
I thereafter entered into a January 26, 2016, Settlement Agreement, Indemnity and First Amendment to

2 Promissory Note Secured by Deed of Trust ("First Settlement Agreement") and then a January 20, 2017,

3 Settlement Agreement, Indemnity and Second Amendment to Promissory Note Secured by Deed of

4 Trust ("Second Settlement Agreement").

5 My Opinions.

6 7. Based on my education, knowledge, training and experience, and my review of the

7 documents related to this case and applicable governing laws, I have formed certain opinions. My

8 opinions are as follows:

9 1. Nature of the Loan - A Business Purpose Loan.
10 8. Based on the information I reviewed, it is my opinion that the Paniagua Loan was a non-

11 consumer/business purpose loan (also sometimes known as a commercial loan).

12 a There are many documents that I have reviewed, signed by the Eduardo Paniagua

13 ("Plaintiff"), in which he represents that the loan was for a business purpose.

14 b. The Plaintiff signed an Affidavit Regarding Loan Purpose stating that the purpose

15 of the loan shall be for either business, commercial or investment purposes. This is

16 a stand-alone, notarized document, signed by the Plaintiff, that expressly states

17 such. See Trial Exhibit ("TE") 31.

18 c. The lender may rely upon the statements of the borrower in determining the

19 intended purpose of the loan. See California Financial Code§ 22203.

20 d. The initial loan request was noted to be for a fix and flip. The Plaintiff has not

21 disputed this. TE 18.

22 e. Flip loans (or "Fix & Flip") are loans to finance the speculative renovation of

23 residential properties to sell for a profit.

24 f. The profit motive in a Fix & Flip project makes the financing of such a project a

25 non-consumer/business purpose loan. See Staff Commentary to Regulation Z,

26 1026.3(a)(3)(i)(A) through (E), Business, Commercial, Agricultural or

27 Organizational Credit Factors.

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DECLARATTON OF EXPERT WI1NESS, LORENE RANDICH, AS DIRECT TESTIMONY FOR TRIAL
1 g. Loans to acquire, improve or maintain rental properties that are not owner-occupied

2 are deemed to be for a business purpose. See Staff Commentary to Regulation Z,

3 1023.3(a)(4), Non-owner-occupied rental property.

4 h. The Plaintiff has testified that there was a profit motive for the project, and

5 therefore, for the loan that financed the project.

6 1. Plaintiff has testified that there is a Profit Sharing Agreement for the distribution of

7 the profits from the sale of the subject property after its renovation.

8 J. Calling a residential property a 'family home' does not equate to a consumer

9 purpose or consumer use.

10 k. The Plaintiff never lived in the home and had no intention to occupy it. According

11 to the appraisal, the property was vacant. No family members intended to occupy

12 the home after the loan was made. See TE 27.

13 1. Per the loan application, the Plaintiff states that the property is a rental property.

14 See_TE 41, 42.

15 m. Planning to use the profits from a business venture for personal purposes does not

16 change the nature of the loan and make loan funds that were borrowed to finance

17 the business venture a consumer purpose.

18 Supporting Research:

19 A.TE31

20 B. California Financial Code § 22203

21 C. 1026.3(a)(3)(i)(A) through (E) of Regulation Z, CFPB Staff Commentary, Factors in determining

22 business purpose

23 D. 1026.3(a)(4) of Regulation Z, CFPB Staff Commentary, Non-owner-occupied rental property

24 E. TE 27

25 F. TE 41, 42

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DECLARATION OF EXPERT WITNESS, LORENE RANDICH, AS DlRECT TESTIMONY FOR TRIAL
1 2. Defendants Were Not Required to Hold a License Issued by the California DRE When

2 Conducting Any of Their Activities Related to the Paniagua Loan.

3 9. Based on the information I reviewed, it is my opinion that Milestone Financial, LLC,

4 Bear Bruins Ventures, Inc., Carolyn Stuart, William R. Stuart or Zoe Hamilton (collectively

5 "Defendants") activities related to the Paniagua Loan origination were such that Defendants were not

6 required to hold a license issued by the California Department of Real Estate ("DRE").
7 a. The DRE licenses real estate brokers and salespersons who engage in the following:
8 1) Representing buyers and sellers in the sale of real estate
9 2) Representing borrowers and lenders in financing real estate
10 3) Representing landlords and tenants in the leasing of real property

11 See CA Business & Professions Code 10131.

12 b. As the lender, Milestone was a principal in the Paniagua loan transaction, not a

13 broker.

14 c. Bear Bruin Ventures, Inc. and Carolyn Stuart did hold DRE broker licenses at the

15 time, but there is no evidence they performed any activities relating to the origination

16 of the Paniagua loan.

17 d. William R. Stuart did hold a DRE salesperson license at the time. Mr. Stuart does not

18 appear to have negotiated any loan terms between the Plaintiff and another party.
19 Rather, at all times he acted on behalf of the lender. I have reviewed the evidence

20 provided by the Plaintiff and see nothing to the contrary.

21 e. Zoe Hamilton was not licensed by the DRE at the time the loan was originated. She

22 does not appear to have engaged in any activities for which a DRE license would be

23 required. Based upon my review of the evidence and deposition testimony, it appears

24 that at all times she acted on behalf of the lender.
25 Supporting Research:

26 A. CA B&P 10131: Describes activities for which a real estate license is required.
27

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DECLARATION OF EXPERT WllNESS, LORENE RANDICH, AS DIRECT TESTIMONY FOR TRIAL
1 3. Defendants Were Not Required to Hold a Consumer Loan Endorsement for the Paniagua

2 loan.

3 10. Based on the information I reviewed, it is my opinion that none of the Defendants were

4 required to hold a Mortgage Loan Originator endorsement issued under the Nationwide Multi-State

5 Licensing System (NMLS) to originate the Paniagua loan.

6 a. The Mortgage Loan Originator endorsement issued through the NMLS is required

7 for individuals and companies which are loan originators brokering or making

8 "residential mortgage loans." See California Business and Professions Code§

9 10166.0 I (b)(1 ).

10 b. Residential mortgage loans are defined as consumer loans on residential real

11 estate consisting of one-to-four units. See California Business and Professions

12 Code§ 10166.0l(d).

13 c. Consumer loans are loans '"whether secured by either real or personal property, or

14 both, or unsecured, the proceeds of which are intended by the borrower for use

15 primarily for personal, family or household purposes." See California Financial

16 Code§ 22203.

17 d. The Paniagua Loan was not a consumer loan. No NMLS endorsement was

18 required of any party.

19 Supporting Research:

20 A. California Business and Professions Code§ 10166.0l(b)(l).

21
B. See California Business and Professions Code§ 10166.0l(d).
22
California Financial Code § 22203
23

24 4. The Paniagua Loan is Exempt From Usury.
25 11. Based on the information I reviewed, it is my opinion that the Paniagua Loan is exempt

26 under California usury law.
27 a. The loan was arranged through MJF Funding, Inc., a broker licensed by the DRE.
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DECLARATION OF EXPERT WI1NESS, LORENE RANDICH, AS DIRECT TESTIMONY FOR TRIAL
1 b. Loans secured by real estate are exempt from usury when arranged through a real estate

2 broker licensed by the DRE. See California Constitution, Article 15, Section 1.

3
Supporting Research:
4
A. California Constitution, Article 15, Section 1
5
B. TE 30. Of particular relevance are the following: page 7/53 - the March 11, 2014 email in
6
which Zoe Hamilton sent MJF/Marc Fournier's processor, Raychel Cooke, the form 1003 that
7
Fournier and his office would use to generated their documents; page 2/53 - Hamilton's request
8
to MJ/F/Marc Fournier's processor, Raychel Cooke, for their office to procure a credit report of
9
their client, Plaintiff; page 10/53 - MJF's Raychel Cooke returned the documents signed by
10
Marc Fournier; and pp. 1, 2, 4, 5, 6, 7, 9, 10, 11, 12, 13, 16, 17, 18, 19 - emails that were either
11
from or included members of the MJF office that arranged the loan for Paniagua on these
12
included raychelcooke@gmail.com, Raychel@bluewaterufnding.net.
13

14 C. TE 106 - The DRE website indicates that Bluewater Funding is a dba ofMJF Funding a licensed

15 real estate broker.

16
Plaintiff confirmed in numerous documents that his loan was arranged by his licensed broker,
17
MJF Funding dba Bluewater Funding. See Conditional Loan Quote [TE 33]; Agreement to
18
Arrange Credit [TE 32]; two Loan Applications [TE 41, 42]; Mortgage Loan Disc. Stmt [TE 43];
19
Escrow Instructions [TE 44]; two Settlement Agreements [TE's 61, 66]; and the Promissory
20
Note [TE 36].
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DECLARATION OF EXPERT WI1NESS, LORENE RANDJCH, AS DIRECT TESTIMONY FOR TRIAL
1 5. Charging a Late Fee (Liquidated Damages) on a Balloon Payment is a Common Practice in

2 California's Private Lending Industry.
3 12. It is my opinion that charging liquidated damages on a balloon payment is a common

4 practice in the private lending industry in California.

5
6 I declare under penalty of perjury under the laws of the State of California that the foregoing is
true and correct. Executed at Los Altos, California.
7

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Dated: October/_!!__, 2023
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DECLARATION OF EXPERT WITNESS, LORENE RANDICH, AS DIRECT TESTIMONY FOR TRIAL
EXHIBIT 1 9
Lorene A. Randich
Mortgage Industry Consultant

l.randich@comcast.net
650-245-4152

Experience:
2020 to Present Bay Laurel Financial
Principal
Through Bay Laurel Financial (“Bay Laurel”) I offer consulting services to the
mortgage industry. Special focus is in loan originations, compliance, loan
servicing and underwriting. I also offer expert witness case review and
testimony in these areas.

1991 through 2020 Redwood Mortgage Corp.
Executive Vice President, Lending Operations
Redwood Mortgage Corp. (“Redwood”) is a mortgage loan broker and direct
lender licensed by the California Department of Real Estate, experienced in
underwriting residential, multifamily, condominium, condo conversion, office,
industrial, construction, subdivision, raw land, residential care, self-storage,
ground lease and hotel lending. Redwood Mortgage Corp. has made or
arranged over $1 billion in loans since its founding in 1978.

Corporate Broker of record for Redwood from December, 2011 through
September 2019.

Member of the Board of Directors since December, 2011 and ongoing.

Responsible for management of all loan originator, processor, underwriter,
funding and closing staff, varying in number from 4 to 13 employees. Direct
oversight of all loan origination policies and procedures, marketing, training,
compliance, underwriting, documenting and closing. Voting member of the loan
committee and final authority for all loan closings.

1978 to 1983 Sears Roebuck and Company
Credit Analyst and Management Trainee
Responsibilities included point of sale credit decisions, review and disposition of
credit inquiries and disputes, collections. Successfully completed the
management training program.

Education: Bachelor of Arts, University of California, Berkeley
Political Science Major
Graduated with honors

Associate of Arts, College of San Mateo
Graduated with highest honors

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Licenses Held: Real Estate Broker, California Dept. of Real Estate. No. 01139898

Loan Originator Endorsement, National Mortgage Licensing System. No.
238665

Associations: California Mortgage Association Board of Directors
Education Committee chair (2016-2020)

California Association of Board of Directors (former)
Mortgage Professionals, San Government Affairs chair (former)
Francisco/Peninsula Chapter

National Association of Mortgage Member; Government Affairs Committee
Brokers: (former)

Honors:
2022 Speaker of the Year Duane Gomer Education

2020 Phillip M. Adleson Education California Mortgage Association
Award

2016 President’s Award California Mortgage Association
Stephen Pollack

2010 President’s Award California Mortgage Association
George Eckert

Educational Writing:
2023 Seller Financing Chapter Duane Gomer Education
CA SAFE Comprehensive 8 Hours of
Continuing Education

2022 Rental Property Financing Duane Gomer Education
Chapter CA SAFE Comprehensive 8 Hours of
Continuing Education

Published Articles:
May, 2023 HMDA – A 2023 Update Points of Interest, California Mortgage
Association

July, 2017 HMDA - The Temporary Points of Interest, California Mortgage
Financing Exclusion Assn.

Jan., 2011 Don’t Just Peek at Loan Purpose Scotsman Guide
(Lead Article)

March, 2008 How to Read Lenders in a Flat Scotsman Guide
Market

Presentations:

Sept. 28, 2023 Bridging the Gap – Residential Bridge Loans

May 16, 2023 HMDA – A 2023 Update (webinar)

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March 9, 2023 Commercial Real Estate in 2023. Moderator

Sept. 30, 2022 Loan Disclosures: A 2022 Update (webinar)

April 12, 2022 Lending on 1031 Exchanges. Moderator (webinar)

March 18, 2021 Residential Bridge Loans. Co-presenter (webinar)

Oct. 25, 2019 Modification and Forbearance Agreements. Co-presenter

Jan. 19, 2018 HMDA: A Final Look. Co-presenter

Oct. 27, 2017 Marketing in Social Media: Compliance Dos and Don’ts. Moderator

April 6, 2017 The New CFPB HMDA Rules: Prepare Now for 2018. Moderator

Jan. 20, 2017 Minimizing Risk in Making Business Purpose Exempt and Organizationally
Exempt Loans. Co-presenter

Jan. 20, 2017 HMDA: The New Frontier in Loan Reporting. Co-presenter

Oct. 28, 2016 Loan Disclosure Basics. Encore presentation. Co-presenter

Oct. 22,2015 Instructions to Title and Escrow; The Critical Role these Instructions Play.
Moderator

Feb. 6, 2015 Making Loans on Going Concern Properties. Co-presenter

Feb. 6, 2015 Holding Back Loan Proceeds: Challenges to Your “Cash Collateral.” Moderator

Feb. 5, 2015 Overview of CA Mechanics Lien and Stop Payment Notice Law Issues for
Construction Lenders. Moderator

Oct. 23, 2014 Loan Disclosure Basics. Co-presenter

Oct. 24, 2014 Securing Loans with Multiple Parcels of Collateral: Getting it Right. Moderator

Jan. 31, 2014 Funding Loans with Third Party Originators. Co-presenter

May, 2013 Business Communications. Moderator

Feb. 7, 2013 CFPB: A Title Wave of Regulations. Co-presenter

Oct. 18, 2012 The Aftermath and Future of Mortgage Fraud. Moderator

Feb. 12, 2012 SFR Lending Update. Co-presenter

Oct. 28, 2011 Solving the Dodd Frank Puzzle. Co-presenter

June 28, 2011 The New Rules in Loan Originator Compensation. Co-presenter. (webinar)

May 13, 2011 Business Purpose Lending. Co-presenter

May 13, 2011 Making Commercial Loans. Co-presenter

Feb. 4, 2011 Wall Street Reform and Consumer Financial Protection Act of 2010. Moderator

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Sept. 13, 2010 1-4 Family Regulatory Review. Co-presenter

May 14, 2010 Business Purpose Loans – How Safe Are You? Co-presenter

Oct., 2009 RESPA: Extreme Makeover. Moderator

July 16, 2009 Mortgage Fraud: Preventing Catastrophe. Co-presenter

April 24, 2009 Major Truth-In-Lending Changes. Part II. Co-presenter

Oct. 23, 2008 Major Truth-In-Lending Changes: Reg. Z, HOEPA, Etc. Part I. Co-presenter

July 24, 2008 Loan Commitment Letters. Co-presenter

July 20, 2007 Making Commercial Second Loans. Co-presenter

April 13, 2007 The Home Mortgage Disclosure Act (HMDA) and the Holden Act. Moderator

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EXHIBIT 2 14
Deposi�on of Elena Asturias
Sept. 13, 2022

Page Line Comment
23 23-24 Credit card scores impacted by Milestone
41 7-11 Proﬁt mo�ve in Funston renova�on. Plan was to repair and sell
41 20-23 Proﬁt-sharing agreement in wri�ng, but not produced (mother has)
43 8-25 Family members living in the house since grandmother passed away
44 1-4 Con�nued
45 1-6 Renters in Funston since its comple�on
64 21-23 EWB loan (original loan) was for nonowner-occupied
65 2-4 Resnik (lender in 2nd) was told the purpose was to renovate & sell Funston
65 9-16 Milestone proceeds went to Paniagua Construc�on for the construc�on
70 10-16 Yosemite/Malgesini loan – were told the property would be sold
71 20-25 Terms of Business Purpose Loan signed
72 1-8 Con�nued
72 17-25 Cert. of Business Purpose, Use of Proceeds signed
73 1-8 Con�nued
73 17-25 Above form completed by Asturias
81 1-20 Ruﬀrage is a social associate of Paniagua’s
81 21-25 Did not meet or speak with Fournier
82 1 Con�nued
82 2-8 Ruﬀrage was paid out of Milestone escrow, as instructed by Paniagua
82 9-15 Does not know of Blue Water Funding
82 16-23 Does not know MJF Funding
82 24-25 Had email correspondence with Zoe Hamilton
83 1-11 Had received email correspondence from William Stuart
84 4-25 Wheatly was a 3rd party who oﬀered to mediate
85 3-25 Believes Wheatly has ﬁnancial connec�ons with Stuart
94 19-25 $650 to MJF Funding out of Milestone escrow
95 1-10 Does not know what $650 fee was for or why it was paid
103 2-10 Milestone maturity date extended one yr (to 3/31/17) and interest rate reduced
from 11.95% to 10.75%
131 3-12 Second setlement agreement states loan was arranged through Blue Water
Funding
131 17-25 First setlement agreement states loan was arranged through MJF Funding
132 8-13 Paniagua did not object to or understand the above statement

Exhibits - Asturias
9 Terms of Business Purpose Loan (4/2019)
10 Cer�ﬁcate of Business Purpose, Use of Proceeds (4/2019)
11 Loan applica�on (3/2014; Resnik?)
20 Lender’s Escrow Instruc�ons for Milestone
21 Aﬃdavit Regarding Loan Purpose for Milestone loan
22 MLDS for Milestone loan
23 Borrower’s Closing Statement for Milestone loan

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24 Milestone Promissory Note
27 Milestone ﬁrst setlement agreement
28 Milestone second setlement agreement (1/2017)
38 Milestone documents from plain�ﬀs (238 pages)
40 Milestone NOD (8/24/14)

Deposi�on of Eduardo Paniagua
Aug. 23, 2022

Page Line Comment
42 21-23 Family members living in Funston when Milestone loan taken out
44 22 et al Property rented to third par�es a�er construc�on was completed
47 6-22 Ruﬀrage assisted in ﬁnding loans and was paid
57 18-22 First conversa�on with Stuart was to extend the loan
64 21-25 Never spoke to Mark Fournier or anyone from MJF or BlueWater
65 1-7 Con�nued
66 12-25 Arranging broker on Condi�onal Loan Quote is Eric Ciaverelli
67 1-21 Con�nued
78 21-25 Fournier signed/dated the loan app prior to the borrower
88 16-18 Processing fee of $7,500 to Jose Ruﬀrage
88 22 Paniagua thinks Ruﬀrage’s payment was ‘between Ruﬀrage and Milestone’
89 1-4 Broker fee to MJF Funding was $650
94 1-2 First Setlement Agreement signed/dated Jan. 27, 2016
97 1-5 Second Setlement Agreement (?) signed/dated Jan. 25, 2017
100 4-7 Paniagua is a contractor but says does not know what a No�ce of Comple�on is
for
100 17-18 Per No�ce of Comple�on, work was completed on Nov. 15, 2015
115 8-16 Document outlining distribu�on of proﬁts from Funston property between
family members – not produced
117 24-25 Espina (family member) stayed in Funston for free
118 1 Con�nued
118 3-14 Addi�onal tenant, Larry, paid rent
119 7-16 Paniagua’s brother and spouse also stayed in Funston for free
120 16-19 Rela�ves living in Funston rent free were only there for a couple of months
138 15-25 Fournier signed the MLDS
139 22-24 $650 fee to MJF/Fournier on MLDS
140 1-3 $7,500 processing fee on MLDS
165 22-25 Geneson loan, Use of Proceeds, Not for personal, family or household purposes
166 1-9 Con�nued

Deposi�on of Eduardo Paniagua
Sept. 26, 2022

Page Line Comment

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136 17-25 MJF Funding Corp. paid $650 fee (Lender’s Escrow Instruc�ons)
Exhibits - Paniagua
4 Appraisal of Funston dated Jan. 8, 2014, for Herzer Financial
5 Promissory Note, 3/31/16 maturity
6 Loan Quote Worksheet, agent Jose Ruﬀragge
7 Condi�onal Loan Quote; arranging broker is BlueWater Funding/Eric Ciaverelli; signed by
Marc Fournier
8 Credit report on Paniagua pulled by MJF Funding
16 Loan applica�on
18 Aﬃdavit Regarding Loan Purpose
19 Addi�onal Loan Obliga�ons
21 Closing Statement for Milestone loan
23 Setlement Agreement, Indemnity and First Amendment
24 Setlement Agreement, Indemnity and Second Amendment (?)
28 Lender’s Escrow Instruc�ons & Agreement
29 Aﬃdavit Regarding Loan Purpose
30 MLDS
31 Setlement Agreement, Indemnity and First Amendment
32 Setlement Agreement, Indemnity and Second Amendment
41 Loan applica�on
43 Geneson note
50 Cer�ﬁcate of Business Purpose Use of Proceeds (April, 2019 for Church Capital)
51 Terms of Business Purpose Loan (for Church Capital/Yosemite)
54 Eduardo Paniagua Discovery

Deposi�on of William Stuart
August 31 2022

Page Line Comment
18 18-25 Milestone makes business purpose loans
19 1-7 Con�nued
19 19 Milestone formed in 2007
23 2-14 Zoe Hamilton doesn’t perform ac�vi�es that require a license
27 1-11 Milestone obtained its CFL license Feb. 23, 2018
31 9 Not sure how many loans originated in 2014; under 100
34 8-13 Marke�ng through direct mail to brokers from lists
34 15-18 Website ‘clariﬁes kind of how we work’
44 1-10 Some�mes borrowers get Milestone’s name and call directly. They are referred
to brokers
44 11-18 Will some�mes give the borrower a ‘short list’ of brokers if they don’t have one
45 14 Milestone only quotes directly to brokers
48 13 Stuart never met or spoke with Paniagua or Asturias
48 14-16 Did not speak with brokers involved in the Paniagua transac�on
54 18-22 Never met or spoke with Ruﬀrage
58 20-25 Was Loan Purpose Aﬃdavit included with loan documents for signing?
59 1-10 Con�nued

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69 1-0 Checks licensing for brokers paid in the transac�on
69 14-24 Only have one broker in every transac�on
124 1-2 Never spoke with Eric Ciaverelli

Deposi�on of Zoe Hamilton
September 7, 2022

Page Line Comment
73 21-25 States has not performed any ac�vi�es that required use of salesperson license
74 22-25 License expired mid-2000’s and renewed in 2014
75 1-8 Con�nued
82 6-17 Zoe generally ascertains the loan purpose on the ini�al loan intake
86 16-22 Standard prac�ce is to advise borrowers that they only work through brokers
86 23-15 They ‘may’ oﬀer lists of brokers to individuals
87 1-4 Con�nued
88 12-25 Advises unlicensed third par�es they only work with brokers
92 7-10 Milestone made 30-70 loans in 2014
92 11-12 The same in 2015
95 25 Milestone made between 20 and 60 loans in 2016
96 1-4 Con�nued
99 2-15 When working with an unlicensed 3rd party, will communicate w/broker & 3rd
party
100 13-18 For Paniagua loan, was ini�ally contacted by Jose Ruﬀrage
100 19-25 Ini�al call was “construc�on loan on investment property”
102 15-24 Knew Ruﬀrage wasn’t licensed; ‘would have’ checked his creden�als
103 8-13 Provided list of brokers to Ruﬀrage, not Paniagua
104 2-14 Completed the ini�al loan quote worksheet
105 6-20 Does not recall if loan quote was provided to Paniagua. States it was provided to
Fournier
106 9-12 Provided the loan quote to Fournier’s oﬃce & Ruﬀrage
106 17-24 Ruﬀrage provided the property photos, contractor’s bid and cost breakdown
a�er quote was provided
110 13-15 Paniagua did not dra� the loan purpose aﬃdavit
112 8-14 Ruﬀrage was direct point of contact on Paniagua loan; was a close family friend
121 8-18 Does not know why Ruﬀrage’s fee is shown as a referral fee on the loan quote
and a processing fee on the escrow instruc�ons
125 6-17 MLDS, signed by borrower, received from Fournier’s oﬃce (Raychel Cooke)
134 11-18 Does not recall ever speaking directly with Paniagua
134 19-25 One email to Paniagua – to obtain missing signatures
135 1-4 Con�nued
135 8-23 Telephone/personal communica�on(s) post-closing with Asturias about
disbursements
136 8-25 Some email communica�ons with Asturias about the draw
150 3-12 Does not recall if she ever spoke with Fournier on the Paniagua transac�on
198 11-25 Does not appear to understand what mortgage loan originator ac�vity is
199 1-25 Con�nued

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18
200 1-25 Con�nued
201 1-7 Con�nued
202 11-25 Recollects mee�ng with DRE inves�gator posing as a borrower
220 13-25 Exhibit 22 in evidence (No�ce to Borrower to Obtain Broker Representa�on)
was the list provided to Paniagua
221 1-14 Con�nued

Exhibits - Hamilton
4 Loan Quote
21 Accusa�on by DRE against Bear Bruin Ventures & Carolyn Stuart (2017)
22 No�ce to borrowers to obtain broker representa�on

Exhibit Review

5 Fire insurance, 7/10/13-7/10/14
• Rental property policy
7 Loan Quote Worksheet
• Who completed this? Ruﬀrage? Based on a conversa�on with Ruﬀrage?
• Agent Name: Ruﬀrage
• FLIP at top, underscored twice
• Occupancy Now: Vacant (to be ﬂipped not checked)
• Loan Purpose: To make it (unintelligible) a 3,000 SFF home + ﬂip
• Market Rent (Core): $3,500
14 No�ce to Borrowers
• Milestone Financial and BBV Proﬁt Sharing Plan (lenders) do not represent
borrowers
• Provides licensed brokers to work with
• Marc Fournier, MJF Funding is ﬁrst on the list
• Was this provided to the borrower?
15 Es�mate for Remodeling and Addi�on at 1228 Funston
• $450,200 total costs
16 Appraisal
• Ordered for Herzer Financial
• Dated Jan. 8, 2014
• Occupancy: Vacant
• Value, $2,000,000, subject to comple�on
• Interior is to studs
17 Emails between Jose Ruﬀrage and Zoe Hamilton
• Jan. 24, 2014, 6:24 PM: Zoe requests applica�on info
• Jan. 27, 2014, 12:23 PM: Jose will send info
• Jan. 27, 2014, 12:25 PM: Jose forwards email from Eduardo to Zoe (received by
Jose on Jan. 24, 201 at 6:13 PM) containing appraisal

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19
• Jan. 27, 2014, 12:25 PM: Jose forwards email from Eduardo to Zoe (received by
Jose on Jan. 25, 2014 at 3:02 PM) containing appraisal, budget, site permit & job
card
• Jan. 27, 2014, 12:45 PM: Jose to Zoe, statement re faxing Eduardo’s worksheet
• Feb. 5, 2014, 8:51 AM: Jose forwards email from Eduardo to Zoe (received by
Jose on Feb. 5, 2014, 2:47:01 AM) containing East West Note & Funston
Statement
• Zoe’s email signature: Milestone Financial, LLC
• Funding Manager/Senior Loan Coordinator
• (no licensing informa�on)
18 Leter dated Feb. 6, 2014 from Zoe Hamilton (Page Mill Funding) to Eric Ciaverelli (Blue
Water Funding)
• Re: Eduardo Paniagua, 1228 Funston; Lender: Milestone Financial, LLC
• Lender (Milestone) only funds nonconsumer loans, real estate-secured loans
arranged by CA licensees
• Iden�ﬁes the Paniagua loan as ‘your loan’ (Ciaverelli’s)
19 Zoe Hamilton emails
• To escrow oﬃcer re impounds (3/11/14)
• To Raychel Cook reques�ng the ﬁnal 1003 and a credit report (3/11/14)
• To escrow sending loan documents (3/11/14)
• To Raychel Cooke sending ini�al 1003 (3/11/14)
• To escrow to request scheduling the signing appt. (3/12/14) [s�ll need 1003 &
882 from Raychel]
• From Raychel Cooke, broker signed docs, ﬁnal 1003 and 885 atached (3/12/14)
• To Raychel Cooke, sending ini�al 1003 (3/11/14)
• From escrow advising of signing appt. to be at 2601 Mission St., SF [Capital
Mgmt. Group] (3/12/14)
• From Jose Ruﬀrage, wire instruc�ons & saying thank you (3/13/14)
• To Jose Ruﬀrage reques�ng help with escrow’s request for a revised stmt. to be
signed (3/13/14)
• Btwn escrow & Paniagua re delivering the signed documents to escrow (3/20/14)
• To Paniagua reques�ng follow-up items from signing [missing signatures]
(3/19/14)
20 Aﬃdavit Regarding Loan Purpose
• MJF form; no blanks to complete by hand
• States loan is for business, commercial or investment purposes
• States property is not occupied or intended to be occupied by Plain�ﬀ
• Stand-alone form
21 Agreement to Arrange Credit
• MJF form
• Iden�ﬁes Marc Fournier, MJF Funding as the broker
• Title states it’s an agreement to arrange credit (a broker ac�vity)
• States Borrower contacted Broker for $500,000 loan on Funston
• Par. 4: “…for a loan…to be arranged by Broker…”
• Par. 5: “In addi�on to procuring, nego�a�ng and arranging the Loan…”

6|Page

20
• Par. 5: “Broker agrees to indemnify (and Borrower hereby generally releases) the
actual funding lender…” (implica�on that lender is not the broker)
• Par. 5: Waiver of claims against the lender
• Par. 7: Borrower warrants that loan is business/commercial purpose and not
consumer purpose
• Par. 10: Discusses lender’s rights (implica�on that lender is not the broker)
22 Condi�onal Loan Quote
• Signed by Fournier/MJF
• Iden�ﬁes Lender fees of 3.5%
• Lender iden�ﬁed as Milestone Financial LLC
• Arranging/Procuring broker iden�ﬁed as Blue Water Funding, Eric Ciaverelli as
agent
23 Disbursement Request & Authoriza�on - Revised
24 Long Form Deed of Trust and Assignment of Rents
25 Milestone Promissory Note
• Par. 2 (Purpose): business, commercial or investment only & not for consumer
purpose
• Par. 27: arranged by a broker, MJF Funding Corp.
26 Disbursement Request & Authoriza�on
• Includes cost breakdown & staged disbursements
27 Important and Cau�onary Informa�on; Addi�onal Loan Obliga�ons
• Cert. of Occupancy obliga�ons (see Promissory Note)
30 Loan Applica�on
• Signed by Mark Fournier, MJF Funding, as Loan Originator
• Standard URLA
• Calyx LOS
31 Mortgage Loan Disclosure Statement – Nontradi�onal (RE 885)
• All fees shown as ‘Paid to Others’
• $17,500 Lender fee (3.5%)
• $650 Mtg. Broker fee
• $7,500 Processing fee (1.5%)
• Retained by Lender (construc�on holdback) $400,000
• Proceeds $60,448.64
• Par. XVI: Milestone Financial iden�ﬁed as future lienholder
• Par. XVII A: Loan will not be made from broker controlled funds
• Cer�ﬁca�on (under penalty of perjury) signed by a representa�ve of MJF
Funding
32 Lender’s Escrow Instruc�ons & Agreement (Revised)
• Lender: Milestone Financial; William Stuart signed 3/13/14
• Borrower: Eduardo Paniagua signed 3/20/14
• Broker: MFJ Funding, Inc.; Marc Fournier signed 3/14/14
• Prepared by Milestone Funding, iden�ﬁed as Lender
• Broker fee, $650 to MJF Funding
• Processing fee, $7,500 to Jose Ruﬀage
• Lender Points (Origina�on), $17,500 to Milestone Financial
34 Borrower Closing Statement

7|Page

21
• Loan closed March 20, 2014
• Broker, processing & loan origina�on fees as Ex. 32, above
• $360,000 retained by lender (construc�on holdback)
• Proceeds to borrower: $91,829.42
37 No�ce of Default
• Recorded 8/22/14
• Owes $19,535.27
38 Emails between Paniagua, Asturias and Hamilton [Origina�on]
• Hamilton sent quote (loan quote?)
• Paniagua sent documents via Dropbox (2/2/15)
39 BRE Order to Desist and Refrain (3/13/15)
BRE Licensed:
• C. Stuart
• W. Stuart
• Bear Bruin Ventures, Inc. (dba Page Mill Funding)
Not BRE Licensed:
• Zoe Hamilton
• Milestone Financial
None had an NMLS endorsement
Zoe Hamilton communicated with the DRE inves�gator/plant
Milestone ﬂyer
40 BRE Second Amended Order to Desist and Refrain (4/27/15)
Result: Desist and refrain from doing any acts which require either a DRE license or an
NMLS endorsement
42 Emails between Hamilton, Asturias & Paniagua [Servicing]
• To Asturias & Paniagua – Status of project; payment is late; possible extension
(11/25/15)
• To Asturias – Oct. pymt. Due; possible reﬁ of Milestone & 1st (1/4/16)
• From Asturias – Wai�ng for buyers to close (1/4/16)
• From Hamilton – forwarding an extension agreement (1/25/16)
44 Emails between Hamilton, Asturias & Paniagua
• From Asturias – project completed & in contract (11/25/15)
• To Asturias – Need update, due for 1/1/15 payment; reﬁ possible (1/4/16)
56 Emails from Victor Marquez, former atorney
• Re setlement (2018)
59 Payoﬀ Approval & Acknowledgement
• Borrower signature required before lien can be released; signed by Paniagua
4/14/17
63 First Amended Complaint by Paniagua and Asturias
• Alleges Milestone adver�sed to the public as a ‘wholesale direct lender’
• Ruﬀrage originated the loan; not a loan broker. ‘Simply referred Plain�ﬀs to
Defendants’
• Defendants selected MJF Funding as the broker
• Alleges Defendants were unlicensed in March 2014
• Loan was accelerated due to lack of payments
• $50,000 liquidated damages charged with accelera�on

8|Page

22
• Jan. 2017 payoﬀ fell through because of defendant’s delay in payoﬀ demand
92 Aﬃdavit Regarding Loan Purpose (notarized copy)
• Cer�ﬁca�on to MJF Funding Corp.
• Loan is for business, commercial or investment purposes
• Loan is not for consumer purposes
• Broker will rely upon borrower’s statements
• Signed & notarized 3/12/14
94 Veriﬁca�on of MJF Funding Corp. DRE license
• Corporate Broker license
• Veriﬁed on 6/17/22
• Issued: 3/11/08
• License status: Expired as of 8/12/18
• Oﬃcer at expira�on: Marc Jason Fournier
• DBA: Bluewater Funding (as of 5/12/08) & Bluewater Realty (as of 7/7/08)
95 Veriﬁca�on of Marc Jason Fournier DRE license
92 • Individual Broker license
• Veriﬁed on 10/28/22
• Issued: 7/26/07
• License status: Expired as of 7/25/19
• No DBA’s
• Aﬃliated Corpora�on: MJF Funding Corp.
96 Subs�tu�on of Trustee, Recorded 5/1/2018
97 Milestone Financial LLC CFL license
• Finance Lender & Broker
• Ini�ally issued 02/16/2017

9|Page

23
1 PROOF OF SERVICE

2 I, RONI M. IWATA, declare:

3 I am employed in the County of Los Angeles, State of California. I am over the age of 18 and
not a party to this action. My business address, telephone number and email address are 444 South
4 Flower Street, Suite 1850, Los Angeles, California 90071, (213) 225-6000, riwata@mdjalaw.com.
5 On October 18, 2023, I served the document(s) described as DECLARATION OF EXPERT
6 WITNESS, LORENE RANDICH, AS DIRECT TESTIMONY FOR TRIAL on the interested
parties in this action:
7
Sarah Shapero, Esq. Victor M. Marquez, Esq.
8 Jessica Adair, Esq. 648 Hayes Street
SHAPERO LAW FIRM San Francisco, CA
9 100 Pine Street, Suite 530 Tel: (415) 314-7831
10 San Francisco, CA 94111 Email: victormarquezesq@aol.com
Tel: (415) 273-3504 Co-Counsel for Plaintiff
11 Email: sarah@shaperolawfirm.com Eduardo Paniagua
Email: jessica@shaperolawfirm.com
12 Attorneys for Plaintiff
Eduardo Paniagua
13

14 Harris Cohen, Esq. Elkanah J. Burns, Esq.
HARRIS L. COHEN, A PROF. CORP. LAW OFFICES OF ELKANAH J

Case Info

Judge

Curtis E.A. Karnow Track Judge’s New Case

Case No.

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Document Filed Date

October 18, 2023

Case Filing Date

November 13, 2018

County

Parties

ADELAARS, SARAH Attorney
ADELAARS, SARAH Attorney for the Appellant
ADELAARS, SARAH Attorney for the Plaintiff
ASTURIAS, ELENA Appellant
ASTURIAS, ELENA Plaintiff
BEAR BRUIN VENTURES, INC. Cross Complainant
BEAR BRUIN VENTURES, INC. Defendant
BURNS, ELKANAH J. Attorneys for Plaintiffs
BURNS, ELKANAH J. Attorney for the Defendant
BURNS, ELKANAH J. Attorney for the Plaintiff
COHEN, HARRIS L Attorneys for Defendants
COHEN, HARRIS L Attorney for the Appellant
COHEN, HARRIS L Attorney for the Defendant
DAVITT, VINCENT J. Attorneys for Defendants
DAVITT, VINCENT J. Attorney for the Appellant
DAVITT, VINCENT J. Attorney for the Defendant
DOES 1 TO 100 INCLUSIVE Defendant
HAMILTON, ZOE Cross Complainant
HAMILTON, ZOE Defendant
LAU, JOYCE K. Attorney
LAU, JOYCE K. Attorney for the Appellant
LAU, JOYCE K. Attorney for the Defendant
MARQUEZ, VICTOR MANUEL Attorneys for Plaintiffs
MARQUEZ, VICTOR MANUEL Attorney for the Appellant
MARQUEZ, VICTOR MANUEL Attorney for the Plaintiff
MILESTONE FINANCIAL, LLC Appellant
MILESTONE FINANCIAL, LLC Cross Complainant
MILESTONE FINANCIAL, LLC Defendant
PANIAGUA, EDUARDO Appellant
PANIAGUA, EDUARDO Cross Defendant
PANIAGUA, EDUARDO Plaintiff
PANIAGUA, EDUARDO Respondent
ROES 1-100 Cross Defendant
SHAPERO, SARAH Attorneys for Plaintiffs
SHAPERO, SARAH Attorney for the Plaintiff
STUART, CAROLYN Cross Complainant
STUART, CAROLYN T. Defendant
STUART, WILLIAM Cross Complainant
STUART, WILLIAM R. Defendant
Jessica Adair Attorneys for Plaintiffs
Stephanie Warden Attorneys for Plaintiffs
Anita Jain Attorneys for Defendants
Neil Chan Attorneys for Plaintiffs
Joyce Liou Attorneys for Defendants
Stephanie Silvers Attorneys for Defendants
Stefani Silverman Attorneys for Plaintiffs
Edward Jamison Attorney
Nathaniel Fisher Attorney
Stephanie Wald Attorney
Marie Fournier Attorney
Bernard Kornberg Attorneys for Defendants
John McDonnell Attorney

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Party Statement: EDUARDO PANIAGUA ET AL VS. MILESTONE FINANCIAL, LLC ET AL

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Case Info

Parties