DiTech Founder Sues GMAC, Saying It Has Failed to Pay Up
J. Paul Reddam, flamboyant founder of DiTech.com, alleged in a lawsuit that GMAC Mortgage Corp. has failed to pay $200 million that it owed after acquiring the Costa Mesa mortgage lender.
GMAC, a unit of General Motors Corp., made an initial payment of $70 million as part of the deal but has failed to make a series of payments since acquiring DiTech in March 1999, according to the lawsuit, which was filed Friday in Orange County Superior Court.
The payments were to be based on DiTech’s performance after the deal, the lawsuit said. It added that the purchase price was not to exceed $275 million.
David Wiechert, a Capistrano Beach lawyer representing Reddam, said the lack of payment “is a total repudiation of the agreement.”
GMAC received the lawsuit at its offices in Horsham, Pa., but will not comment until its attorneys review the document, spokesman Rick Gillespie said Wednesday.
DiTech, which was founded in 1995 and became an aggressive marketer of higher-risk home-equity loans, has been rocked by scandal.
In May, three top managers were indicted on charges of extortion and accepting illegal kickbacks. They were later fired.
Reddam, who doubled as the firm’s TV pitchman and helped it grow into one of the Southland’s largest lenders, resigned as chief executive the same day the investigation became public. He has not been charged.
