Direct Mortgage Ex-employees Sue Over Fraud And Unpaid Wages

Two former employees of Direct Mortgage Corp. have filed a federal lawsuit accusing the company and its chief executive of fraud, breach of contract and failing to pay wages, including overtime and commissions.

Brooks Kelly and Jason Harris filed the complaint Feb. 20 in the U.S. District Court for the District of Utah against Direct Mortgage and its CEO, James (Jim) Beech.

The lawsuit seeks more than $750,000 in damages, plus interest, attorneys’ fees and punitive damages. The suit came five days before LenderMac Holdco LLC agreed to acquire the Utah-based company.

Kelly, a Texas resident, was hired in June 2025 as director of retail sales and a loan officer. Harris, also of Texas, joined the company in May 2025 as a strategic advisor. Both say they were “personally solicited by Beech” between November 2024 and June 2025 away from prior employment and “to transition a producing team of loan officers to Direct.”

Tech platform

According to the complaint, Beech told the duo that Direct Mortgage’s technology would significantly reduce production costs and streamline compliance, and that the company had roughly $3.2 million in working capital.

The plaintiffs allege those representations were false and that, after they joined, the platform generated inaccurate loan documents and operational failures that posed compliance risks.

“Beech made specific representations about Direct’s proprietary technology platform and the operational infrastructure supporting it; however, after joining Direct, it became apparent to Plaintiffs that the technology platform did not function as represented,” the suit reads. “By Fall 2025, it was clear that Direct’s technology platform was incompatible with effective mortgage operations.”

Compensation and a loan to the company

The lawsuit claims the two men relied on those representations in accepting employment offers that included equity incentives and an option agreement tied to the potential purchase of the company.

After learning the company was short on working capital, despite being told the aformentioned $3.2 million was available, Kelly and Harris claim that they personally loaned Direct Mortgage $200,000 to stabilize operations, with the understanding that the funds would be repaid. The company never repaid the loan, the lawsuit alleges.

The complaint also accuses Direct Mortgage of violating the Fair Labor Standards Act and Texas labor law by failing to pay minimum wage and overtime compensation.

Kelly alleges he worked as many as 90 hours in a week and closed approximately $10 million in loans, but received no commissions or bonus compensation. Harris claims he worked up to 112 hours per week and was promised a bonus equal to 25% of the increase in operating profit during his tenure, but was never paid.

The lawsuit alleges the company failed to track hours and had no policies in place to pay overtime, resulting in wages that fell below minimum wage during their employment.

In addition to unpaid wages and the $200,000 loan repayment, the plaintiffs seek liquidated damages under federal law, civil penalties under Texas law and a jury trial.

The defendants had not filed a response to the complaint as of Tuesday. Neither the plaintiffs’ legal teams, Beech, Direct Mortgage or LenderMac responded to HousingWire’s requests for comment at the time of publication.