A top executive at bankrupt subprime lender Mortgage Lenders Network USA Inc. is seeking to avoid arrest and criminal prosecution on charges that his company failed to pay up to $3 million in commissions to its sales force.

MLN President Mitchell L. Heffernan filed a motion in bankruptcy court this week seeking an injunction that would prevent the Connecticut Department of Labor from pursuing criminal charges against him, the Hartford Courant reported.

The Department of Labor has applied for an arrest warrant and plans to charge Heffernan with 61 counts of failing to pay commissions ranging from $5,000 to $300,000, which the state considers unpaid wages, the Courant said.

The motion filed on behalf of Heffernan argues that the company’s problems are being resolved in bankruptcy court, the Courant reported.

State Attorney General Richard Blumenthal maintains that while federal bankruptcy laws have the potential to stop civil proceedings, they do not apply to criminal charges. If Heffernan is charged, he could face $300,000 in fines, jail time or both, the Courant reported.

MLN closed down its wholesale lending division on Dec. 29 after losing access to financing, and has filed for Chapter 11 bankruptcy protection.

The Connecticut banking commissioner suspended MLN’s licenses on Jan. 30, saying the company failed to fund “in a timely fashion” 97 loans in Connecticut and 1,409 loans in other states.

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