They also personally loaned the company $200,000. The lender never paid it back
A Utah mortgage lender faces a federal lawsuit alleging its proprietary technology failed — and two recruits were never paid a dime.
Brooks Kelly and Jason Harris, two Texas-based mortgage professionals, filed suit on February 20, 2026, against Direct Mortgage Corp. and CEO James Beech in U.S. District Court in Utah. They allege they were recruited away from prior jobs with promises of proprietary software that would revolutionize the industry, only to discover a platform that produced inaccurate documents, defective disclosures, and material operational failures — creating serious compliance and business risks.
According to the lawsuit, Beech personally courted Kelly and Harris between November 2024 and June 2025, persuading them to bring a producing team of loan officers to Direct. He described the company's technology as unlike anything else in the industry, one that would cut unit production costs to one-fifth of the industry average.
Harris signed on as Strategic Advisor in May 2025. Kelly joined as Director of Retail Sales and MLO the following month. They also entered into an Option to Purchase Agreement that would allow their entity, Proxima Holdings LLC, to acquire Direct's outstanding capital stock for $2.2 million — a deal whose value hinged on the technology Beech had championed.
But the technology, they say, never delivered. When the problems surfaced, Direct allegedly assured them the system could be salvaged and the company would not lose any more money. Trusting those assurances, Kelly and Harris personally loaned Direct $200,000 for working capital — despite earlier representations that the company had roughly $3.2 million in working capital.
That loan was never repaid.
By fall 2025, Direct acknowledged the technology had irreparable systemic limitations, told the pair to abandon the loan operating system, and advised them to leave the company altogether. Immediately after, the lawsuit alleges, the company moved to sell to a third party.
The compensation side is just as troubling. Kelly says he closed roughly $10 million in loans and received nothing — no commissions, no bonuses — despite an employment agreement providing 110 basis points on self-sourced loans. Harris, promised bonus compensation calculated as 25 percent of the delta in operating profits before depreciation and amortization, was also paid nothing. Both describe working extreme hours — Kelly roughly 90 hours in a single late-June 2025 week, Harris approximately 112 — with no overtime pay and no time tracking by the company.
The lawsuit raises eleven claims including fraudulent inducement, breach of contract, unjust enrichment, and violations of the Fair Labor Standards Act. The amount in controversy exceeds $750,000.
The case is in its early stages, and no determination on the merits has been made. It is filed as Kelly et al v. Direct Mortgage Corp. et al, Case No. 2:26-cv-00143, in the U.S. District Court for the District of Utah.
