A Boise mortgage company is in trouble with the state after hundreds of its customers' files were found unprotected outside a recycling center last month.

The Idaho Department of Finance said Direct Mortgage, a division of DMI Funding Inc., had violated state and federal laws on handling documents containing personal and financial information. The state ordered the company to notify each person whose information may have been breached and to properly destroy the records.

Oct. 25, a concerned citizen called the police after discovering, outside Western Recycling Center on Cole Road, two pallets stacked with boxes filled with mortgage and other files containing Social Security numbers, tax records, bank account numbers, address and credit histories of at least 100 people.

Department of Finance investigators determined a private citizen had bought the records at an auction after Direct Mortgage, owned by Karl Aguilera, failed to pay the monthly storage unit rental fees, despite several written and verbal notices from the storage company.

The person who purchased the storage unit's contents - two large bins filled with loose paper and 48 boxes of documents - was hoping to sell the paper for recycling purposes and took some of the loose documents to Western Recycling. An employee examined the documents, identified them as confidential loan documents and said the documents must be shredded.

Later that day, after the center had closed, the person returned and left the 48 boxes outside the recycling center. Investigators estimate the documents sat unprotected for about three or four hours before police arrived and secured them.

"Identity thieves could have wreaked havoc with this information," said Gavin Gee, Idaho Department of Finance director. "While we are not aware of actual misuse of individuals' personal finance information in this instance, the potential for damage from identity theft was great."

Ironically, also found among the abandoned documents were copies of Direct Mortgage's privacy policy, which states "We maintain physical, electronic, and procedural safeguards that comply with federal standards to guard your nonpublic personal information."

Cynthia Sewell: 377-6428