Wednesday, February 12, 2003
Copyright © Las Vegas Review-Journal

Jury begins deliberations in ex-mortgage broker's fraud trial

A four-man, eight-woman jury is scheduled to resume deliberations today in the mail fraud trial of former mortgage broker Harley Harmon.

U.S. District Judge Philip Pro directed jurors to start deliberations at noon Tuesday after they heard a prosecutor and defense attorney debate the merits of a 35-count indictment. The jury deliberated for about five hours Tuesday before recessing.

Earlier Tuesday, attorneys gave jurors conflicting interpretations of nine days of testimony from about 35 witnesses, including Harmon.

Harmon is a former Nevada Assembly majority leader and member of a family that traces its roots in Las Vegas back to 1905.

The state shut down Harley Harmon Mortgage in 1997 when it had $22 million in mortgages. Mortgage brokers raise money from individuals to lend to developers and home builders at double-digit interest rates.

While some investors at Harmon Mortgage recovered their money through foreclosures, others say they lost everything. Their individual losses ranged from as little as a few thousand dollars to as much as $1 million.

The federal government accused Harmon of defrauding investors, rather than just making bad mortgage loans.

In some cases, Harmon promised first mortgage loans, which would be first to recover funds in the event of foreclosure, according to the government. However, the prosecution said Harmon instead put many investors in riskier mortgages that were subordinated to first mortgage loans.

Harmon also was accused of promising to put investors' money in mortgage loans for specific projects, such as a Lake Mead storage center. Then, without investor approval, Harmon switched their funds to other projects which were failing, according to the indictment.

An FBI agent presented a table that showed that more than $900,000 was lost as the net result of diversions and outflows into residential and commercial real estate projects. Assistant U.S. Attorney Dan Schiess told jurors that Harmon used money from new investors to pay investors in failing real estate projects, rather than devoting the funds from new investors in proposed projects.

"Mr. Harmon did not have the right to find new investors, to make victims of new investors to try and help old investors," Schiess argued.

Frank Cremen, Harmon's defense attorney, said the federal government had a flimsy case. Cremen noted that police and state officials investigated Harmon but didn't accuse him of crimes.