Bankruptcy Judge Linda Riegle on Thursday directed a reputed associate of a mob boss not to spend money from the sale of the Royal Hotel a week ago.

It was the second time in a week that Riegle has taken action designed to prevent investors in USA Capital Diversified Trust Fund from losing assets to Salvatore Reale, who has reputed ties to former mob boss John Gotti.

Attorneys for USA Capital earlier this month filed involuntary bankruptcy petitions for the companies that own Hotel Zoso and the condos. Riegle ordered appointment of trustees for companies that control Hotel Zoso and a nearby condominium project in Palm Springs, Calif., in order to protect the interests of Diversified fund investors.

USA Capital solicited money from individual investors and used the money to make short-term, so-called trust deed loans secured by real estate. Its Diversified fund pooled investor money to make numerous loans, but other investors bought fractional interests in specific loans. USA Capital became insolvent and filed for bankruptcy protection in April.

At a hearing Thursday, the judge issued a temporary restraining order and an injunction ordering Reale and HMA Sales not to spend money from the sale of the Royal Hotel at 99 Convention Center Drive. HMA Sales, former owner of the hotel, is owned by USA Investment Partners, which is owned by Tom Hantges, Joe Milanowski and Allen Abolafia.

Russell Walker, a Salt Lake City attorney for Milanowski, could not be reached for comment Thursday. Reale was not represented by an attorney in the hearing.

The hearing stems from $14 million that USA Investment Partners took from the Diversified fund, according to court papers.

Since the bankruptcy filing in April, USA Capital interim manager Tom Allison persuaded Milanowski to sign a note on behalf of USA Investment Partners for $58 million for the benefit of investors. In that transaction, one of the assets provided by Milanowski was USA Investment Partners' interest in HMA, according to a lawsuit signed by attorney Lenard Schwartzer.

According to a court document, Allison did not know that Milanowski in May granted a lien on the hotel to the Reale, based on a $9.8 million that Hantges and Milanowski borrowed from Reale. The lawsuit seeks a judgment that the Reale note represents a fraudulent transfer of assets and for appointment of a receiver for the Royal or HMA.

USA Capital attorney Elaine Monson filed a statement saying she learned that HMA sold the Royal Hotel on Dec. 22.

Representatives of USA Capital did not believe the hotel could be sold because of a pending lawsuit against HMA by Great White Investments. Great White, however, accepted a $1 million payment to withdraw its notice of the pending lawsuit.

"By agreeing to pay Great White Investments what is essentially a fraudulent transfer of $1 million, Mr. Milanowski and HMA were able to facilitate payment of an even greater fraudulent transfer to Reale," Schwartzer said in the application for a restraining order.