By BENJAMIN SPILLMAN
U.S. Senate candidate Danny Tarkanian is embroiled in a lawsuit to block foreclosure on family-owned property he once viewed as a retirement investment.
Tarkanian, a Republican seeking to challenge Sen. Harry Reid, D-Nev., is among plaintiffs who filed suit Jan. 8 in Clark County District Court against La Jolla Bank and Action Foreclosure Services of California.
The lawsuit alleges the bank worked in concert with real estate investor Robert A. Dyson Jr., who it said defaulted on a $12.5 million loan made through Vegas Diamond Properties, a company owned jointly by Tarkanian and about a dozen other family members.
"He defaulted within one month, took the money and then disappeared," Tarkanian said of Dyson.
A La Jolla Bank spokeswoman declined to comment on the lawsuit. Dyson was unavailable for comment. The lawsuit states that he filed for bankruptcy protection Oct. 31 and therefore cannot be sued.
Court documents state Dyson approached Tarkanian in early 2007 through a mutual associate, Doug Johnson of Johnson Investments, and another plaintiff in the case.
Dyson wanted a loan from Vegas Diamond and offered as collateral a development in progress near Anza in Riverside County, Calif.
He arranged for Tarkanian to get a loan from La Jolla Bank for $14.5 million which would then be loaned to Dyson at a higher rate of interest after about $2 million was used to pay another note on the Vegas Diamond property, Tarkanian said.
La Jolla approved the loan but neither the bank nor Dyson told Tarkanian nor Johnson that the Anza property had already been used as collateral for other loans through La Jolla, the lawsuit states.
"Mr. Dyson's role in this case is one of concealment and fraud and his actions have directly resulted in the Plaintiffs being on the brink of foreclosure," the lawsuit states.
Court documents state the property, valued at $15 million, was securing loans through La Jolla worth $32.5 million.
After Dyson couldn't make good on his obligations, La Jolla sought to foreclose on the Vegas Diamond Property, about 9 acres near the M Resort, Tarkanian said.
The lawsuit seeks to block the foreclosure on the grounds La Jolla knew Dyson was stretched too thin but made the loans anyway without telling the other parties involved.
"Because of the close connection between Mr. Dyson and La Jolla Bank, La Jolla Bank was well aware of the perilous web created by Mr. Dyson in which it aided Mr. Dyson," the lawsuit states.
Tarkanian said the lawsuit won't take away from his Senate campaign.
He is one of at least nine Republicans campaigning and, along with former Nevada GOP Chairwoman Sue Lowden, is at the top of opinion polls.
But he said it could hurt his and his family members' retirement prospects.
"This was some savings I had, my family had that was going to be really nice in a retirement stage," he said. "If we lose it we end up losing it. That is part of our risk when we invest."
Contact reporter Benjamin Spillman at email@example.com or 702-477-3861.