Division won’t release information about lender’s report

The financial statement CM Capital Services was required to file would have said whether the hard-money lender was solvent.

CM Capital Services had no immediate comment.

“This is an ongoing matter. So we cannot provide any further comment at this time,” acting Mortgage Lending Commissioner Nancy Corbin said in an e-mail.

Dean Altschuler, a certified public accountant and investor with CM Capital, criticized the division’s refusal to comment.

“It’s more of the same thing we have been hearing for the last two years,” Altschuler said. “It’s more stonewalling.”

Altschuler said the state should have revoked CM Capital’s license already.

Like other hard-money lenders, CM Capital solicits money from investors and uses the money to make short-term loans to developers and others who have real estate for collateral. The hard-money lending business has all but dried up over the last few years as real estate prices crashed and most development ceased in Southern Nevada. Most properties that secured hard-money loans have been foreclosed.

In response to an e-mail request in mid-February, Corbin on Monday refused to provide a copy of the examination of CM Capital in 2009.

“The examination of CM Capital Services LLC is currently active with the division and cannot be released without impeding or otherwise interfering with that examination,” Corbin wrote.

An audited financial statement obtained by the Las Vegas Review-Journal, however, reported that CM Capital Services had negative net worth or deficit of $4 million and $21 million in assets as of Dec. 31, 2009. The company’s equity was $1.1 million a year earlier, according to the audit.

CM Capital Services recorded a net loss of $941,000 for 2009 and lost $596,000 in the prior year.

The 2009 examination was the basis for an agreement between CM Capital and the division that was completed in February, shortly before former Commissioner Joseph Waltuch’s last day at the division.

CM Capital paid a $200,000 fine and $15,000 in legal and investigative fees under the agreement, which ordered a variety of measures but didn’t include specific allegations of regulatory violations.

The settlement required that CM Capital make no loans that aren’t fully funded and bans it from removing money from construction control accounts without the borrowers’ written consent.

The agreement also prohibits it from creating advertisements that contain inaccurate or misleading information and directs CM Capital to give investors monthly reports on loan transactions.

Contact reporter John G. Edwards at jedwards
@reviewjournal.com or 702-383-0420.