Investors miffed at regulators

People who lost millions of dollars on investments brokered at OneCap Mortgage wonder whether state regulators are getting soft on hard-money lenders such as OneCap.

There’s no clear answer.

OneCap is among about 20 hard-money or private lenders in Nevada that solicit money from individual investors and use the money for loans secured by real estate. During the real estate boom, investors enjoyed double-digit interest rates on these loans but often complained about the way hard-money lenders managed the loans.

Two years ago, the Mortgage Lending Division and Financial Institutions Division fined OneCap for a long list of alleged violations, including origination of loans that were not secured by real estate. OneCap had no license to make such loans.

The two divisions later compromised with OneCap and lowered the amount of fines. The mortgage division fined OneCap $85,000 and the financial division fined it $35,000.

At the time, OneCap was managing about $400 million in real estate loans. Vince Hesser, who manages OneCap, estimates the total has dropped to about $200 million or $225 million. He counts about 1,000 investors in those loans.

Gil Bourdon, a retired semiconductor sales engineer in Henderson, is one investor in OneCap real estate loans.

“I think my greed got the best of me, even though my gut was telling me, ‘Get out, get out,’ ” he said. “We’re just ordinary people. We worked hard for our money, and we made a big mistake.”

Hesser attributed OneCap’s woes to the economy.

“We’re in the worst real estate economy since the Great Depression,” Hesser said. “It’s a market issue. It’s not that our company did anything different than any other company.”

Hesser disputes state allegations that he violated regulations.

The mortgage division gave OneCap a 5 rating in its last examination, the equivalent of an F grade and the lowest possible score. A 5 score signals that a hard-money lender “demonstrated unsatisfactory compliance with applicable laws and regulations and that immediate remedial action is required,” according to Nevada regulations.

The division declined to release a copy of the examination and didn’t disclose the OneCap score, which was obtained from another source.

Under the rules, the commissioner may take possession of the business and assets of the mortgage broker with a 5 rating. Waltuch, however, has not sought to put OneCap into receivership, which appears to be a break from past practices.

At Nevada regulators’ request, Harley Harmon Mortgage was turned over to a receiver in 1997.

A Clark County District Court judge later named a receiver for Interstate Mortgage Group at state officials’ request. The Securities and Exchange Commission won a federal court order to put Global Express Capital into receivership. USA Capital, which was holding $962 million in assets for 6,000 investors, beat state regulators to the punch by filing for bankruptcy court protection in April 2006.

“In my opinion, the (mortgage division) should have taken control of OneCap’s portfolio in 2007 and solicited suggestions from the lenders as to whom we thought would be the best receiver for us,” Bob Day, one of the most outspoken investors at OneCap, said by e-mail. “The investors should have been permitted to control their own investments.

“Putting a receiver in place now will not be beneficial for the investors.”

Some investors say that putting a busted hard-money lender into receivership or bankruptcy often has produced unsatisfactory results even when done early in the process.

In past receiverships and in the USA Capital bankruptcy, investors complained about the size of fees paid to lawyers and accountants. They objected to waiting for recoveries that are small fractions of the amount they invested.

The reasons for not putting OneCap into receivership are confidential, Joseph Waltuch, mortgage division commissioner, said in an e-mail.

“Each situation is reviewed on a case-by-case, individual basis,” the commissioner said.

Waltuch doesn’t believe that investors should be solely responsible for dealing with hard-money lenders through lawsuits for receiverships or involuntary bankruptcy petitions.

“(The division) is a regulatory agency, which is responsible for enforcing the laws and taking appropriate actions within the law to protect investors as much as possible,” Waltuch said. “However, investors must also be diligent and protect themselves as well, and the division’s actions do not negate the right of the investors to take independent action on their own behalf.”

Waltuch in July allowed OneCap to service outstanding loans but prohibited it from originating new loans. In November, Waltuch ordered OneCap to stop all licensable activity but let the company keep its license.

However, a group of people closely associated with OneCap has established Royal Union Holding Co. and three similarly named companies to run business trusts that manage foreclosed properties for OneCap investors. Other hard-money lenders also have established business trusts to manage foreclosed property.

Hesser said he doesn’t own the Royal Union companies and declined to say who does.

Heidi Williams, vice president of OneCap Mortgage, became president of two Royal Union entities. Michael Hesser, Vince Hesser’s father, is manager of one Royal Union company and a director of another.

“OneCap has indicated to all investors that their affiliate company, Royal Union, will be holding all the documents in OneCap’s portfolio,” Day said.

Some investors, including Day, refuse to join Royal Union, because they want to retain control over their mortgage loan investments.

Vince Hesser said Royal Union is not forcing investors to join the business trust.

“They are free to choose whoever they want to choose,” he said.

The mortgage division has no authority to regulate the Royal Union companies, Waltuch said.

Day said: “I, for one, do not understand how the (mortgage division) can permit an unaffiliated third party to take possession of all of the Lenders’ confidential private and financial information.

“I do not see any reason why OneCap (investors) should have to ask Royal Union for our loan information. It would be helpful if the (mortgage division) would obtain this information and give it to the investors, so that we can try to salvage what remains.”

Contact reporter John G. Edwards at or 702-383-0420.

Las Vegas union members voting to authorize the right to strike
Thousands of Las Vegas union members voting Tuesday morning to authorize the right to strike. A “yes” vote would give the union negotiating committee the power to call a strike anytime after June 1 at the resorts that fail to reach an agreement. (Todd Prince/Las Vegas Review-Journal)
Small businesses struggle to find qualified candidates
A 2018 survey found that over two-thirds of small businesses in Nevada find it somewhat to very difficult to recruit qualified candidates. Bailey Schulz/Las Vegas Review-Journal
Nevada secretary of state website offers little protection against fraudulent business filings
Property developer Andy Pham tells how control of his business was easily seized by another person using the secretary of state website.
Caesars may be going solo in its marijuana policy
Several Southern Nevada casino companies aren’t following Caesars Entertainment’s lead on marijuana testing.
How much is the Lucky Dragon worth?
Less than a year-and-a-half after it opened, the Lucky Dragon was in bankruptcy.
Gyms and discount stores take over empty retail spaces
Grocery stores used to draw people to shopping centers. But many large retail spaces have been vacant since 2008. Discount stores like goodwill and gyms like EOS Fitness are filling those empty spaces, and helping to draw shoppers back in. K.M. Cannon/Las Vegas Review-Journal
Funding source of Las Vegas stadium for the Raiders is sound, expert says
The stadium is funded in part by $750 million of room taxes, the biggest such tax subsidy ever for a professional sports stadium. Robert Lang, executive director of Brookings Mountain West and The Lincy Institute at UNLV, says that is a good use of public funds. (Richard Velotta/Las Vegas Review-Journal)
Las Vegas needs light rail, expert says
Robert Lang, executive director of Brookings Mountain West and the Lincy Institute said he is afraid of a "congestion mobility crisis." Las Vegas needs a light rail system, he said, to accommodate the city's growing number of attractions. (Richard Velotta/Las Vegas Review-Journal)
Three takeaways from Wynn Resorts' Earnings Call
Matt Maddox came out swinging in his first earnings conference call as Wynn Resorts chief executive officer, boasting of record Las Vegas quarterly revenues and applicants lining up for work.
Star Wars VR Comes to Las Vegas
Sneak peak at the new "Star Wars: Secrets of the Empire" VR experience at the Grand Canal Shoppes.
Elaine Wynn continues her fight to change Wynn Resorts board
Elaine Wynn, the largest shareholder of Wynn Resorts Ltd., is seeking to kick a friend of her ex-husband Steve Wynn off the company’s board of directors. (Todd Prince/Las Vegas Review-Journal)
Zillow is getting into house flipping in Las Vegas
Las Vegas Review-Journal real estate reporter Eli Segall says flipping houses has waned in popularity after the housing bubble burst.
Ellis Island Buys Mt. Charleston Lodge
Ellis Island, which operates a casino, brewery and hotel just off the Strip, purchased the Mt. Charleston Lodge in early April.
Casinos to be penalized for allowing drug-impaired customers to gamble
Nevada Gaming Commission Chairman Tony Alamo talks about an amendment making casinos subject to the same disciplinary standards of preventing people to gamble if impaired by drugs as they are for letting them play while intoxicated by alcohol.
Terrible Herbst to open large travel center in Southern Nevada
The 50,000-square-foot commercial travel center will include 96 fuel pumps and the third White Castle restaurant in Southern Nevada. Wade Tyler Millward reports.
Art Bell’s Top 10 Shows
A selection of radio host Art Bell’s most popular shows.
Hooters owner talks about room upgrades at his hotel-casino
George Ruff, founder and senior principal of Trinity Hotel Investors L.L.C., owner of Hooters Hotel and Casino in Las Vegas, talks about recent room upgrades at the hotel. K.M. Cannon/Las Vegas Review-Journal
Passengers Discuss Allegiant Air
Allegiant Air passengers voice their views on the airline at McCarran International Airport on April 16, 2018. (Bailey Schulz/Las Vegas Review-Journal)
Longtime Las Vegas attorney John Momot dies at age 74
Criminal defense attorney John Momot, who represented mob figures and even played himself in the movie “Casino,” has died.
Trump Slams Amazon for Not Paying Enough in Taxes
Trump Slams Amazon for Not Paying Enough in Taxes Trump tweeted his concerns about the company on Thursday. This isn't the first time Trump commented on the issues via Twitter. August 2017 December 2017 Amazon did hold back on paying state taxes in 1995, but the company has been routinely collecting state sales taxes since then. In 2016, the company's report from the Securities and Exchange Commission confirmed it paid $412 million in taxes.
David Copperfield in court after man injured during magic trick
The attorney for a British man who is suing illusionist David Copperfield said his client suffered serious injuries after being called on stage during Copperfield's show at MGM Grand.
eyecandylab CEO shows augmented reality during NAB
Robin Sho Moser, CEO and co-founder of eyecandylab gives an augmented reality demonstration at his booth during the National Association of Broadcaster Show at the Las Vegas Convention Center. K.M. Cannon/Las Vegas Review-Journal
Trends in access to capital for local black business owners
Denette Braud, owner of Braud’s Funnel Cake Cafe, talks about what owning her own business means to her.
Sir Richard Branson announces purchase of Hard Rock Hotel
Sir Richard Branson, founder of the Virgin Group, has acquired the Hard Rock Hotel with partners and plans to turn it into a Virgin-branded property by the end of 2019.
Calvary Christian Learning Academy, “There was no fair warning.”
Samantha O’Brien, whose three-year-old daughter attended the Calvary Christian Learning Academy daycare, found out Monday night when her daughter’s teacher called about the school closing.
Adobe unveils #HackTheBracket application for March Madness
Adobe unveiled their #HackTheBracket application at the Adobe Summit trade show at Sands Expo. People can use data from Adobe Analytics to make their bracket for March Madness. K.M. Cannon/Las Vegas Review-Journal
Adidas Signs Yankees' Star Aaron Judge
Adidas Signs New York Yankees Star Aaron Judge The slugger is set to don a new set of stripes this season after signing with the apparel company. Aaron Judge Terms of the deal were not disclosed. The deal includes branding on his batting gloves and wristbands. Judge, the AL's reigning Rookie of the Year, was previously under contract with Under Armour since 2014. Judge won the American League Rookie of the Year award last season after setting an MLB record for most homers in a rookie season (52).
Esports athletes are sponsored, too
Meet Red Bull-sponsored professional esports player Daryl S. Lewis, better known by his in-game name Snake Eyez. Nicole Raz Las Vegas Review-Journal.
Bettor Investments turned into a bad bet
Bettor Investments formerly operated a Nevada-licensed entity betting operation. The company promised “conservative growth, profits and stability for our investors.” Matt Stuart, who ran the fund, shut it down in late 2016 and never made good on an agreement with shareholders.
Starbucks Will Give You $10 Million for a Better Cup Design
Starbucks Will Give You $10 Million for a Better Cup Design Get your thinking caps on because the company is looking for a new cup that's easier to recycle. The $10 million grant challenge sees Starbucks partnering with investor group Closed Loop Partners for the project. According to CNN Money, Aside from the new cup design challenge, Starbucks stated it will test a cup with an inner lining made from plant fibers to prevent hot liquid from leaking. Will you join the challenge for #Bettercups?
News Headlines
Home Front Page Footer Listing
You May Like

You May Like