Hearing that the daughter of the former chairman of Henderson-based Southwest Exchange continued to spend potential assets after the company was put in a receivership, a judge Tuesday put related business entities in receivership and froze their assets.
Clark County District Judge Elizabeth Gonzalez declined to take immediate action to freeze the assets of Donald McGhan, the former chairman of Southwest Exchange; his daughter, Nikki Pomeroy; his son, Jim McGhan; or his wife, Shirley McGhan. Gonzalez may freeze the assets of those individuals after a later hearing.
She also delayed action on a request from plaintiff’s attorney Brad Johnston to find that Donald McGhan and Pomeroy already have testified through an affidavit and can no longer claim the Fifth Amendment as a defense against self-incrimination.
Southwest Exchange, an accommodator or exchange facilitator, enabled real estate investors to delay income taxes from the sale of properties. Under a section of the Internal Revenue Code, investors are allowed to defer taxes on their gains by directing the buyer to send money directly to an exchange company. The exchange company is later expected to release the sale proceeds so the investor can use the money to buy another property.
Southwest Exchange closed in late January with an estimated $95 million in investor money missing. About 150 investors are believed to be affected, but receiver Larry Bertsch has yet to make any public report on Southwest Exchange.
At a hearing Tuesday, attorney Brandon Roos complained that Pomeroy continued to spend assets that belonged to investors who lost money when Southwest Exchange closed.
Southwest Exchange was put in receivership in early February, but documents indicate that Pomeroy continued to spend money from a related company, NexGen, as late as March.
Pomeroy used NexGen money to pay herself a $30,000 salary and used other money from the account to pay home association fees and property taxes on some of her houses. She owns four houses, ranging from 4,000-square foot to 8,000-square-foot each, in luxury neighborhoods such as Spanish Trail and Canyon Gate Country Club. Other money was spent for day-school for children, a swimming pool and landscaping and, in one day, $25,000 in electronic equipment.
The judge put a long list of companies into receivership and froze their assets based on arguments that Southwest Exchange investor money was diverted to those companies. The list included International Integrated Industries, Blackstone Limited and Sirius Capital.
Johnston said that Donald McGhan and Pomeroy signed affidavits saying they were the only ones who had information about the three companies. Johnston contended the statement represented a waiver of the two civil defendants’ right to plead the Fifth Amendment against self-incrimination.
Defense attorney Mark Dzarnoski rejected Johnston’s argument.
Gonzalez said she would consider the issue later and told Johnston to also brief her on the consequences of an earlier affidavit that Pomeroy signed.
Anthony Zmaila, an attorney for the receiver, said his client was not ready to release an initial report on his findings at Southwest Exchange.
“The information that we have is at best preliminary, because we do not have all the documents,” Zmaila said.
Attorneys discussed efforts to keep information secret in the case and directed attorneys to put any documents they claim to be confidential in red folders, which will be kept confidential unless the judge rules otherwise.
Gonzalez said the only information that needs to be kept confidential is personal identification information, such as Social Security numbers, for clients of Southwest Exchange.