The trust company that was accused of embezzling $1.4 million from a trust account is still in business.
P. Sterling Kerr, senior trust officer for Trust Company of the Pacific, denied that money was ever taken from a trust account. Kerr also said the state Financial Institutions Division ended its suspension of the trust company’s license last week.
“There is no suspension right now,” Kerr said on Monday. “We’re fully back in business.”
Steven Kondrup, the division’s acting commissioner, on Thursday signed the order ending the license suspension, pending several actions by the trust company.
Kondrup required the trust company to increase its capital to $300,000 and called for independent audits of the trust company. He also fined the Las Vegas-based trust company $10,000, noting that he could have fined the company twice that amount.
On Monday, Amanda Penn, a spokeswoman for the state agency, confirmed Kerr’s statement that he has been allowed to resume doing business at the trust company.
“The bank has notified the division that Kerr now has the required capital. Therefore, he can continue to do business. However, the fine is still outstanding and the file remains open. All other matters in the case remain confidential,” she said.
Trust companies serve as the agent for trust funds and estates and provide related services for clients.
Trust Company of the Pacific primarily serves as custodian for self-directed individual retirement accounts, Kerr said.
The trust company has 7,000 accounts with a total value of $250 million, he said.
Concerns about the Trust Company of the Pacific date back to April 26, when Oceanside Developments filed a lawsuit in Clark County District Court against the trust company and Kerr, its majority owner and senior trust officer. The lawsuit alleged that $1.4 million was embezzled from an Oceanside trust account, which Kerr denied.
While Oceanside was a client of the trust company, Kerr held a one-sixth interest in Oceanside.
The company was developing a 48-unit condominium project in Mazatlán, a Pacific coast city in Mexico, according to the lawsuit.
In an April 12 e-mail, Kerr advised his Oceanside partners that he was taking money out of the Oceanside Development account.
Kerr’s e-mail, a copy of which was attached to the lawsuit, argued that his partners were being unfair to him in financial dealings.
Kerr complained about a $1 million loan that the trust company made to Oceanside Developments.
The division on May 21 suspended the trust company license, citing “emergency circumstances which pose a risk to public welfare” and filed a complaint seeking revocation of the trust company’s license.
The division cited the lawsuit’s allegations “suggesting serious misconduct” and said the trust company violated the law by making a $1 million loan to Oceanside. In addition, the trust company had negative net worth of $1,750, rather than the required minimum equity totaling $300,000.
The lawsuit was dismissed based on information that Oceanside and the trust company reached an undisclosed agreement out of court.
Kondrup signed a second order on Thursday, continuing the license suspension. The new order found that the trust company borrowed against the minimum stockholder’s equity to buy out a partner in the trust company.
The commissioner directed the trust company to provide documentation to show that the loan had been repaid and that it now had at least $300,000 in minimum equity.
Kondrup also ordered the trust company to get an independent accounting firm to provide audited financial statements within 45 days and new audits by an independent accounting film yearly. The trust company must have trust accounts reviewed monthly by an independent certified public accountant.
It’s not clear whether the state has stopped investigating the trust company.