USA Capital investors blame courts

One man is living out of his van in California, not a bad life for a kid surfer — but probably not how he wanted to retire in his 70s.

Another had to go back to work at age 83. Others have moved in with their children. A Miami doctor lost $3 million. One woman committed suicide.

These are among countless stories from some 6,000 people who put money in USA Capital trust deeds with promises of double-digit returns, only to end up losing it all when the Las Vegas investment firm filed for bankruptcy in 2006.

Gary Larson, a retired business executive in Mesquite, invested most of his $650,000 retirement fund in USA Capital and is now trying to sell his home to cover living expenses for him and his wife.

He’s on a fervent mission to expose what he sees as “cronyism and corruption” in a court system that has failed to adequately protect the little guys.

“None of this had to happen if the courts would have been fair and done their due diligence,” Larson said. “Many of us are veterans of World War II and the Korean War. We owned businesses and are college-educated. I think we deserve more respect and consideration from the court system.”

Larson thinks the court made its first mistake by awarding USA Capital’s portfolio to Compass Partners, a private equity group from New York. Compass paid $67 million for the right to service the loans and for assets of certain funds.

The company stated it would operate a loan service business in Nevada but later withdrew its application for a license, closed a temporary office in Las Vegas and moved back to New York.

Silar Advisors notified the federal court in October that it foreclosed on the mortgage interests and servicing rights that Compass held. Silar Advisors also said it created an affiliate named Asset Resolution and gave responsibility for servicing the loans to Windemere Capital.

Larson called it a “camouflage” for Compass’ real intention, which was to take advantage of investors. That’s why he’s urging District Court Judge Robert Jones to reject a proposed $86 million settlement agreement in a hearing scheduled for Jan. 20.

Larson said investors overwhelmingly rejected the settlement, but he said the deal is being “crammed down our throats” by receiver Tom Grimmett and attorney Terry Coffing, whom Jones appointed to represent investors.

The receiver plans to submit a revised agreement to the judge that lenders have not been afforded the right to review, Morley Marston posted on, a blog site for the case.

“It appears that the receiver’s modus operandi for another cram-down is definitely his game plan,” Marston wrote.

USA Capital, owned by Joe Milanowski and Tom Hantges, was handling $962 million in assets when it collapsed in April 2006. That money belongs to investors, not the state or Compass, Larson contends.

“The courts have failed to realize this fact, or have ignored it, in their decisions thus far,” he said.

Darlene Hammond, a certified public accountant with a master’s of business administration degree in finance, said she was retired for 10 years in Las Vegas and now has to find a job, not only because of the money she lost to USA Capital, but because of the entire economy.

“What really sticks in my craw right now is the way we’ve been passed from one piranha representative to another,” she said. “This is called legal abuse syndrome. We know we have no power here.”

Hammond wants the judge to deny the settlement agreement, terminate Compass and get rid of the receiver. A committee of three to five direct lenders should be formed to give opinions on any decisions going forward, she said.

Investors tried to form limited liability companies to protect their interests. Their leader, Donna Cangelosi, was “vilified” by the court and can no longer communicate with investors, Larson said.

Cangelosi, whose investment group put $8 million into USA Capital, felt Compass had mishandled money, failed to communicate with investors and did not comply with its fiduciary duties.

“The judge has handcuffed us to these people while our assets sit there rotting,” Cangelosi told the Review-Journal from Reno. “He will not let us terminate them.”

Judge Jones ruled that Cangelosi had violated securities laws by soliciting investors to assign their assets to the LLCs.

“We followed due process of law under an attorney and in the eyes of the court,” Cangelosi said. “There’s no vigilante justice going on here. We filed a complaint and all the judge has done is find excuses and reasons not to allow us our day in court.

“This judge has one goal and one goal only and that is to protect the lower court, the bankruptcy court, which made horrendous errors,” she said. “They allowed the loan service to be sold to a shell company with intent to defraud the lenders.”

Cangelosi said no complaints were filed against her and that the judge can’t rule from the bench on securities violations without due process.

“She did not hold a gun to our heads,” Larson added. “The real villain in this is Compass Partners. They now have an opportunity to charge whatever they want in fees on each loan and have no accountability to the investors.”

Real estate values have dropped considerably and some of USA Capital’s deeds are worth less than half of their original investment value. The settlement offer does not account for that, Larson said. If it’s approved, along with administrative and legal expenses, there will be nothing left for investors, he said.

“Our ultimate goal is to get with a workout company that’s honest and hold onto the property until the economy rebounds,” Hammond said.

The Fertitta family, founder of Station Casinos in Las Vegas, had $17 million invested in USA Capital and got it all back when one of their attorneys was on the oversight committee, Larson said. The attorney then resigned from the committee.

Anthony Zerbo, a 76-year-old from San Jose, Calif., invested about $900,000 in USA Capital over six years after seeing an advertisement in a financial publication.

“When you’re rolling it over and it’s doing good … you think first deeds of trust, you can’t go wrong,” Zerbo said. “Toward the end, things weren’t going good and we tried to pull back our loans and it wasn’t there.”

Contact reporter Hubble Smith at or 702-383-0491.

Project billed as one of the world's largest marijuana dispensaries plans to open Nov. 1
Planet 13 co-CEO Larry Scheffler talks about what to expect from the new marijuana dispensary, Thursday, July 19, 2018. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
Oasis Biotech opens in Las Vegas
Brock Leach, chief operating officer of Oasis Biotech, discusses the new plant factory at its grand opening on July 18. (Bailey Schulz/Las Vegas Review-Journal)
UNLV Tech Park innovation building breaks ground
Construction on the first innovation building at the UNLV Tech Park is underway. (Bailey Schulz/Las Vegas Review-Journal)
Caesars Forum Meeting Center
Caesars broke ground Monday on its $375 million Caesars Forum Meeting Center (convention center) just east of the High Roller observation wheel. (Caesars Entertainment)
Technology reshapes the pawn shop industry
Devin Battersby attaches a black-colored device to the back of her iPhone and snaps several of the inside and outside of a Louis Vuitton wallet. The device, installed with artificial intelligence capabilities, analyzes the images using a patented microscopic technology. Within a few minutes, Battersby receives an answer on her app. The designer item is authentic.
Recreational marijuana has been legal in Nevada for one year
Exhale Nevada CEO Pete Findley talks about the one year anniversary of the legalization of recreational marijuana in Nevada. (K.M. Cannon/Las Vegas Review-Journal)
Young adults aren't saving for retirement
Financial advisors talk about saving trends among young adults. (Bailey Schulz/Las Vegas Review-Journal)
President Trump’s tariffs could raise costs for real estate developers, analysts say
President Donald Trump made his fortune in real estate, but by slapping tariffs on imports from close allies, developers in Las Vegas and other cities could get hit hard.
Las Vegas business and tariffs
Barry Yost, co-owner of Precision Tube Laser, LLC, places a metal pipe into the TruLaser Tube 5000 laser cutting machine on Wednesday, June 20, 2018, in Las Vegas. Bizuayehu Tesfaye/Las Vegas Review-Journal @bizutesfaye
Nevada Film Office Connects Businesses To Producers
The director of the Nevada Film Office discusses its revamped locations database and how it will affect local businesses. (Bailey Schulz/Las Vegas Review-Journal)
Opendoor isn't the typical house flipping company
Unlike most house flippers, the company aims to make money from transaction costs rather than from selling homes for more than their purchase price.
The Venetian gondoliers sing Italian songs
Gondolier Marciano sings a the classic Italian song "Volare" as he leads guests through the canals of The Venetian in Las Vegas. (K.M. Cannon/Las Vegas Review-Journal)
Building In Logandale
Texas homebuilder D.R. Horton bought 43 lots in rural Logandale. (Eli Segall/Las Vegas Review-Journal)
Indoor farming in Southern Nevada
Experts discuss Nevada's indoor farming industry. (Bailey Schulz/Las Vegas Review-Journal)
Former Fontainebleau could have become a Waldorf Astoria
Months after developer Steve Witkoff bought the Fontainebleau last summer, he unveiled plans to turn the mothballed hotel into a Marriott-managed resort called The Drew. But if Richard “Boz” Bosworth’s plans didn’t fall through, the north Las Vegas Strip tower could have become a Waldorf Astoria with several floors of timeshare units. (Eli Segall/Las Vegas Review-Journal)
LVCVA CEO Rossi Ralenkotter announces plans to retire
Rossi Ralenkotter, CEO of the LVCVA, on Tuesday confirmed a Las Vegas Review-Journal report that he is preparing to retire. Richard N. Velotta/ Las Vegas Review-Journal
Cousins Maine Lobster to open inside 2 Las Vegas Smith’s stores
Cousins Maine Lobster food truck company will open inside Las Vegas’ two newest Smith’s at Skye Canyon Park Drive and U.S. Highway 95, and at Warm Springs Road and Durango Drive. Cousins currently sells outside some Las Vegas Smith’s stores and at Fremont Street and Las Vegas Boulevard. (K.M. Cannon/Las Vegas Review-Journal)
Las Vegas home prices to continue to rise, expert says
Lawrence Yun, chief economist at the National Association of Realtors, gives homebuyers a pulse on the Las Vegas housing market. (Eli Segall/Las Vegas Review-Journal)
NV Energy announces clean energy investment
The company is planning to add six solar projects in Nevada, along with the state's first major battery energy storage capacity. Bailey Schulz/Las Vegas Review-Journal
3 Mario Batali restaurants on Las Vegas Strip to close
Days after new sexual misconduct allegations were made against celebrity chef Mario Batali, his company announced Friday that it will close its three Las Vegas restaurants July 27. Employees of Carnevino Italian Steakhouse, B&B Ristorante and Otto Enoteca e Pizzeria, all located in The Venetian and Palazzo resorts, were informed of the decision Friday morning. Bastianich is scheduled to visit the restaurants Friday to speak to employees about the next two months of operation as well as how the company plans to help them transition to new positions.
Nevada has its first cybersecurity apprenticeship program
The Learning Center education company in Las Vegas has launched the first apprenticeship program for cybersecurity in Nevada. It was approved by the State Apprenticeship Council on May 15. (K.M. Cannon/Las Vegas Review-Journal)
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.
News Headlines
Add Event
Home Front Page Footer Listing
You May Like

You May Like