Tarkanian seeks court help in fight against $17 million judgment

WASHINGTON - Congressional candidate Danny Tarkanian told a federal judge this week his family is in a financially perilous position as it tries to fight off a $17 million judgment from a California land deal that went bad.

In a court filing, attorneys for the businessman and others in his prominent Las Vegas family said the Tarkanians are incapable of obtaining a bond that would set aside the award while they pursue an appeal.

"To obtain one would undermine their entire financial viability and would most likely lead to financial insolvency," family attorneys said Monday in court documents that requested a waiver of the bond requirement.

Tarkanian, a Republican, is trying to manage the legal and financial problem while he is running for the U.S. House to represent the newly formed 4th Congressional District, which consists of the northern portion of Clark County and all or part of six rural counties.

The case already has claimed a nine-acre piece of land in Henderson via foreclosure that was a nest egg for his parents, Las Vegas City Councilwoman Lois Tarkanian and Jerry Tarkanian, the famed former University of Nevada, Las Vegas basketball coach. Both are defendants in the matter.

Danny Tarkanian maintains the case, being heard in U.S. District Court in San Diego, is not a distraction in his race against Steven Horsford, the departing Democratic leader of the state Senate. But opponents have cited the case to question his character and his business smarts.

"This won't be an issue that will be settled between now and November 6. For that matter it may not be settled for a year or two," Tarkanian spokesman Ron Futrell said.

Tarkanian said last week he is hopeful his family will prevail before the 9th U.S. Circuit Court of Appeals. The $17 million judgment stems from a loan that a family company, Vegas Diamond Properties LLC, guaranteed to a California developer for a project in Anza, Calif.

The Tarkanians contend they were victims of loan fraud. The project fell through, the developer filed for bankruptcy, and La Jolla Bank, which made the loan, was taken over by the Federal Deposit Insurance Corp., which is seeking payment on the failed loan plus interest.

Although U.S. District Judge William Hayes has discretion to set a bond amount or waive it, generally defendant appeals bonds are set for 150 percent of a judgment, according to N. Alex Hanley, director of marketing at Jurisco, a Florida-based surety bond service.

If that is the case, the Tarkanians could be looking at providing as much as
$25 million collateral for a bond, Hanley said.

To set aside a judgment, "I would seriously doubt the court would ever waive the requirement of a bond short of some other type of security they could arrange," Hanley said.

"We deal with a lot of those land deals like that, particularly in California," Hanley said of the Tarkanian case. "Happens all the time. People get in over their heads. That just kind of seems like the way it goes."

In court papers, Tarkanian attorney Gus Flangas argued the FDIC would not be harmed by waiting for the appeals process to play out.

He noted the agency already has foreclosed on Tarkanian property in Henderson, whose value the FDIC set at $3 million.

"Should the FDIC be allowed to execute on its improper judgment the defendants will endure wrongful and significant harm," Flangas said. "They will not only be deprived of their assets but also possibly forced into bankruptcy."

"A stay on this matter is appropriate because the defendants are likely to succeed on the merits; the FDIC would not be substantially injured; and the public interest favors such a stay," Flangas wrote.

Contact Stephens Washington Bureau Chief Steve Tetreault at stetreault@stephensmedia.com or
202-783-1760. Follow him on Twitter @STetreaultDC.