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$17 million judgment ordered against candidate Danny Tarkanian

A $17 million judgment against congressional candidate Danny Tarkanian and his family in a California real estate deal gone bad provided fresh fodder Wednesday for his GOP opponents in the highly competitive June 12 primary race for Nevada’s new House seat.

Tarkanian said he would appeal the judgment, which was signed May 21 by U.S. District Judge William Hayes in the Southern District of California court in San Diego. But Tarkanian appeared stunned by the outcome of the long-running case in which he maintains his family was the victim of loan fraud.

“Our attorney felt confident we would prevail,” he said in an interview before speaking with his lawyer. “I know one thing: We’re going to appeal the judgment.”

Tarkanian learned about the judgment on the same day one of his eight Republican primary foes began airing a TV commercial that attacks his character and his losing election record.

The 30-second ad from Dan Schwartz, an international businessman and newcomer to Nevada, mentions the real estate case hanging over Tarkanian, past property tax issues and problems with Tarkanian’s campaign finance report filed with the Federal Election Commission.

“You see, Danny Tarkanian never wins because Danny Tarkanian cannot be trusted,” the ad says.

Tarkanian said he expected negative attacks, which have hobbled him in previous campaigns, including the GOP U.S. Senate primary in 2010 in which he came in third .

“They always come with the hit pieces,” Tarkanian said.

With early voting under way, Tarkanian remains the Republican to beat thanks to his high name recognition and base of support from his three previous campaigns. But his opponents’ attacks painting him as a perennial loser and a poor businessman may be taking a toll.

Internal polling in the race shows Tarkanian still leading the field, but his support from likely primary voters has dropped in recent weeks, from the 60 percent range into the 30s, as the campaign has become more competitive, according to two GOP insiders familiar with the surveys.

Schwartz and state Sen. Barbara Cegavske are running neck and neck for second place, but neither has cracked 20 percent support, according to the internal polling in the volatile race.

Up to 15 percent of GOP primary voters remain undecided, according to the polling. Because the race is so splintered, the victor could win with about a quarter of the vote.

Tarkanian and Schwartz are the only candidates airing TV ads widely across the district. It covers the lower half of Nevada, including all of five rural counties and parts of Lyon County and urban North Las Vegas in Clark County. Cegavske’s campaign has focused a ground game on reaching 10,000 supporters, which probably would be more than enough to win in a low-turnout GOP primary.

Ken Wegner, who has been a GOP congressional nominee three times but lost to U.S. Rep. Shelley Berkley, D-Nev., is a Gulf War veteran with a solid base of military support.

Political newcomer Kiran Hill, a former Marine who has worked for the State Department in Iraq, seeks to lure voters by appealing to supporters of Rep. Ron Paul, R-Texas, through a TV ad in Pahrump.

The GOP primary winner June 12 will face outgoing Nevada Senate Majority Leader Steven Horsford, the only Democrat running, in the Nov. 6 general election.

For the past couple of years, the Tarkanians have been losing the legal battle to save a 9-acre parcel of land near the M Resort on Las Vegas Boulevard .

In 2010, the Tarkanians sued La Jolla Bank to block it from foreclosing on the property, used as collateral for a $14.6 million loan in 2007 as part of the soured California real estate deal.

The bank later failed and was taken over by the Federal Deposit Insurance Corp., apparently leaving the Tarkanians with little legal recourse.

Tarkanian’s attorney, Gus Flangas, said the FDIC foreclosed on the family property in 2011, placing its value at
$3 million. The Tarkanians could be on the hook to make up the difference of the $17 million judgment if they don’t win an appeal to the 9th Circuit or if they don’t settle with the FDIC.

Another option is for the Tarkanians’ Vegas Diamond Properties LLC to declare bankruptcy, although Flangas said that “the family’s trying to do everything they can to keep from having to do that.”

“It was bad enough to lose the property,” which was meant to be a retirement nest egg, Flangas said. “It would be even worse for them to come after the family for the money.”

Vegas Diamond Properties is owned jointly by Tarkanian and other members of his extended family, including his mother, Las Vegas City Councilwoman Lois Tarkanian, and his father, Jerry Tarkanian, the former famed University of Nevada, Las Vegas basketball coach.

The Tarkanians contend they were tricked into loaning a California-based developer money for a project in Anza, Calif., that had many undisclosed problems.

The Tarkanians’ lawsuit alleged that La Jolla Bank worked with real estate investor Robert A. Dyson Jr. to defraud the family by approving the loan deal despite the developer’s growing financial problems and opposition to the Anza project from local Native Americans.

Court documents said the Anza property, valued at
$15 million, was securing loans through La Jolla worth
$32.5 million, and Dyson couldn’t make good on his obligations.

Dyson later filed for bankruptcy protection, leaving the Tarkanians unable to sue him.

Once the FDIC got involved, the courts began siding with the federal receivers.

“Anything the bank did wrong kind of goes out the door,” Flangas said.

On May 4, Judge Hayes issued a summary judgment on the FDIC’s behalf against the Tarkanians.

The financial judgment came a couple of weeks later against Danny Tarkanian, his wife, Amy, his parents and other family members for $16,995,005.17, including the loan principal, interest and fees.

“The principals involved not only lost their properties, but also are now in danger of losing their entire net worth,” Flangas wrote Wednesday in a document summing up the case.

Reporter Jeff German contributed to this story.

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