Mortgage company failure prompts state study

Monday, April 20, 1998 | 9:05 a.m.

Legislative Commission members want to know whether Nevada law can better protect investors who sink money into risky mortgage investment companies.

"There is at least a perception that there was a breakdown and we would like to find some ways to prevent that in the future," said panel Chairman Richard Perkins, D-Henderson.

Under the commission's action Friday, Perkins will name six lawmakers to a panel to examine the Harley L. Harmon Mortgage Co. case and the state Financial Institutions Division's role in it.

The commission ordered the study at the urging of Assemblyman David Goldwater, D-Las Vegas, a financial adviser who says he has two clients who invested money with the now-defunct company. Goldwater stressed that he did not urge investors to put money into Harmon's company.

Goldwater said nearly 400 investors, many of them senior citizens, lost a total of more than $22 million when Harmon's company folded. The firm is in receivership.

"The failure of (the firm) highlighted weaknesses in our regulations," he said. "I have constituents who literally lost their life savings. (We need to) make sure this does not happen again."

To ensure the study panel can move quickly, the Legislative Commission granted it subpoena powers.

Goldwater, who's expected to head the committee, said he's not out to attack Harmon but to make sure the state is meeting its duty of protecting investors.

He said the committee will ask the Financial Institutions Division for proposed legislation to better protect investors.

The Harmon case still is under investigation by the division, which revoked his firm's license in December after uncovering misconduct in the way the company handled loans for four construction projects.

Many prominent Clark County residents were among investors scrambling to recover the principal owed to them by Harmon, Assembly speaker pro tem in 1977 and its majority leader in 1979.