Assembly panel OKs Harmon measure

Thursday, April 1, 1999 | 10:29 a.m.

CARSON CITY -- A bill to stop a repeat of the Harley Harmon investment scam in Las Vegas was approved by the Assembly Commerce and Labor Committee Wednesday after failing last week to win passage.

But an association of mortgage brokers that opposes the bill said the fight isn't over. It will carry the battle to the Senate when the bill arrives there, a spokesman said.

Assembly Bill 72 requires disclosure statements on deeds of trust and notes to be filed with the office of Secretary of State Dean Heller before any transaction.

That would provide potential investors a way to check out the background of the individuals offering investments to see if they were involved in failed ventures in the past, said Heller, who proposed the bill.

He cited the Harmon case in which investors reportedly lost millions of dollars. And he referred to recent case of Del Mar Mortgage Inc. in Las Vegas, which was temporarily taken over by the state Division of Financial Institutions but then returned to its owners.

"This industry doesn't want to be regulated," Heller said after the committee meeting. There are similar laws in 49 other states, he noted.

"Why will all the businesses dry up in Nevada when they don't dry up in Florida and New Mexico and other states?" he asked.

But Marty Levasseur, representing the Nevada Association of Mortgage Brokers, argued the bill would require extensive disclosure statements and a prospectus be submitted. That's just more government red tape, he said.

There are better ways to regulate the industry, said Levasseur of Reno, such as overseeing advertising and possibly registering those who raise money from investors.

"We're not in favor of anybody ruthlessly pursuing the public for their last dime," Levasseur said. "But this removes easily accessible capital and credit from the market."

Last Friday, the committee voted 6-4 to approve the bill. A majority of eight was needed on the 14-member committee. In a voice vote Wednesday, there were no dissenters.

But Assembly Minority Leader Lynn Hettrick, R-Gardnerville, and Assemblywoman Merle Berman, R-Las Vegas, who voted against AB72 last week, abstained Wednesday, saying they had conflicts of interest.

Heller told the committee a person may read an advertisement in the newspaper guaranteeing a 12 to 15 percent return on money, but no background is offered on the individuals involved or their past track record.

The Harmon and the Del Mar cases are "just the tip of the iceberg" of the problems that exist in the mortgage securities industry, he said.

All the bill will do, Heller said, is require a certified public accountant to go into the business and produce a report, giving the background information on the firm and any past failures.