Del Mar Mortgage sues over failed investment

Friday, April 30, 1999 | 11:17 a.m.

The case that triggered a controversial confrontation between Del Mar Mortgage of Las Vegas and the state has landed in court.

Three companies and a trust fund that made a loan to a group of developers have filed suit in District Court, claiming they are out more than $1.1 million.

Del Mar Holdings Inc., Del Mar Mortgage Inc., Shustek Investments Inc. and the Michael V. Shustek Trust filed the suit on Wednesday against nine companies and an individual. Named in the suit were Emerald Homes Inc., L.S.P. Inc., Nevada Star Development Inc., Sunday Estates Inc., Alexander Development Co., Friday Estates Inc., Jariv Construction Corp., Mirage Enterprises Inc., VA & AR Corp. and James Jariv.

The suit says Del Mar and Shustek received 18 promissory notes in October 1996 secured by deeds of trust totaling $1.63 million on a development deal. Payments were due in November 1997.

Del Mar's attorney said the deeds are for individual lots in the Emerald Homes subdivision at Ann Road and Jones Boulevard.

Del Mar moved to foreclose on some of the deeds in May 1998 and acquired the property through public auction for $180,000 last January. Some of the land was sold to a third party for $720,000. Other lots have yet to be sold, attorney Craig Burr said.

Because the defendants' total indebtedness had risen to $1.9 million at the time of the sale, the suit says they still owe $1.18 million.

The suit charges the defendants with unjust enrichment and seeks damages in excess of $10,000.

Representatives of the nine defendant companies and Jariv were unavailable for comment this morning.

Burr said the loan that is the subject of the suit was what triggered allegations of misconduct by the state against Shustek and Del Mar. Shustek shielded investors from losses with personal funds, but the state said investors should have been made aware of the details of the failed loan.