State steps up its campaign against Interstate Mortgage

Phil Levine

Wednesday, Dec. 29, 1999 | 11:12 a.m.

The Nevada Financial Institutions Division and the Attorney General's office are requesting a court order the liquidation of Las Vegas-based Interstate Mortgage Group Inc.

In a lawsuit filed Tuesday in District Court, Division Commissioner Scott Walshaw alleges that IMG president and owner David Ferradino "has breached his fiduciary obligations of good faith ... and has placed his investors at risk of losses that may total millions of dollars."

In the same court filing, state officials also seek to revoke IMG's mortgage licence.

The move comes only weeks after state regulators took possession of the company, citing "loss of collateral securing loans in the amount of $5.7 million." Since that time, George C. Swarts has served as state-appointed conservator of the company.

In Tuesday's court filing, state regulators allege Ferradino did not inform investors that he had a "substantial interest in many of the borrowers in the mortgage loans in which their money was invested."

The suit alleges Ferradino created "a revocable trust -- entitled Jericho Trust -- wherein he acted as trustee and beneficiary."

The suit further alleges that Jericho Trust and Champion Homes owner Terry Manley "entered into numerous agreements wherein Ferradino personally, through Jericho Trust, became a substantial owner ... of companies formed to develop land or construct single-family residences for profit. In most cases, Jericho Trust made no capital contribution for its ownership interest in the developer."

It's alleged that Ferradino solicited investors with IMG and then made "numerous mortgage loans to Manley, or entities controlled by Manley."

The suit says that, as of last examination, the company had a total of approximately $46 million of outstanding loans to such entities.

Ferradino could not be reached for comment. In a statement, Manley said he's cooperating with state officials, and that IMG "participated in loans to (Manley-owned) Champion Homes through Jericho Trust, (who had) indicated to us they had properly disclosed this fact to their investors."