Interstate threatens suit against Champion

Phil Levine

Tuesday, Nov. 23, 1999 | 11:27 a.m.

Investors in Interstate Mortgage Group of Las Vegas, which has been seized by the state, were sent a letter from company President David Ferradino confirming the release of unsecured property and threatening a lawsuit against Champion Homes, the developer of that property.

The state Financial Institutions Division took possession of Interstate this month, citing the "loss of collateral securing loans in the amount of $5.7 million." Following the move, certified public accountant George C. Swarts was named IMG's conservator.

In a Nov. 8 letter to investors, Ferradino refers to "reconveyed loans on Champion Village #27." Ferradino tells investors "this is to inform you that I have reconveyed your security on the above loan without your permission and without repaying back your investment. I did it on the promise that Champion Homes would re-secure your investment on a new project called Iron Mountain Ranch. However, this was not done."

Ferradino goes on to outline three plans for repaying investors.

Lyndon Evans, deputy commissioner of the Financial Institutions Division, said the "collateral loss" arose when IMG released approximately seven property liens to Las Vegas-based developer Champion Homes without receiving compensation for the loans.

Evans said IMG is less than halfway through a state-assigned 60-day period to secure investors' funds. He said the company may resume business as usual if it succeeds in re-securing funds, but failure could result in the state revoking IMG's mortgage licence.

In his letter to investors, Ferradino also states "that Champion Homes still owes you and is responsible for repayment of your principal amount. At the appropriate time, we will file legal action against Champion Homes. Regardless of this outcome, Interstate Mortgage is taking 100 percent responsibility in repayment of your principal investment."

Ferradino could not be reached for comment.

In a statement released today, Champion Homes president Terry Manley said "the issues raised are those which exist between Interstate Mortgage and its investors. We do not believe it would be appropriate to comment on those matters given the threat of litigation raised by Mr. Ferradino in his recent letter sent to those investors."

In an earlier statement, Manley stated that "Champion Homes disagrees that we ever received property from Interstate Mortgage without consideration." However, Manley confirmed that Champion "has been a borrower at Interstate Mortgage for more than five years."

Champion's master-planned Las Vegas developments include the Clearwater Canyon project and Hillside Champion Village near Lake Mead Drive and U.S. 95 in Henderson.

IMG has been licenced to do business in Las Vegas since 1984. Evans said he was unaware of any earlier problems involving the company.

Evans said the process of securing investors' collateral is "still progressing, and the conservator is following through with the process." He declined to comment on the content of Ferradino's letter, saying only he'd "let the letter speak for itself."