Las Vegas developer loses bid to have lien released

Grace Leong

Tuesday, Dec. 5, 2000 | 10:34 a.m.

Developer Howard Bulloch, who accused real estate financier Michael Shustek of interfering with his plans to sell property on the south end of Las Vegas Boulevard, lost a legal bid Monday to force Shustek to release a lien on the land.

Bulloch said he is selling the land at Las Vegas Blvd. and Blue Diamond Road in order to buy a parcel adjacent to land near McCarran International Airport and the Strip. Acquiring that parcel would give Bulloch access to the Strip and allow him to develop a resort, Bulloch said in a lawsuit against Shustek.

But Shustek holds an $8.4 million lien on the Blue Diamond property, which was used as collateral for a $13 million loan Bulloch received from Del Mar Mortgage in 1998 to acquire the property. The $8.4 million balance of that loan is due in February 2001. Bulloch said a $34.5 million loan he received from Shustek to buy the 10-parcel property near the airport was repaid in August 2000.

Keith Rooker, Bulloch's attorney, who said the Blue Diamond property is scheduled to be sold Wednesday, filed a lawsuit on Nov. 22 in U.S. District Court requesting that the sales proceeds be held by the court instead of being paid to the defendants directly.

Bulloch, the owner of Desert Land LLC and Casa Malaga Motel Inc., sued Shustek, who is a principal in three companies, Vestin Mortgage Inc., formerly Del Mar, Vestin Group Inc. and Shustek Investments Inc. Also sued was a California mortgage broker, Owens Financial Group Inc.

Bulloch alleged the Shustek companies repeatedly blocked Bulloch's attempts to make timely repayments of the loans in order to trigger penalty fees and foreclosures on the properties.

Bulloch said he feared the sale proceeds will "vanish" as he claimed Shustek is diverting funds from Del Mar Mortgage and Vestin Mortgage and removing his assets from the United States to "make himself judgement proof."

But U.S. District Judge Philip Pro denied Bulloch's request for an order to have the $8.4 million payment impounded by the court.

Steve Byrne, Vestin Mortgage's president, said: "Bulloch wants the court to hold the $8.4 million in case he wins a judgement. But that's not our money, it's our investors' money. It's not fair that he wants the court to hold the investors' money in escrow so he can collect on it if he wins a judgement."

Steve Morris, Shustek's attorney, also disputed as "hearsay" Bulloch's allegations that Shustek allegedly had accounts in the Cook Islands to which he is allegedly transferring his assets.

"The plaintiffs are taking advantage of the negative publicity from the Harley Harmon and Interstate Mortgage scandals to cast Vestin in a bad light," he said. "... Bulloch is asking the court to tie up the assets of third parties to make the plaintiffs happy."

Morris also denied Bulloch's claims that U.S. Treasury Department agents had allegedly told Bulloch that Shustek was being investigated for money laundering.

"In my experience of Treasury Department and FBI agents, they never tell third parties about their investigations," he said. "We're not under investigation by the Treasury Department. We are not Interstate Mortgage. We are clean."