Ex-assemblyman indicted in fraud

Thursday, April 19, 2001 | 11:17 a.m.

Former state Assemblyman Harley L. Harmon was indicted by a federal grand jury for mail fraud for his part in a multimillion-dollar mortgage investment scandal that involved hundreds of local investors.

The indictment announced Wednesday was the result of a joint investigation by the FBI and Metro Police fraud units into the operations of the defunct Harley L. Harmon mortgage company.

Harmon, who does not have a listed telephone number and could not be reached for comment today, faces up to 355 years in prison and $17.75 million in fines if convicted of the 71 counts of mail fraud.

His company, which operated at 1108 S. Eighth St., was stripped of its license by the Nevada Financial Institutions Division in December 1997.

But the Sun subsequently reported that many investors had given Harmon money without knowing that he was under state investigation. That and other revelations reported by the Sun led the Nevada Legislature in 1999 to revise state mortgage broker laws aimed at giving investors more protection from potentially unscrupulous companies.

Investors who learned of the indictment were ecstatic. Henderson resident Dan Gray, who said he testified in October before the grand jury, said the 53-year-old Harmon "deserves to be punished."

"I've salvaged my life, but he destroyed many others," Gray said. "From the get-go, I had faith in the Metro fraud unit and in the FBI."

Harmon was speaker pro tem of the Assembly in 1977 and its majority leader in 1979. His political lineage extended back to his grandfather, Harley A. Harmon, a former chairman of the Nevada Public Service Commission, and his father, Harley E. Harmon, who also served in the Assembly as well as on the Clark County commission.

Investors say the younger Harmon used his prominent family name to lure investments in construction loans with promises of returns carrying 15 percent annual interest. But many investors soon learned that they were placed in certain loans without their consent or discovered that their money was used to pay off other investors.

The company was handling 44 separate loans involving $23.9 million from 694 investors at the time it went out of business. The indictment, which focused on 10 loans made between 1994 and December 1997, demanded that Harmon forfeit at least $6.3 million in proceeds.

"It was part of the scheme and artifice that defendant Harmon told many investors that he would place their investments in loans secured by first deeds of trust when he then and there well knew that he would place their investments in loans secured by subordinate deeds of trust," the indictment stated.

A receiver appointed by Clark County District Court attempted to liquidate the company's assets, but most investors wound up with no more than 30 cents on the dollar.

One such investor, Ellen Rozario of Las Vegas, said she received back only $130,000 of the $350,000 she invested.

"I couldn't be happier," she said of the indictment. "The law had been broken a million times by this guy. The state should have stopped him years ago."

Among the prominent investors who dealt with Harmon were Las Vegas Convention and Visitors Authority President Manny Cortez and Assemblywoman Merle Berman, R-Las Vegas. Not all the investors were wealthy, however. Many had lived on fixed incomes and lost their life's savings through the company. Gray said one such investor in her 90s died penniless, unable to afford heat in her mobile home.

The Sun unearthed state documents that revealed Harmon's company had problems with incomplete investor files as far back as 1990, seven years before its license was revoked. Even today, Gray said the state did not do enough to tighten the mortgage broker laws.

"There are still some crooks in the industry," Gray said. "Hopefully, this indictment will make mortgage brokers more guarded. It will put people on notice that they cannot commit fraud and get away with it."

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