Lack of pool regulation leaves some homeowners swimming upstream

Saturday, Feb. 24, 2001 | 10:49 a.m.

Henderson wheelchair user Dale Channell wanted a swimming pool for physical therapy, but for more than a year has been stuck with an empty hole in his back yard.

Other local customers of the now-defunct Cascade Pools are fighting to save their homes from foreclosure after signing what they allege were fraudulent loan documents for their pools. Channell has only the hole to show for his $60,000 loan.

"Every time the wind blows I get everyone else's garbage, and it fills up," Channell said. "The state hasn't done anything about it. I'm seriously considering moving out of this state permanently."

The controversy centers on Gregory Majeroff, former owner of the Las Vegas pool company and an affiliated finance business. The state Contractors Board revoked his license last fall for failing to make full disclosures in pool and finance contracts.

A Clark County grand jury heard the matter in October, and Majeroff remains under investigation, according to District Attorney Stewart Bell.

But that has not slowed attempted foreclosures and other disputes that led Channell and 19 other plaintiffs to sue Cascade's former owner on Feb. 9. The plaintiffs, who have since been granted a temporary restraining order, are seeking an injunction to stop the foreclosures.

Plaintiff Christina Schofield of Las Vegas said businessmen such as Majeroff can escape fines and other punishment because "in Nevada nobody pays attention."

"Why have regulatory agencies if they don't regulate?" Schofield said. "Everyone is saying, 'It's not my job.' "

But Majeroff, who built about 1,000 pools in the Las Vegas Valley since incorporating in 1990, blamed the Contractors Board and the media for blowing complaints about his business out of proportion.

Majeroff insisted he operated above board and honored most of his contracts. But he said that because of the bad publicity, clients last year began refusing to pay their loans, giving him cash flow problems that affected other customers and resulted in unfinished pools.

"I had to sell my house and just about everything else to keep the business going, but I just keep getting dragged through the mud," Majeroff said. "A lot of the loans we did were at zero-percent interest, and people got their pools and are swimming in them.

Something for nothing

"If people think they should get a free pool, I don't think so. They have completed swimming pools that passed inspections. These people are the ones attempting to commit fraud. They're trying to get something for nothing."

The state expanded consumer protection from unsavory pool contractors in 1997 in response to hundreds of complaints about companies that were not completing pools. One example was the now-defunct Oasis Pools of Las Vegas, whose owner, James Hampton Jr., pleaded no contest that year to misdemeanor charges of deceptive trade practices.

But Sen. Terry Care, D-Las Vegas, does not think Nevada went far enough, citing Cascade Pools. Under current law, Care said a lender can foreclose on a homeowner even if the swimming pool hasn't been completed. That is why he has prepared a bill draft to protect a consumer from foreclosure if the pool hasn't been completed as contracted.

"You could end up with a hole in your back yard and then say you're not going to pay off the loan," Care said. "But the deal between the lender and you is different than the deal between the pool contractor and you. If you don't pay the loan, the borrower has no recourse against conveyance of their home. This bill would close that loophole."

Majeroff built pools with little controversy through most of the 1990s. His specialty was hand-carved rock pools with waterfalls. He solicited some customers by going door to door and others, such as Schofield, at home shows.

'Master manipulator'

But Schofield described Majeroff as a "master manipulator."

"I had always wanted a rock pool with a waterfall, and they were also offering creative financing," she said. "They told us we had a place to go for financing even though my husband had a prior bankruptcy."

In 1995 Majeroff incorporated United Federal Financial Corp. to help lend money to customers. But in August 1999 the state Financial Institutions Division issued a cease-and-desist order against United Federal because it believed the company was making loans secured by a lien on real property without the required Nevada mortgage-company license.

According to a related law, however, a contractor such as Majeroff is not required to get a mortgage-company license as long as he makes direct loans to clients or arranges for loans through a licensed mortgage company, according to division Commissioner L. Scott Walshaw.

After the cease-and-desist order was issued, Walshaw said his office informed Majeroff that he could continue to get involved in loans as long as he followed the law. Around that time, Majeroff began using licensed companies such as the now-defunct City Mortgage Corp. of Las Vegas to help process loans. United Federal also continued to operate as a lender even though it never obtained a business license, let alone a mortgage license.

Customers such as Schofield and Jeffrey Rowland of Henderson took out loans that involved both United Federal and licensed mortgage companies. But Schofield and Rowland, a fellow plaintiff, said Majeroff never disclosed his relationship with United Federal and alleged that his company failed to deliver on the loans. Majeroff scoffed at the allegations.

"There was no requirement for me to make that disclosure," Majeroff said. "I don't see what difference it makes whether I disclose my other businesses. They all got what they signed for, which was a pool. So what is the real claim here?"

Schofield complained that she and her husband were forced to take out another loan to complete their pool because United Federal, which had assumed one of their initial loans, failed to provide the financing they expected.

Loan was sold

Yet she said her loan with United Federal and those of other clients of Cascade Pools were sold by Majeroff last summer to his brother-in-law, Bruce Jobelius of Riverside, Calif., in transactions filed with the county recorder. Jobelius, a defendant in the litigation, eventually attempted to foreclose on Schofield's home even though she alleged that loan was never funded. Jobelius did not return telephone calls last week.

"How does United Federal Financial get to file documents through the county recorder's office with no business license and with a cease-and-desist order?" Schofield said. "I can go down to the recorder's office with a fake ID, deed your house to myself and foreclose on it, and you would have to get an attorney to prove me wrong. If you don't have money for an attorney, I could take your home."

Assistant County Recorder Sue Berfield said that "we never get a list that blackballs anyone from doing business" with the recorder's office.

"According to the state statute we could record any document," Berfield said. "We could record your Aunt Nellie's cookie recipe. There's no way to check what's coming through the door. We don't check anyone."

Rowland, a construction-industry employee, said the pool he was told would take nine weeks to complete actually took seven months. Even then he said the pool was built with only a 3 1/2-inch thick deck, rather than the 6-inch thick deck in his contract. That is why he decided to withhold payment on the United Federal loan.

But that loan also was transferred to Jobelius, who sought to foreclose on Rowland. Like Schofield, Rowland said he did not believe the United Federal loan was ever funded. He speculated that the pool actually cost only the $25,000 he borrowed through a licensed mortgage company, and that an additional $31,700 loan handled by United Federal was never spent on his pool.

"I kick myself for never attempting to build this pool on my own," Rowland said. "I don't think they even spent 20 days of labor on my pool."

Former City Mortgage owner Paul Grady of Las Vegas defended the quality of Majeroff's pools. But Grady, whose former company also is a defendant in the litigation, said Majeroff ran into financial trouble last year largely because he had too much money tied up in loans to clients.

"When they stopped paying him, his business dried up," Grady said. "So he didn't finish 10 or 12 pools."

Grady said he tried to discourage Majeroff from making loans, to no avail.

'Too greedy'

"He got too greedy," Grady said. "He took on pools where he was having to carry too much of the cost of the pools on his back. But he wanted the volume. He wanted his crews to keep working."

Majeroff conceded he may have attempted to increase his business too quickly in part because he offered zero-percent interest loans that generated high volume.

In Channell's case, Majeroff said his workers were delayed by a railing system his client installed to get from his house to what was to be the pool. Majeroff said his financial problems were to blame for his inability to complete Channell's pool once the railing was installed.

But he said he forgave most of the loans to other clients who also ended up with holes in their back yards. Channell was not one of those individuals, however, because his loan was made through another company.

"I was totally ramrodded," Channell said.

Kari Henrie, another litigation plaintiff, has water in her pool but said the construction was shoddy. The bench under her waterfall was so adults could sit below the flow, "but the water hits you in the head, and it feels like you're drowning."

Construction complaints

She complained that the pool's bottom is bumpy and that footprints are imbedded around her deck. The seats in the adjoining spa are so low that when the 5-foot-5-inch Henrie gets inside, the water is up to her neck.

But Jobelius also sent her a foreclosure notice when she and her husband suspended loan payments.

"The reaction from Jobelius was, 'Don't you have a pool?' " Henrie said. " 'Why aren't you making payments?' I said I wasn't going to pay Greg and then someone else to finish what he was supposed to do."

Majeroff said he offered to honor the warranties of unhappy customers last year through other licensed companies even as the Contractors Board suspended and eventually revoked his license. But he said many of the litigants failed to take up his offer.

He conceded that one Contractors Board finding -- his filing of phony names as corporate officers of United Federal -- was a "stupid" mistake. Fraudulent filings of corporate records with the state can be prosecuted as a felony, according to Scott Anderson, deputy secretary of state for commercial recordings.

But the former pool builder said most of the board findings charging lack of disclosure were technicalities. He also accused the board of soliciting complaints and drumming up the negative publicity that he said destroyed his business.

He won't get a sympathetic ear from George Lyford, however. The Contractor Board's criminal investigator said Majeroff simply failed to give customers valid contracts.

"If the contracts are not in compliance with pool regulations, they're not valid contracts," Lyford said. "Certain required disclosures were not made, such as payment schedules. We probably had 30 complaints about him on file and identified problems with more than 100 loans.

"But there's nothing further that we can do for the people who complained. They'll have to get a court judgment against him."

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