Swimming pool scam prompts bill

Erin Neff

Friday, March 9, 2001 | 11:59 a.m.

CARSON CITY -- A consumer fraud case that is believed to have more than 120 victims of a swimming pool construction scam led lawmakers this morning to ask whether the state can step in to help.

Sen. Terry Care, D-Las Vegas, brought Senate Bill 216 to help close a loophole to prevent a pool contractor from also serving as the financial lender for the pool.

That's precisely how dozens, and possibly hundreds, of victims of Cascade Pools ended up with fraudulent loans and eventually foreclosure notices on their homes.

"All they wanted was a pool, and they ended up with a lengthy Kafkaesque nightmare," Care said this morning as testimony began on his bill before the Senate Commerce and Labor Committee.

After hearing testimony from an investigator for the state Contractors Board and a Las Vegas woman who fell victim to the scam, lawmakers were amazed that Cascade's owner Gregory Majeroff seems to have slipped through enforcement cracks.

"It's prudent that the state steps in and stops this," Sen. Mike Schneider, D-Las Vegas, said.

Schneider and Sen. Ann O'Connell, R-Las Vegas, asked how victims such as Christina Schofield continue to face possible foreclosure.

O'Connell even asked for an emergency measure -- beyond Care's bill -- to assist victims to get out of fraudulent loans that have clouded the titles to their homes.

"It appears this guy is just going to keep coming back," Schneider said.

Cascade Pools had its license revoked last fall by the state Contractors Board for failing to make full disclosures in pool and finance contracts.

Majeroff is the former owner of the pool company and an affiliated finance business, United Federal Financial Corp. The state Financial Institutions Division issued a cease-and-desist order against United Federal in 1999 because it believed the company was making loans secured by a lien on real property without the required Nevada mortgage-company license.

"Creative financing was a big draw to a lot of the (victims)," Schofield said. "When they say creative financing, boy do they mean creative financing."

Contractors Board investigator George Leifert said Majeroff would go door to door with brochures about the pools and offer a separate company's creative financing. Some victims signed a credit application for the financing, went out of town and returned to find a giant hole in their back yard, he said.

At that point, Majeroff -- who also served as the loan officer -- would send people notices that foreclosure would begin if they didn't make the loan payments. The problem was, they never got any money from United Federal and most were left with either holes in their yard or nothing.

One contract for a $29,779 loan carried a finance charge of 31.487 percent, bringing the total cost to $281,971 over the life of the loan.

"I see a lot of contracts," said Committee Chairman Randolph Townsend, R-Reno, who is a car dealer. "And I've never seen one at 31.487 percent in any of our four stores."

Since the loans were fraudulent, lawmakers are also considering an emergency measure naming United Federal and City Mortgage Corp. of Las Vegas to make the loans null and void and free the victims from future foreclosure notices.

Victims are currently in a class-action suit against Cascade Pools, and a host of investigations are continuing.

Care's bill would require a financial institution to review any contract entered into between a resident and a contractor of a residential pool or spa.