Agency ordered to investigate complaints

Erica D. Johnson

Wednesday, Dec. 11, 2002 | 11:08 a.m.

A District Court judge Tuesday ordered a state department to investigate a local land developer's allegations of misconduct by Vestin Mortgage Co.

District Court Judge Sally Loehrer in a hearing Tuesday said the state's Financial Institutions Division (FID) failed to investigate most of Howard Bulloch's claims of misconduct by the mortgage company, which he says resulted in his losing millions of dollars.

Bulloch, owner of Desert Land LLC and Casa Malaga Motel Inc. and a borrower of Vestin, alleges that by not investigating his claims against the mortgage company, the FID showed preference to Vestin.

Loehrer said it was clear the FID "did not investigate at least nine and perhaps 11 of the 13 allegations."

She gave the agency 120 days to do so. The FID, which regulates banking and mortgage companies, will have to investigate nine of the claims and provide the court with a written preliminary report by April 1.

A hearing to discuss the findings is scheduled for April 8.

"The court has the authority to mandate that the department does its job and investigates the 13 complaints," Loehrer said. "I can't tell them how to investigate or how thorough to investigate but the department is required by law to do an investigation."

Loehrer did not address Bulloch's motion requesting that an independent prosecutor be appointed to review his complaint.

Tuesday's hearing is the latest in a long-standing battle between Bulloch and Vestin, which resulted in Bulloch filing a federal lawsuit against the mortgage company. The federal suit is still pending.

In November 2000, Bulloch accused Michael Shustek, Vestin Mortgage founder and chief executive, of interfering with his plans to sell property on the south end of Las Vegas Boulevard and lost a legal bid to force Shustek to release a lien on the land.

Bulloch's complaint with the FID and the state Attorney General's office alleges that Vestin committed more than 700 corrupt acts.

But Bulloch's complaints didn't gain much attention until Shustek and entities associated with the company were criticized for giving $158,000 in donations to attorney general Democratic candidate John Hunt, said Charles Thompson, Bulloch's attorney.

Included in Bulloch's complaint are allegations that Vestin blocked his attempts to make timely repayments of his loans in order to collect more than $3 million in penalty fees.

The FID looked at Bulloch's accusations, Assistant Solicitor General Richard Linstrom argued, finding "most did not warrant an investigation because they were meritless."

Linstrom said many of the allegations in Bulloch's complaint addressed issues that would be caught in routine examinations, which occur annually.

FID Commissioner Scott Walshaw is assigned to investigate each accusation filed with the FID, Linstrom said.

Walshaw would not comment on the complaint or the investigation.

"There is no evidence that any of their accusations are actually correct," Linstrom said. "They are the ones that have the burden of showing the commissioner didn't use the proper discretion."

Thompson said Loehrer's decision was the first step in vindicating Bulloch.

"They took Mr. Bulloch's complaint to Carson City and put it in a drawer for a year," he said.