Former mortgage broker ordered to pay $4.2 million

Grace Leong

Tuesday, Jan. 8, 2002 | 10:43 a.m.

David Ferradino, the former operator of insolvent Interstate Mortgage of Las Vegas, was sentenced Monday to five years of probation and ordered to pay $4.2 million in restitution to some 90 investors after he pleaded guilty to theft.

Ferradino, who was originally charged with three counts of theft, embezzlement and fraud and pleaded guilty on Sept. 17 to the one count, was ordered to complete restitution to the investors by 2007 in annual payments.

Clark County District Judge Lee Gates denied on Monday a request by Deputy Attorney General Matthew Dushoff to require Ferradino to make monthly restitution payments of $74,000 to the investors.

Gates also ruled that a judgment -- which enables investors to expedite recovery of their funds -- is to be redrafted by Dushoff and signed by Ferradino by Jan. 23.

Prosecutors alleged the investors, most of them living in Las Vegas, deposited $5.7 million with Interstate to back Champion Homes and Iron Mountain Ranch home-building developments in the Las Vegas area.

Ferradino, who used land as collateral to secure the investments and then gave the money to Champion Homes Corp. without permission or knowledge of the investors, was accused of failing to reveal he was a 50 percent owner of Champion Homes. The company later bought out his interest for $1.5 million.

Ferradino, who surrendered his mortgage broker's license as part of the plea agreement in September and can no longer be involved in the mortgage broker business in Nevada, is still allowed by the Nevada Real Estate Commission to maintain a real estate sales license.

Deputy Attorney General Wallace Hammons said Ferradino's license was "downgraded from (that of) a broker to a real estate salesman" by the state commission in December.

"The commission was concerned about Ferradino's felony plea but was more concerned about his ability to make restitution to the investors. That's why they allowed him to keep his real estate license," he said. "But if Ferradino violates his plea agreement, he'll have his license revoked."

Reactions to Ferradino's sentence were mixed.

Pamela Lawson, Ferradino's attorney, said probation was "the best solution because it gave him a chance to work and to pay the investors back" and the judgment "provides protection" for the investors.

"The confession of judgment includes Ferradino's pledge of his real estate commissions to make restitution and allows investors to collect on proceeds from a future sale of Bickford Ranch, an undeveloped piece of land in California that Ferradino has a 17 percent stake in," she said.

"Ferradino's interest in Bickford Ranch is valued at $5 million. Except for $3 million that's secured to U.S. Bank -- which loaned Ferradino the money to buy the property -- investors can recover about $2 million once the property is sold," she said.

Lawson argued Ferradino should be required to pay only $2.1 million in restitution because he has already made a $1.5 million payment and another $2.1 million is being repaid by Kaufman and Broad Home Corp.

Kaufman and Broad acquired the 466-acre Iron Mountain Ranch for $31.5 million in 2000. Ferradino's investors could receive as much as $4.2 million from that sale.

"The investors are receiving checks at regular intervals in repayment of their investments," she said. "But in the event the investors do not receive a return of their money from the Iron Mountain Ranch sale, then (Ferradino) will still be liable for all transferred investments."

But George Metenjies, a Las Vegas man who attended Monday's hearing, said Ferradino's sentence was "too lenient."

Metenjies said his 88 year-old mother was an investor who lost about $55,000 of her $105,000 investment in Champion Homes.

"Ferradino didn't disclose to us that 50 percent of the Champion Homes land was going to the city of Henderson for the building of a school and library."

Dushoff, who said at the hearing he isn't convinced that Ferradino doesn't have enough money to make the monthly $74,000 restitution payments, said the state "has evidence Ferradino is still involved with multi-million dollar land deals in Nevada through his stepson, Ryan Welch."

Dushoff also cited documents he received from Ferradino that allegedly indicate he borrowed $350,000 from Nevada State Bank in August. "If Ferradino is making only $2,000 a month as he claims, why would Nevada State Bank be willing to loan him $350,000?"

But Lawson disagreed, saying the $350,000 loan was a refinancing transaction and not a new loan. She said his stepson later assumed the loan.

Dushoff, who accused Ferradino of failing to provide full financial disclosure of all his assets, won a court order on Monday to force Ferradino to produce all his financial records, salary statements, stockholdings and tax records dating from 1997.

A hearing is scheduled Jan. 23 to determine if Ferradino has complied with Monday's order.