Escrow firm has license revoked

Grace Leong

Thursday, Feb. 6, 2003 | 11:15 a.m.

The state Department Business and Industry has revoked the licenses of Las Vegas escrow company K&E Loan Servicing Inc. and its owner William Kenneth Rick, who is suspected of unlicensed mortgage loan operations.

The state Financial Institutions Division also issued a cease and desist order for unlicensed mortgage brokering against the escrow company after several of Rick's investors "came forward and showed evidence that revealed 13 instances where Rick was (allegedly) paid referral fees or 'points' for brokering mortgage loans," said Paul Ashworth, a supervisory examiner for the state.

Scott Walshaw, commissioner for the division, who took possession of K&E at 3124 W. Charleston Blvd., appointed division examiner Jay Dickerman as conservator to oversee the operation of the company.

A state investigation of K&E's books and records after the company was seized found Rick was allegedly brokering 'hard money' construction development loans and that he was servicing the loans through K&E by paying interest on the loans, the division said.

Rick was also accused of using funds from new or current investors to pay the interest on previous loans.

Walshaw and Ashworth couldn't specify the number of investors involved and the number of loans serviced by the company.

"We revoked K&E's license because his bond expired and his bonding company won't issue him a new bond. We suspect it's because they were tipped off about the illegal mortgage brokering activity," Ashworth said. "Technically, K&E's business is about collecting and remitting payments to parties involved in real estate transactions."

"We were alerted by several investors with Ken Rick that he was making private investor loans or 'hard money' loans. That's unlicensed mortgage brokering activity by Rick," he said. "We speculate that some of the investors that called us may have known he didn't have a license but went ahead and invested anyway because of the high interest returns on the loans. But when the investments started to go bad, that's what prompted the investors to call us."

"Some of these investors also thought their investment was protected because they thought they had a first deed of trust on properties, when in some cases, they didn't," Ashworth said.

"We also heard Rick was in trouble over allegations that he misused trust funds in a separate construction funds control company in Las Vegas. But construction control is outside the jurisdiction of our office. That may be the purview of the State Contractors Board, but it led us to look at K&E," Walshaw said.

Ashworth said the construction control company Rick owned is called Ken's Construction Control -- where lenders' funds are held in trust by the company for release to contractors as real estate projects are completed. Ken's Construction Control is also at 3124 W. Charleston Blvd.

"We aren't sure who's responsible for regulating construction control. That's virtually an unregulated area," Ashworth said.

"As far as we know, Rick is still doing business under Ken's Construction Control. But K&E is currently under conservatorship by the state, meaning we're winding down its business and not taking any new loans or accounts," Ashworth said.

"If there are any outstanding existing loans that are to be serviced, we collect payments and make disbursements to existing accounts. Rick will have 30 days to notify K&E investors to move their accounts to another company," he said.

Rick could not be reached for comment on the state's allegations.