Las Vegas Sun

March 28, 2024

Local investors allege they lost millions

Arvis Forrest was described by his attorney as an "old country boy" who left Arkansas with $40 in his pocket as a teenager and built a multimillion-dollar investment portfolio through self-taught knowledge of real estate.

Forrest, a Boulder City resident who passed away at age 87 on Feb. 2, was hardly flashy. He drove a 10-year-old car and lived in a double-wide trailer.

Yet he had planned to leave millions of dollars to a number of charities, including Catholic Charities of Southern Nevada, Shade Tree women's shelter and Opportunity Village in Las Vegas and the Shriners Hospitals for Children scattered throughout the country.

But his attorney, David Spurlock, and accountant, Bryan Dziedziak, said Thursday that the Forrest estate may never get to donate much of that sum because it was entrusted to Las Vegas businessman William Kenneth Rick. They allege that since 1999, Rick engineered a construction loan scheme that involved false real estate documents, forged signatures and fraudulent corporations.

"It's a crying shame," Dziedziak said. "It's going to be tough to get any money from Mr.Rick because the assets have basically been disposed of or have been hidden."

Next Thursday, the estate's lawsuit against Rick goes to court. The estate is seeking return of an estimated $25 million plus interest and legal fees -- at least half of which would go to the charities -- and hopes to stall foreclosures on property it believes is held by Rick and associates in what the lawyer and accountant consider to be a Ponzi scheme.

Spurlock said a construction loan scheme orchestrated by former state Assemblyman Harley L. Harmon "pales in comparison" to alleged activities by Rick and associates. Thursday, a federal jury found Harmon guilty of 34 counts of mail fraud in connection with $23.9 million in loans from 694 investors.

"Harmon was taking investors' money to fund other investments but these guys here were flat taking money and running," Spurlock said. "You had fraudulent notary stamps. You had companies where property was being forfeited without the owners even knowing."

Rick said that "all of this is being worked out with the title companies. This is an issue we have with the title companies. There are two or three title companies involved. A lot of people are in the process of suing them."

Rick referred further questions to his attorney, Richard Young. In a statement, Young said: "While Mr. Rick acknowledges that a number of people delivered funds to him, and that in a moral sense he is responsible, he did not have knowledge that further activities subsequent to his involvement had occurred.

"He was not a party to the scheme, which probably has resulted in the loss of significant monies, including his own funds and quite possibly his business."

Investor Dana Strum, a Las Vegas television producer, said, "I think Rick studied a lot of what Harley Harmon did and copied a little bit of it."

Strum said. he and about 45 other investors gave Rick about $40 million since 1999 for residential and commercial construction loans with promised returns of up to 15 percent interest paid monthly. Strum said he is seeking to recover a six-figure sum.

Strum said that although some interest payments were made, he believes Rick and his associates have failed to repay investors at least $16 million. Strum alleged Rick got help from at least three local title company employees. Those employees provided false deeds of trust and other phony information to dupe unsuspecting investors, many of whom were senior citizens who have lost their retirement savings, Strum alleged.

Strum, producer of the variety show "Las Vegas Now" on KTUD Channel 25, said Rick's clients ranged from savvy real estate pros such as Forrest -- who had made his millions investing in mobile home parks and first deeds of trust -- to retirees who knew nothing about the business. They came to Rick mostly through word of mouth, including referrals from mortgage brokers.

The way it usually worked, Strum said, is an investor would provide Rick with at least $100,000. The investors were led to believe that their money would be repaid by developers at interest rates of roughly 12 to 15 percent. As collateral the investors were told they would be assigned first deeds of trust, meaning they would be first in line to foreclose on the land and improvements in the event of a default on the loans.

Strum alleged Rick gave some investors falsified deeds of trust that typically listed property with the wrong parcel numbers or represented non-existent plots.

"He would hand over these documents to the investors and then hand over the phone to them, where one of these title officers would tell them that it was alright to give money to Rick," Strum said.

Investors believe Rick and an alleged business partner, Gary Lee, converted investors' money into cashiers checks, deposited them in various bank accounts, and then sent much of the money to offshore accounts to make his dealings difficult to trace.

Lee, who allegedly fled to Mexico last fall, could not be reached for comment.

Spurlock and Dziedziak said that Forrest, who was involved in at least 30 separate loans, was defrauded when Rick formed corporations such as For-Ken LLC with Forrest as a partner but without Forrest's knowledge. In one instance, they alleged, Rick used bogus documents to take control of the El Capitan Mobile Home Park at 4901 E. Bonanza Road that Forrest had owned outright. Forrest apparently didn't realize the property had changed hands until he tried unsuccessfully to use it as collateral for a bank loan.

Strum and other investors first contacted Metro Police in October. Sgt. Edward Kravetz, who works in the fraud unit, confirmed this morning that a criminal complaint was filed months ago.

"The charges are pending," Kravetz said.

Rick has already been disciplined by the state Financial Institutions Division. The division announced last week that it had revoked the licenses of Rick's escrow company K&E Loan Servicing Inc. after determining that he was involved in unlicensed mortgage brokering activity. The division issued a cease and desist order against him, prompted by investor complaints.

Rick remains in business as owner of Ken's Construction Control Inc. at 3233 W. Charleston Blvd. In his construction control business, he serves as a middleman between developers and contractors by paying contractors and subcontractors when phases of developments are completed.

"In my opinion, the state laws that deal with construction control need to be clearly reviewed," Spurlock said. "I don't think that it is regulated closely enough."

Last spring Rick became treasurer of the nonprofit Nevada Animal Society/ Society for the Prevention of Cruelty of Animals, where he had performed volunteer work. But in November society director Doug Duke said he received a phone call from Metro Detective Roy Cox about the allegations involving Rick.

"The detective made it clear that this was a massive investigation," Duke said. "I called the board of directors to an emergency meeting in November and demanded his resignation, which we received.

"The fact that Mr. Rick didn't disclose the investigation is why the board demanded his resignation immediately. This is an incredible tragedy if what they're alleging is true, and it's disgusting."

Rick has been a local businessman since at least the early 1980s and until now had enjoyed an impeccable reputation, complete with favorable local media treatment. Some investors who have sued him or are preparing to do so said they had been doing business with him for years.

Rick is disabled and uses a wheelchair.

Spurlock alleged that "Rick used his handicap to lure people into a false sense of trust.

"That's unfortunate because that's not a fair representation of handicapped people," Spurlock said.

Investor Judith Stone said she believes things began turning sour for Rick "two to three years ago" in the form of his own bad investments. She said Rick told her last fall that he had sold his debt to Lee so that Lee could enjoy a tax write-off. Stone said she was told by Rick that he was trying to recoup as much money as he could for the investors and was apologetic, but she is skeptical of Rick's story.

Stone said she and her husband, semi-retired psychiatrist Dr. William Stone of Henderson, are still waiting to recover a combined $985,000 from Rick. She said Rick signed a check to her for that amount but that it bounced.

"These investors are not stupid people but what gets me is that he duped us," Stone said. "As far as I know all of his transactions up to about two years ago were genuine. My husband had made investments with him for years and the interest was always returned."

But Stone, who was laid off as a bookkeeper last year, said she learned months after making her investments that at least one of her deeds of trust had been falsified. The experience, coupled with the loss of her job and her husband's poor health, has forced them to scale back their retirement plans, she said.

"I would like to see justice done," Stone said. "I would like to see him arrested and put in jail and I don't want it to be a country club jail. This man has destroyed many lives, including people who are ill and who lost their life's savings."

Similar sentiment was shared by retired Las Vegas neurosurgeon Dr. Kazem Fathie, former president of the Clark County Medical Society and chairman of the American Academy of Neurological and Orthopedic Surgeons. Fathie, who said he invested $300,000 of his individual retirement account funds with Rick at the recommendation of Dr. Stone, said the loss of that money has also severely hampered his retirement.

"I personally feel that he has lots of problems in this town," Fathie said of Rick. "Both he and Mr. Lee should be in prison and their assets should be frozen."

Also angered by her experience is Eleanor Ahern of Las Vegas, who said she is seeking to recover $200,000. Like other investors she has known Rick for several years. She said that Rick tutored her daughters in 1980.

When her husband, the founder of Ahern Rentals of Las Vegas, died, she called Rick and had him invest the $200,000 from her husband's life insurance policy.

"He assured me it was as safe as safe could be," she said.

Late last year, Eleanor Ahern said she learned things had gone sour with her investment when she received a phone call from a representative of a foreclosure company. What she thought was going to be an investment in construction of a large home was actually just an empty lot.

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