Las Vegas Sun

March 28, 2024

Attorney argues feds have no evidence of Harmon crime

The attorney for Harley L. Harmon, a former assemblyman accused of mail fraud in connection with a multimillion-dollar mortgage scandal, opened a federal trial Monday arguing that the government has no evidence his client committed a crime.

"It's hard to think that someone would commit 51 counts of mail fraud in order to keep their good name," Frank Cremen said of Harmon, whose father and grandfather were prominent Nevada politicians. "People don't do that. People (commit mail fraud) to enrich themselves.

"You can bet your bottom dollar that the federal government looked everywhere for theft by my client, but they couldn't find it because it wasn't there."

Harmon, 55, was indicted in April 2001 and charged with 71 counts of mail fraud after a joint FBI and Metro Police investigation into the operations of the now-defunct Harley L. Harmon Mortgage Co. The number of counts dropped to 51 because some witnesses were not available for various reasons, including death in some cases.

In his opening argument, Assistant U.S. Attorney Dan Schiess painted Harmon as a man trying to stay one step ahead of investors and developers as he funneled money from project to project, never telling investors what he was doing with their capital.

"Mr. Harmon could have solved his financial problems legally, but that would have required courts and lawyers, and he believed that would hurt his business," Schiess said.

"People associated his name with trust, confidence and reliability. He used his name as a marketing tool, and he thought his reputation would go down if people knew investors were having problems with him."

Harmon, who served as speaker pro tem of the Assembly in 1977 and as its majority leader in 1979, has a political lineage that extends back to his grandfather, Harley A. Harmon, a former chairman of the Nevada Public Service Commission. Harmon's father, Harley E. Harmon, served in the Assembly and on the Clark County Commission.

Investors say Harmon used his family name to lure investments in construction loans with promises of annual returns of up to 15 percent. But many investors soon learned they were placed in certain loans without their consent or discovered their money was used to pay off other investors.

Cremen argued that Harmon disclosed all of the financial dealings to state regulators on a monthly basis, and no one stepped in to tell him he was doing anything wrong.

Schiess said investors received letters from Harmon telling them everything was fine with their investments when it really wasn't.

"The checks (to the investors) stopped coming and things finally came to light," Schiess said. "Those investors realized that Mr. Harmon had misled them. This case is simply about deception."

The case focuses on loans Harmon's company made to developers of two housing projects, a mobile home park and a storage center between 1994 and 1997. Harmon's company was handling 44 separate loans involving $23.9 million from 694 investors when the Nevada Financial Institutions Division stripped the company of its license in December 1997.

The Sun subsequently reported that many investors had given Harmon money without knowing he was under state investigation. That and other revelations reported by the Sun led the Nevada Legislature in 1999 to revise state mortgage broker laws aimed at giving investors more protection from potentially unscrupulous companies.

Some of Harmon's investors received all of their money back, while others got back about 30 cents on the dollar when the assets of Harmon's company were liquidated.

Among the prominent investors who dealt with Harmon were Las Vegas Convention and Visitors Authority President Manny Cortez, who invested at least $115,000, and state Ethics Commission member Merle Berman, a former assemblywoman, who invested $205,000, according to documents filed in Clark County District Court.

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