Friday, June 13, 2003 | 11:13 a.m.
The chairman and director of a company that sells time-share units in Las Vegas is resigning those positions, the financially troubled company said Thursday.
Floyd Kephart, chairman of Leisure Industries Corp. since December 2001 when the company was acquired in a stock deal by Preferred Equities Corp. and Ramada Vacation Suites, will leave the company June 30, a company statement said.
A spokesman said Kephart is resigning to pursue other opportunities and is staying on until the end of the month to allow the company to name a replacement.
Kephart could not be reached for comment on details of his new pursuit or if the company's recently named chief executive officer, Michael Greco, is in line to succeed him.
Greco, formerly the chief executive officer of MortgageRamp Inc., became a director on the company's board in January 2002 and was elected president and chief operating officer in December. He became the company's chief executive officer and took over the day-to-day operation of the company last month.
When Greco took on the CEO role, Kevin Blair, who had served as the company's general counsel, became chief operating officer.
Leisure Industries is the operating name for Mego Financial Corp. and operates Leisure Resorts Las Vegas, a 489-unit time-share resort on 18.5 acres just east of the Imperial Palace hotel-casino.
In addition to the Las Vegas property, Leisure Industries operates time shares in Arizona, California, New Jersey, Colorado, Florida and Hawaii.
Publicly traded Mego recently disclosed in a Securities and Exchange Commission filing that the company wrote more than $6.4 million in bad checks and fell behind in its payroll tax and retirement withholdings, according to a company audit.
Mego Financial also has been named in a lawsuit seeking the company's eviction from its corporate headquarters at 1645 Village Center Circle. The landlord, Howard Hughes Properties LP, is seeking the eviction in a lawsuit filed in Clark County District Court.
Leisure Industries acknowledged last month that it was financially unstable after disclosing that executives had underestimated the magnitude of consumer defaults on loans the company held.
Kephart said in May that filing for bankruptcy protection was an option the company was considering.
In the SEC filing, dated June 4, the company reported that its audit committee had hired Singer Lewak Greenbaum & Goldstein LLP to perform an audit of the company's 2002 financial statements and L.J. Soldinger Associates LLC to investigate allegations from a terminated employee about the company's finances. The Singer Lewak firm replaced BDO Seidman LLP, which resigned in April after determining that Leisure Industries might not be able to continue as a "going concern."
In a May 27 letter to the audit committee that is part of the SEC filing, Soldinger President Larry J. Soldinger outlined findings from a 10-day investigation into allegations by former Leisure Industries employee Robert Understein. Among the findings listed in the SEC filing:
In the eviction lawsuit, the landlord said Mego's monthly rental payment of $31,389 became delinquent May 5. The suit said Howard Hughes Properties sent a notice May 15 and filed the lawsuit June 3.
A spokeswoman for the company said Mego is negotiating a settlement with Howard Hughes Properties.
In a separate matter, Leisure Industries recently received a letter from the Nasdaq stock exchange stating that the company has not maintained a sufficient number of independent directors on its board of directors to conform to Nasdaq rules.
The company submitted a plan of compliance to the Nasdaq Listing Qualifications Panel on May 16, but an unfavorable decision could result in Leisure Industries being delisted from the exchange.
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