Harmon to be sentenced in mortgage company fraud

Jace Radke

Monday, Sept. 22, 2003 | 11:12 a.m.

Former Assemblyman Harley L. Harmon was scheduled to be sentenced today after being found guilty of 34 counts of mail fraud in a scheme that cost investors more hundreds of thousands of dollars.

Harmon appeared before U.S. District Philip Pro this morning at the George Federal Building with his attorney Frank Cremen.

A jury found Harmon, 55, guilty of the charges in February, and today he faces up to 71 months, just shy of six years, in prison on each count -- a potential sentence of 201 years, though the judge was expected to allow him to serve the sentences concurrently.

Harmon was indicted in April 2001 after an investigation into his now-defunct Harley L. Harmon Mortgage Co.

At issue was millions of dollars of investors' money lost through the mortgage company's loans to developers of two housing projects, a mobile home park and a storage center, between 1994 and December 1997.

The mortgage company, which operated at 1108 S. Eighth St., 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.

U.S attorney Dan Schiess said during the trial that Harmon led investors to believe he was putting their money in safer first deeds of trust when they were actually in second, third and even worse positions on loans brokered by Harmon's mortgage company.

Money was also diverted from the investors' projects to projects in danger of being foreclosed. Interest payments and reports mailed to investors kept them in the dark about what Harmon was doing with their money, Schiess said during the trial.

Harmon was originally charged with 71 fraud counts, but most were dropped because some witnesses were unavailable.

Prosecutors say the scheme was to defraud investors of $3.88 million overall, though Harmon's attorneys objected to that amount as the total loss, saying it was actually $2.5 million.

Many of those who invested with Harmon said they had trusted him because of his background and the good reputation of his family. Harmon was speaker pro tem of the Assembly in 1977 and its majority leader in 1979.

His political lineage 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.

After Harley L. Harmon was stripped of his license in 1997 the Sun reported that many investors had given him money without knowing that 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.