Shustek reaches settlement with mortgage regulators

Kevin Rademacher

Monday, Feb. 23, 2004 | 11:07 a.m.

A dispute between mortgage lender Michael Shustek and state regulators was settled last week.

In the agreement, Shustek's Del Mar Mortgage, a now-defunct predecessor company to Shustek's Vestin Mortgage, admitted to one violation of state regulations in the handling of two loans to developer Howard Bulloch.

A $5,000 fee will be paid to cover the state's administrative expenses, Shustek said, adding that he will personally pay the fine since Del Mar no longer exists.

He characterized the settlement as "great news."

"Vestin Mortgage ... has been found innocent of all charges," Shustek said.

In April 2003, a Clark County District Court judge criticized state regulators for their failure to act on complaints Bulloch brought against Del Mar and Vestin over the handling of the loans. After an initial investigation in which regulators found no violations, Judge Sally Loehrer ordered a new investigation, and three possible violations were found.

The violation admitted to by Del Mar involves a $500,000 principal payment the company received on one of the Bulloch loans. That payment was distributed to one investor instead of being divided among all 100-plus investors involved in funding the loan, said Ned Reed, a deputy attorney general working on the case for the Mortgage Lending Division.

Shustek said that payment had been approved by other investors in the loan and the dispute involves a paperwork issue.

In March, Bulloch won a $5 million judgment against Del Mar and Vestin in a separate U.S. District Court case over the dispute. Shustek has appealed that ruling.

The settlement was not well received by Bulloch.

"We thought very much that these violations required a hearing," he said this morning. "Instead they negotiated this in a back room to get out of it."

Bulloch said he would continue to pursue the court case against the Shustek companies.