Fake loans found in mortgage firm probe

Kevin Rademacher

Thursday, June 24, 2004 | 10:53 a.m.

Some of the worst concerns surrounding the collapse of the Global Express investment operations run by Las Vegas financier Connie Farris have been confirmed by the court appointed receiver.

At least five loans on which Global Express received capital from investors are now known to be fraudulent, said receiver James Donell. The loans, which were purported to be backed by land in Bishop, Calif., Rancho Mirage, Calif., Utah and Las Vegas involved property that never existed, Donell said.

"They didn't exist," Donell said.

Donell said that the total amount of investor money that was collected for the nonexistent loans was unknown, but he said it involved at least "hundreds of thousands of dollars."

Additionally, Donell said there are probably other similar transactions. "I think there's more," he said.

Farris could not be reached for comment.

In a December lawsuit against Global filed by the Securities and Exchange Commission, the SEC claimed that the company and its subsidiaries were operating a "Ponzi-like" investment scheme. That lawsuit estimated that its Real Estate Investment Fund I had 600 investors who had contributed $48 million. Donell has said that the assets of the fund appear to total about $10 million.

Donell will not comment on the possibility of criminal charges facing Farris, but he did say that FBI investigators have been in contact with him.

"They are closely monitoring everything I am doing," he said.

Also, a U.S. District Court judge in Las Vegas last week granted Donell's motions to formally cease the operations of Global Express and its subsidiaries and vacate offices in Las Vegas and Billings, Mont. The judge also granted a motion allowing Donell to hire an auctioneer to sell off some of the company's personal property.

Judge Kent Dawson also denied a motion by investors in the fund to discharge the receiver and allow investors to appoint a board to oversee the disbursement of assets. The move is likely the end of investors efforts to play an active role in the case, said investors attorney Bryan Clark.

"My group is done," said Clark, a lawyer with the firm of McDonald Carano Wilson LLP. "They have simply exhausted their resources."

The judge said conflicts of interest among investors who played varying roles in the fund could not be resolved without a receiver. Clark disagreed.

"That's no reason they can't get together and elect a board to represent members," he said. "At the end of the day it's their money and their company."