SEC formalizes Vestin inquiry

Kevin Rademacher

Monday, Jan. 10, 2005 | 10:47 a.m.

An informal Securities and Exchange Commission inquiry into Las Vegas-based lender Vestin Group Inc. has apparently become a formal investigation.

In an SEC filing made Friday, Vestin said that on Thursday the company received from federal regulators an "'Order Directing Private Investigation and Designating Officers to Take Testimony' which appears to focus on the financial reporting of the (investment) funds."

"The company intends to continue to cooperate fully in this matter and believes that it has complied with SEC disclosure requirements. The company cannot predict the outcome of this matter," Vestin's filing said.

Company officials maintain that Vestin has done nothing wrong.

"While Vestin continues to firmly believe it has not violated any Securities and Exchange Commission regulation, after a year of informal inquiry clearly the SEC sees the matter differently," Vestin spokesman Steve Stern said. "We will continue to fully comply with any request the agency makes, as we have done for the past 13 months, to bring this issue to a rapid close. Business will continue as usual at Vestin while this matter is being resolved."

The initial, informal inquiry was announced in March 2004, and company executives said it involved unknown matters related to the company, Vestin Fund I LLC, Vestin Fund II LLC and Vestin Fund III LLC.

At a shareholders meeting in July, Vestin founder and Chief Executive Michael Shustek said the company -- at that time -- had spent about $1.5 million responding to the inquiry.

"We have had no other words (from the SEC)," Shustek said in July. "I am sad to report that we have spent about $1.5 million on the inquiry ... which of course comes out of shareholders pockets ... This is disrupting the public company as well as the subsidiaries."