Apex land deal linked to Goodman draws lawsuit

By Sam Skolnik

Wednesday, Jan. 21, 2009 | 2 a.m.

A real estate investment group that includes Las Vegas Mayor Oscar Goodman and several other local notables has been sued on behalf of hundreds of victims defrauded by a convicted Ponzi scheme operator.

The suit, filed last week in federal court in Salt Lake City, claims that Apex Holding Co. and Apex Utility Holding Co. took a $22 million down payment from the Ponzi operator, Val Southwick, and his company, VesCor Capital Corp. — while intentionally hampering his development efforts so they could get the land back.

Apex officials knew, or should have known, that VesCor could never complete payment for the property, contends the suit from Robert Wing, VesCor’s receiver.

After pleading guilty in March, Southwick, a real estate scam artist who preyed on the elderly, was sentenced in June to one to 15 years in prison for each of nine counts of felony securities fraud. Investigators found that Southwick had ripped off more than 800 investors — at least 110 of whom were from the Las Vegas area — to the tune of $180 million.

When Southwick made the down payment on Apex’s land in April 2005, it was publicly known that Southwick had for decades allegedly engaged in unscrupulous business behavior. In the 1990s, state securities departments in both Nevada and Utah had chastised or fined Southwick for selling fraudulent or unregistered securities.

Yet in April 2005, investors in Apex agreed to sell 6,000 acres within Apex Industrial Park, near Nellis Air Force Base in North Las Vegas, for $123.6 million.

“The money paid to Apex was paid out of investor funds as part of a Ponzi scheme,” Wing’s attorneys wrote in the Jan. 13 complaint, referring to the $22 million down payment.

Southwick failed to make good on the rest of the purchase, and Apex got its property back through foreclosure.

Neither Goodman nor any of the other prominent local Apex investors was named in the suit.

A spokesman for Goodman gave this statement: “The mayor is not on the board of directors of Apex, and he has no active interest in Apex. He is not named in the lawsuit. The mayor said that his last involvement was when the property was purchased in 1997, two years prior to being elected mayor.”

In June, as the Sun was preparing to detail the accusations against Apex, Goodman said he didn’t know Southwick, and that he and Apex were only trying to make money through a legitimate deal. Goodman said in June that if he had had suspicions about Southwick at the time of the 2005 VesCor sale, he would not have agreed to do business with him.

The mayor said his original investment of roughly $700,000 gave him a 4 percent share of the Apex deal. He said he has since invested another $2 million, for a total investment of $2.7 million, and has made $1.6 million in profit so far.

Goodman stood to make $5 million if the deal had gone through.

Tony Tegano, the Tango Pools founder who originally bought into Apex for the same percentage as Goodman, likewise said in June that Apex investors didn’t know of Southwick’s past problems before the deal.

Other Apex investors include developers Peter and Tom Thomas of the Thomas & Mack Co.; Ralph Engelstad, the deceased one-time owner of the Imperial Palace; developers Joanne and Andrew Levy and Ed Hoffman; retired advertising executive Rod Reber; and former Southern Nevada Paving owner Floyd Meldrum.

Mark Gaylord, a Salt Lake City attorney who represents Apex, said he had not yet crafted a formal reply to the lawsuit.

“I’ve reviewed the complaint, and I’m considering the merits,” Gaylord said. “We expect to vigorously defend these claims.”

Wing’s claims against Apex result from an investigation conducted by the Chapter 11 bankruptcy trustee for VesCor, Lewis Freeman of Miami. Last month, that bankruptcy case ended as the case between Freeman and Wing was settled.

Freeman had accused Apex of signing the deal with Southwick and VesCor knowing of their inability to pay. Apex investors acceded to the agreement so they could receive the down payment, attain favorable capital gains tax rates — and profit further when they foreclosed on the land with the chance to sell it again, Freeman contended.

In other words, Freeman wrote, there was a good chance that Apex had actually run a scam on master con man Southwick.

Wing isn’t quite as blunt in his accusations. But the gist of the eight-page complaint is clear: Whether or not Apex knew of Southwick’s shady past, and the likelihood that he’d fail to pay the bulk of the purchase price, Apex did what it could to scuttle the deal so that Southwick would be forced to foreclose.

“Apex unreasonably and improperly interfered with VesCor’s attempt to develop the property,” the suit claims.

According to the suit, Apex manager David Carver in 2006 threatened that Apex would “aggressively pursue remedies” against Southwick should he continue to try to develop the property.

Carver has been deposed in the matter, Wing said. The deposition could not be obtained, however, and Carver could not be reached for comment.