Man charged in scheme wants money to develop property

By Steve Green

Friday, Sept. 25, 2009 | 12:35 p.m.

As he faces criminal charges in what investigators call an $80 million Ponzi scheme, Las Vegas businessman Jean Marc El Jwaidi is seeking additional funding to develop commercial property at Russell Road and the 215 Beltway.

El Jwaidi and his company moved in a bankruptcy court filing Thursday in Las Vegas to block foreclosure of the property by three Vestin Mortgage entities, saying the vacant land at issue is needed to rebuild the business.

El Jwaidi was arrested in July by investigators with the Nevada Secretary of State's Securities Enforcement Division on a charge of bilking a vulnerable Las Vegas senior citizen investor out of $400,000.

State securities investigators said they've interviewed former employees and other witnesses who provided information indicating El Jwaidi accepted up to $80 million from investors worldwide to develop the land into "PG Plaza," but instead used the money to repay prior investors, cover some $1 million in gambling debts and support a lavish lifestyle for he and his family. El Jwaidi has denied the allegations.

As described in a state search warrant that was part of the criminal probe, the marketing of PG Plaza included a two-page advertisement in 2008 in In Business Las Vegas, a newspaper read by many affluent individuals. In Business is a sister publication to the Las Vegas Sun.

The ad described PG Plaza as a 9.23-acre "Monte Carlo-style, open-air plaza" with 500,000 square feet of Class A office and retail space, luxury condominium units, a boutique hotel, a high-end grocer, a gym, five restaurants, multiplex theaters and 30 boutique shops on a streetscape modeled after Rodeo Drive in Beverly Hills, Calif.

The ad described the developer as "Jean Marc Joveidi," apparently an El Jwaidi alias, and said he was a "successful businessman."

Investigators said the land now sits empty and undeveloped, though El Jwaidi's attorney says his company paid for it to be graded.

One of El Jwaidi's companies, Babuski LLC, filed for Chapter 11 bankruptcy protection June 29 in order to block foreclosure of the property by Vestin.

In a July motion in the bankruptcy case that it be allowed to foreclose, Vestin said the property was appraised that month at $8.8 million -- far less than the $13.9 million owed by Babuski to Vestin.

Vestin said the property is declining in value, that Babuski has failed to pay property taxes on the land and that the company has no hope of reorganizing so it can become current on the mortgage.

"The debtor has no records, no money, no management and no operations. There is currently no feasible plan in place to successfully develop the property," Vestin said in its motion.

But Babuski and El Jwaidi, in filings Thursday opposing Vestin's request for foreclosure, said Babuski is trying to recover papers seized by the Secretary of State's investigators during a raid of their office.

Among those papers is a June 2008 appraisal of the land valuing it at $28.5 million, Babuski said.

Babuski said it's hard to believe the land declined in value by some $20 million in 13 months. Babuski said that even with some $21.1 million in liens against the property, it likely has some equity that will allow for a successful bankruptcy reorganization.

Babuski disputed assertions that its bankruptcy filing on the day of the scheduled foreclosure showed bad faith on the part of Babuski.

"The filing was in the hope of retaining the equity that is contained in the properties so as to be able to repay all of its secured creditors, rather than providing to Vestin a windfall," Babuski said.

"Since the bankruptcy filing, the debtor has worked tirelessly to locate funds to continue the development of its properties. At this time, the debtor is attempting to find post-(bankruptcy) financing which will enable it to complete the development of the properties. The debtor is confident that it will locate the financing required to sufficiently fund its reorganization efforts," Babuski said.

An Oct. 7 hearing is planned on Vestin's motion that it be allowed to proceed with the foreclosure.

An Oct. 16 preliminary hearing is planned in the felony criminal case against El Jwaidi.