Legal battle heats up between investors, Las Vegas real estate lender

By Steve Green

Saturday, Jan. 15, 2011 | 9:50 a.m.

Attorneys have more work to do as legal developments unfold in lawsuits pitting disgruntled investors against Las Vegas real estate financier Jeff Guinn and his company, Aspen Financial Services.

Guinn, son of the late former Gov. Kenny Guinn, is a "hard money" lender who pools investors' money and loans it to real estate developers and investors at rates that are typically higher than traditional bank financing.

This industry boomed in Southern Nevada in the mid 2000s, but has nearly collapsed with the recession, with Aspen and competitors like Vestin Mortgage hit hard by many of their borrowers going into foreclosure.

Aspen, having brokered and serviced more than 700 loans valued at more than $2.3 billion, since 2008 has been mired in litigation in Clark County District Court with some investors claiming Aspen mishandled their investments or engaged in deals benefiting Aspen at the expense of investors.

Aspen has denied those assertions, saying the recession caused losses sustained by investors and filing counterclaims charging its most vocal critics are improperly using the court system and the media in an effort to destroy Guinn.

A 2008 case against Aspen led by investor Lois Levy is pending, as is a 2009 case led by Donna Ruthe.

Aspen scored a legal victory last month in another 2009 case filed in behalf of certain investors by attorneys Aaron Maurice and Scott Taylor of the Henderson law firm Woods Erickson Whitaker & Maurice LLP.

Clark County District Court Judge Mark Denton granted Aspen's motion that for most of the plaintiffs, about 20 investors, the case be put on hold.

If those plaintiffs want to pursue their claims, they'll have to submit them to arbitration. Denton ruled the lawsuit can proceed for four plaintiffs with different circumstances.

In another development, a fourth lawsuit was filed last week against Aspen and Guinn, this one by investor and Las Vegas personal injury attorney Robert Ebinger.

Ebinger says in the suit he invested in various loans with Aspen from 2005 through 2007 and now has $225,000 invested with Aspen. He says that money was pooled with that of other investors for a $7.7 million second mortgage for Rancho Park Residential LLC.

Rancho Park Residential also received a first-priority loan of $15.2 million from Ohio Savings Bank for its 33-acre project, to be developed by Pageantry Communities Inc. near the intersection of Decatur Boulevard and Smoke Ranch Road in Las Vegas and called Avion, lawsuit documents show.

Ebinger charges that in arranging, brokering and servicing the loan, Aspen "has materially breached its statutory, fiduciary and contractual duties" to Ebinger.

Ebinger also charges Aspen has refused to fully disclose information to him about the loan and has obstructed his investigation of the deal.

The suit says Aspen extended the loan at issue in October 2007 even after learning in September 2007 that the borrower's financial condition had deteriorated, and that the borrower defaulted in November 2007.

Ebinger suggests in the lawsuit that instead of extending the loan, Aspen should have required that the principal amount be paid in October 2007, when Ebinger says the borrower had the financial ability to do so.

Another option, he suggested, was that Aspen should have foreclosed at that time as the value of the real estate was sufficient to satisfy or nearly satisfy both the first and second loans.

"Aspen, by its timing in approving the loan extension, disregarded enforcement of the 95 percent loan-to-value (loan requirement), all to plaintiff's detriment," Ebinger added in the lawsuit.

He also charged Aspen failed to reduce its monthly fee for servicing the loan even when there was a reduction in interest payments to Ebinger as an investor.

The lawsuit seeks unspecified general and punitive damages, that Ebinger's investment be placed in a constructive trust, that a receiver be appointed for Aspen and that Aspen be required to account for Ebinger's assets he says Aspen is holding.

The attorney for Aspen and Guinn, John Bailey of the Las Vegas law firm Bailey Kennedy, doesn't comment on pending litigation.