Las Vegas Sun

March 28, 2024

Las Vegas lender Aspen Financial Services suing investors over defaulted loan

Aspen Financial Services LLC of Las Vegas is suing 39 investors in a failed real estate loan after they refused to go along with Aspen’s plan to foreclose on and then sell the real estate at issue.

Aspen, a hard money lender that pools investors’ funds and loans it to real estate developers, filed the suit this week in Clark County District Court.

The lawsuit involves the $19.24 million Milano Residences LLC loan from 2006 for what was supposed to be a 100-unit condominium complex at Cactus Avenue and Bermuda Road in the Silverado area of Las Vegas.

Aspen is already mired in litigation with disgruntled investors over that loan and Aspen has previously disclosed a criminal investigation has been under way involving the loan.

After the condominiums were not finished and the loan went into default, some of the investors in the loan sued Aspen, charging Aspen and its principal Jeff Guinn had acted in ways benefiting them but hurting the suing investors.

They also alleged irregularities with the financing including allegedly inflated appraisals and problems such as delays and cost overruns.

Aspen has denied the allegations. In responding to investor lawsuits, Aspen says it’s been found to be in compliance with state lending laws and that investors were hurt by the economic downturn, not wrongdoing on Aspen’s part.

In the latest skirmish between Aspen and a minority of the 321 investors in the Milano Residences loan, Aspen said in its new lawsuit that after it foreclosed on the Milano Residences real estate, it reached a deal to sell it for $2.9 million to an entity called H5 Group LLC.

Aspen said that in accordance with state law and its loan servicing agreement with the investors, the deal was approved by at least 51 percent of the holders of the beneficial interests in the loan.

But a title company, which is not named in the lawsuit, told Aspen in October it refused to insure the title for the sale without the signatures of all 321 investors on the closing documents, the lawsuit says.

After that, Aspen says it sent the closing documents to all the investors. Holders of 82 percent of the beneficial interests in the loan have now signed the documents, the lawsuit says.

Holders of another 18 percent of the loan interests — those sued by Aspen this week — “have refused to sign and return the documents,” the lawsuit says.

Aspen in the lawsuit is seeking a court declaration that the defendants must execute the closing documents or a declaration that as a matter of law Aspen can sign the closing documents on behalf of all the holdout investors.

Among those sued by Aspen this week were investors who have been involved in litigation against Aspen over the Milano loan and other loans. These defendants include Kenneth and Yvonne Gragson, North Main LLC, Lois Levy, Rodney Reber, Charles Thompson and David Willden.

Aspen, in previous court filings by the law firm Bailey Kennedy, has called the investors just that — “investors.” Bailey Kennedy continues to represent Aspen in the lawsuits filed by investors.

But this week’s Aspen lawsuit, filed by attorney David J. Merrill, calls them “lenders.”

Separately, Aspen lost a motion to stay certain discovery in the Milano Residences lawsuit in which the investors are suing Aspen.

Aspen had argued before Clark County District Judge Mark Denton that because of the criminal investigation, its executives and employees faced a difficult choice in appearing for depositions or responding to certain discovery.

They could “provide the testimony to defend against the civil allegations, which may be used against them to aid the federal investigation; or assert the right against self-incrimination and hinder the defense of the civil matter,” Aspen said in a court filing.

But the court found “there are no criminal proceedings actually pending and the effort seeking the limited stay is not ripe,” an order denying Aspen’s motion says.

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