Tuesday, March 31, 1998 | 10:03 a.m.
Clark County District Judge Stephen Huffaker has set the fees that a Las Vegas receiver can charge to help individuals recoup investments made with the defunct Harley L. Harmon Mortgage Co.
Huffaker also told investors Monday that if they were unhappy with receiver Bernie Chippoletti of Terra West Realty & Development Corp. they could try to recoup the money on their own with court approval.
More than 400 individuals, including many public figures and members of prominent local families, invested at least $22.7 million in 46 construction and real estate loans. Harmon, a former state assemblyman from Las Vegas, promised returns of 15 percent interest to be paid annually in monthly installments.
But many of the investments went sour, and Harmon Mortgage lost its business license in December after the state uncovered misconduct in the company's handling of four construction project loans.
In a preliminary ruling, Huffaker said Chippoletti can charge 5 percent of whatever he can recover through liquidation or other methods on defaulted investments. In some cases, the receiver may charge an additional $60 an hour for accountants and up to $275 an hour in legal fees in order to recoup investments.
But both the receiver and his Las Vegas attorney, Phil Aurbach, said every effort will be made to defray those extra costs. In some cases, they said they will try to get borrowers of the loans to pay those fees.
Chippoletti said only seven of the loans Harmon handled, involving about 75 investors, are still paying the interest they were promised. Under Huffaker's ruling, these investors can be charged $7.50 a month in processing fees plus a one-time fee of $250 when their investment matures. Again, some of these fees may be paid by the borrowers.
About 20 investors attended the court hearing, some of whom believed the fees requested by Chippoletti were exorbitant. Others, however, said they were satisfied the court-appointed receiver would do the best job possible.
Huffaker praised Chippoletti, noting that the receiver has a handful trying to decipher Harmon's paperwork. Investors were led to believe they were holding first-trust deeds, meaning they would be first in line to be repaid by borrowers. Instead, they now believe that Harmon used their money to pay off other investors.
"It appears records weren't well kept by Harley Harmon," Huffaker said. "It appears it was done on a shoestring by Harley Harmon."
Aurbach has received some criticism from investors because partners in his law firm, Marquis & Aurbach, are charging the receiver $275 an hour. But Aurbach said most of the $15,000 in legal fess spent so far have gone to other lawyers and paralegals at much lower hourly rates.
Huffaker also praised Aurbach's professionalism, saying he was one of the best attorneys in town.
"If I needed a complex thing done, I would hire him at $275 an hour," Huffaker said.
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