Legislature blasts state regulators over mortgage company probe

Members of the Legislative Commission's Subcommittee to Investigate Regulation of Mortgage Investments grilled state officials on Tuesday about the handling of the Harley L. Harmon Mortgage Co. case.

The company operated by Harmon, a former state assemblyman, was stripped of its business license last December but not before jeopardizing $22.7 million in mortgage loan investments.

Harmon collected money from as many as 600 investors, promising up to 15 percent interest annually. The money, spread out over more than 40 loans, was to be borrowed and repaid by developers of residential and commercial properties. But few investors profited, and many lost money.

State Financial Institutions Commissioner Scott Walshaw, his deputy, Burns Baker, and Doug Walther, a senior deputy attorney general, said there were delays because of the time needed to get records for a strong case.

But lawmakers, led by subcommittee chairman and Assemblyman David Goldwater, D-Las Vegas, argued that the company could have been shut down months earlier.

Baker conceded that "we were being spoon-fed the information" from Harmon, allowing the company to control the pace of the investigation.

"As elected officials, we can't allow our institutions to be spoon-fed," Goldwater said.

The state revoked the company's license after uncovering misconduct in the handling of four separate construction project loans.

Las Vegas Metro police continue to investigate Harmon for possible fraud. Walther revealed that his office has been assisting the law enforcement effort by providing access to its files on the case.

archive