AG's role in mortgage company oversight debated

CARSON CITY -- Assemblyman David Goldwater, D-Las Vegas, said Thursday there is "overwhelming testimony" that crimes were committed in the "Harley Harmon fiasco" investment scheme in Las Vegas, but no criminal charges were ever filed.

Goldwater headed a legislative subcommittee that looked into the Harley L. Harmon Mortgage Co. venture in which millions of dollars were lost by Las Vegas residents.

Goldwater, citing evidence of false signatures and other crimes, said it was unclear whether the state attorney general's office had criminal jurisdiction.

"Metro started the investigation, but they had no idea what was going on," he said.

Goldwater said Metro Police turned the case over to the Clark County district attorney's office, which declined to prosecute because there was no police investigation.

Because of the ambiguity in the law, it was up to the state to turn over the information from its investigation to the local district attorney, Goldwater said.

"They (the attorney general's office) did not report to the local jurisdiction. The local authorities were not informed as we would have liked to have seen," Goldwater said.

His statements were made to the Assembly Ways and Means Committee, which is considering Assembly Bill 64 to give the attorney general's office jurisdiction over both civil and criminal prosecution in mortgage investment cases.

Senior Deputy Attorney General Anne Cathcart told the committee that passage of the bill would mean her office would need $491,603 to hire extra staff for the new duties. Scott Walshaw, commissioner of the state Financial Institutions Division, said he would need an estimated $130,000 over the next two years for additional staff.

The bill, which would require licensing of mortgage bankers and mortgage loan agents, would impose an annual fee that could yield more than $800,000 a year.

"This looks like a money-maker," Assemblywoman Chris Giunchigliani, D-Las Vegas, said.

Committee members questioned whether the attorney general's office would need the extra staff. Assemblywoman Jan Evans, D-Sparks, asked how many cases are handled each year.

Senior Deputy Attorney General Doug Walther said the disciplinary cases are "few and far between, but they are very complex and time consuming." In addition, he said there would be new duties in policing the licensing of mortgage banking companies and agents.

Walshaw estimated there are 300 companies that are now exempt from licensing that would have to apply to the state for a permit. He suggested that 1,500 agents would have to be licensed.

The committee did not take any action on the bill. It has scheduled a hearing Tuesday for Assembly Bill 72, which gives the secretary of state's office authority over the securities involved in mortgage transactions.

Both bills have been approved by the Assembly Commerce and Labor Committee.

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