Friday, Jan. 22, 2010 | 2:38 p.m.
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The prominent Tarkanian family of Las Vegas is suing a bank to block foreclosure of an investment property, charging the mortgage at issue was tainted by fraud.
U.S. Senate candidate Danny Tarkanian; his mother and Las Vegas City Councilwoman Lois Tarkanian; and his father, former UNLV coach Jerry Tarkanian, are part of the lawsuit as principals of a company called Vegas Diamond Properties LLC.
Vegas Diamond and co-plaintiff Johnson Investments LLC filed suit in Clark County District Court Jan. 8 against La Jolla Bank and Action Foreclosure Services in hopes of blocking foreclosure of 13 acres of vacant investment land on south Las Vegas Boulevard at Barbara Street, near St. Rose Parkway.
Court papers show La Jolla Bank, based in Rancho Santa Fe, Calif., north of San Diego, loaned Vegas Diamond and Johnson Investments $25.5 million, with the Las Vegas land securing the loan.
Vegas Diamond and Johnson Investments planned to use some of the La Jolla Bank loan money to pay off older loans; and then earn a profit by re-loaning some of the funds to California real estate developer and broker Robert A. Dyson Jr.
They thought Dyson Jr. would use the money for development of a real estate project in Anza, Calif.
The Las Vegas lawsuit says Dyson Jr., who filed for Chapter 11 bankruptcy in California in 2008, has defaulted on the loans from Vegas Diamond and Johnson Investments – causing them to default on their loan from La Jolla Bank.
The Tarkanians and Johnson Investments charge in their suit that Dyson and La Jolla Bank failed to disclose Dyson had already borrowed funds from La Jolla for the Anza project, that the Anza project was over-leveraged and facing troubles and that all the money borrowed from the Tarkanians and Johnson Investments wasn’t used for its intended purpose of developing the Anza acreage.
"Mr. Dyson’s role in this case is one of concealment and fraud and his actions have directly resulted in the plaintiffs being on the brink of foreclosure," the lawsuit charges.
"Mr. Dyson and La Jolla Bank were intricately involved with one another to the detriment of the plaintiffs," the suit charges.
The suit says that dating to 2005, Dyson initially borrowed money from Doug Johnson, a principal for Johnson Investments and a former employee of Dyson’s. The Tarkanians entered the deal later.
"Unbeknownst to Mr. Johnson and Mr. (Danny) Tarkanian, money from the loans made by La Jolla Bank to Johnson Investments and Vegas Diamond was used to pay off other loans Mr. Dyson had with La Jolla Bank," the suit charges, adding some $5 million of the loan money went to a Dyson company called Songbird but it’s unknown what Songbird did with it.
The lawsuit says the Anza project was worth only around $15 million, but was securing loans totaling $32.5 million and that Dyson was having difficulty developing the project due to resistance from residents and other problems.
Dyson and his Chapter 7 bankruptcy attorney could not immediately be located for comment on the allegations. The state court lawsuit says he can’t be sued because he is in bankruptcy.
Dyson is known in Las Vegas for developing the Sotheby’s International Realty franchise called Dyson & Dyson of Las Vegas Inc. Court records show he had two other Sotheby’s franchises: Dyson & Dyson of California Inc. and Villa Ventures Inc.
The Las Vegas suit asserts claims of fraudulent concealment against La Jolla Bank and notes that on Sept. 9 the bank received a cease and desist order from the Office of Thrift Supervision ordering the bank to correct unsafe and unsound banking practices.
"La Jolla Bank knew that Mr. Dyson was encountering severe resistance and trouble in proceeding with the Anza project, yet the plaintiffs were never provided this information prior to accepting the loans," charged the lawsuit filed by the Tarkanians and Johnson, who also complained the bank failed to disclose other important information about its relationship with Dyson.
"La Jolla Bank aided Mr. Dyson in his actions to wrongfully obtain funds from the plaintiffs," the suit charges.
But Craig Newman, attorney for La Jolla Bank, argued in state court Jan. 8 that it was Dyson – not the bank – who allegedly defrauded Vegas Diamond Properties and Johnson Investments.
Clark County District Court Judge Timothy Williams issued a temporary restraining order that date blocking the foreclosure while the lawsuit proceeds. Newman then transferred the lawsuit to federal court in Las Vegas.
The lawsuit is one of scores of such cases pending in state and federal courts in Las Vegas pitting developers, investors and banks against each other over loans made when the economy was booming and money was easy to come by.
"It’s something happening quite a bit in this environment," Danny Tarkanian said Friday. "Unfortunately we’re caught in the middle of it."