Las Vegas Sun

March 28, 2024

Las Vegas real estate lender sued again, and files its own suit

Las Vegas "hard money" real estate lender Aspen Financial Services faces another lawsuit filed by an unhappy investor -- at least the fifth such suit filed since 2008.

The latest suit filed in Clark County District Court this week alleges wrongdoing involving a loan familiar to Aspen watchers: The Milano Residences loan for a failed condominium project that's the subject of a criminal investigation. The unfinished 100-unit condo development is in the Silverado area of Las Vegas, at Cactus Avenue and Bermuda Road.

The new suit was filed by attorneys Elizabeth Zagajeski and Kurt Harris in behalf of plaintiffs Kelly J. Lee and North Star Compass LLC against Aspen, Milano Residences LLC and businesswoman Susan Mardian.

The suit asserts allegations of fraud, fraudulent concealment, conversion, negligence, breach of the loan servicing agreement, breach of the implied covenant of good faith and fair dealing and breach of fiduciary duty. The suit also seeks an accounting of the loan at issue and that a receiver be appointed to supervise Aspen.

The new suit also seeks unspecified general and punitive damages.

The lawsuit claims that after Lee invested $1 million for a first deed of trust position in the Milano property, $818,000 in principal is still owed to Lee not counting interest.

The suit charges funds from the loan were used for purposes other than construction of the condominiums, that Aspen failed to disclose key information to investors about problems with the loan and that Aspen's proposals to investors for dealing with the defaulted loan placed Aspen in a conflict of interest "wherein Aspen wrongfully placed its interests and the interests of some principals, including (Jeff) Guinn, ahead of the interests of plaintiff."

Like other lawsuits over the condominium loan, this one complains that -- for a project that was never completed -- from July 2004 to December 2006, Aspen churned $55.1 million through six loans against the property in which Milano was the borrower.

In the process, the new suit complains, Aspen was paid some $1.23 million in brokering and loan extension fees.

Aspen doesn't comment on lawsuits. However, in court papers it has said it has passed state regulatory examinations and that investor losses should be blamed on the economic downturn -- not on Aspen's brokering and servicing of loans that went into default.

In responding to an earlier claim about the condominium development against her, attorneys for Mardian and her companies denied wrongdoing and said in court papers: "These defendants breached no duties" to investors.

Separately, Milano Residences LLC and Mardian were sued this week by Aspen and Milano Residences Management LLC, trustee of the Milano Residences Irrevocable Trust.

Aspen and the trust charge in the suit that the defendants defaulted on a $19.24 million note for the condominium development and that Mardian is liable for a deficiency judgment after the plaintiffs foreclosed on the property in September. Mardian has not yet responded to that suit.

The suit didn't specify the amount of the deficiency judgment, but in a previous court filing Aspen said that after foreclosing on the property, it reached a deal to sell it for $2.9 million. That deal appears to be on hold because some investors refuse to go along with it.

Aspen's lawsuit against Mardian would seem to answer charges in the Lee lawsuit that Aspen appeared to be working for the benefit of Guinn and Mardian "and not for the benefit" of Lee -- and that Aspen has "refused to pursue the guarantor, Susan Mardian."

Separately, Aspen has moved to dismiss a lawsuit filed against it in January by investor and Las Vegas attorney Robert Ebinger.

Ebinger complained in the suit about problems with his investment through Aspen of $225,000 or 2.9 percent of a $7.7 million second mortgage for Rancho Park Residential LLC.

Rancho Park Residential planned with Pageantry Communities Inc. to develop a 33-acre project called Avion near the intersection of Decatur Boulevard and Smoke Ranch Road in Las Vegas.

Ebinger charges that in arranging, brokering and servicing the now-defaulted loan, Aspen "materially breached its statutory, fiduciary and contractual duties" to Ebinger and has failed to provide requested information about the loan.

In seeking dismissal of the complaint this month, attorneys for Aspen called it "frivolous" and said Ebinger "blames Aspen for his real estate losses during an historic collapse in the Las Vegas real estate market and economy, not to mention the global economy."

Aspen said 153 of Ebinger's coinvestors in the loan understood this and "every action plaintiff complains of was ultimately authorized by the votes of plaintiff's coinvestors (and often by the plaintiff himself)."

They added another "frivolous" suit against Aspen, which they didn't identify, is being prosecuted by a law firm that employs Ebinger's wife. And Aspen's attorneys denied the firm is withholding information about the loan.

These attorneys added that Ebinger has invested in 10 loans with Aspen since 2003 and that the Rancho Park loan is the first and only one of these loans to go into default.

The legal grounds for the motion of dismissal are that Ebinger failed to plead his fraud claims with the required specificity and that most of his other claims "fail as a matter of law."

Aspen is represented in the lawsuit by attorneys with the law firm Bailey Kennedy.

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