Judge: Son of former NV governor “fraudulently concealed information” from lenders

By: - April 9, 2019 5:11 pm

Former Nevada Governor Kenny Guinn and son Jeff. Photo credit: The Anointed Son: A True Story of Greed, Power and Blind Trust

Former Nevada Governor Kenny Guinn and son Jeff. Photo credit: The Anointed Son: A True Story of Greed, Power and Blind Trust

Hard money lender Jeff Guinn, the son of former Nevada Governor Kenny Guinn, “fraudulently concealed information” when he valued four loans brokered by his former company, Aspen Financial,  but did not engage in “overarching fraud” on more than 20 loans at issue in a lawsuit filed against Guinn.

Two and a half years after the 2016 bankruptcy court trial, Judge Gary Spraker of Alaska ruled partially in favor of plaintiff Donna Ruthe, who alleged Guinn misled investors who lost hundreds of millions of dollars when loans brokered by Guinn defaulted.  Guinn earned broker fees to pool funds from investors, who earned double-digit interest rates making high-risk loans to borrowers. 

“Plaintiffs reaped the rewards of these investments for a number of years, but problems emerged when real property values plummeted. Guinn is not blameless here. However, the court finds that there was no overarching fraud,” Spraker wrote.

“First, Guinn ran Aspen loosely,” the judge wrote in his decision. “He relied on appreciating land values to justify Aspen’s hard money loans to local contractors. This worked until 2007, when real property stopped appreciating, and instead depreciated precipitously.  By this time, the regular stream of payments Plaintiffs had received from their prior Aspen loans desensitized them to the considerable risk involved in financing hard money loans.”

Spraker concluded the Ruthes’ “chose” to receive documents, including a disclosure statement required by Nevada law to be signed pre-investment, after they turned over money to Guinn.

However, Spraker disregarded state law (NRS 645 b.185) which says a licensed mortgage broker shall not accept money from a private investor without a signed disclosure form.

Guinn testified he was given permission by the state to violate the disclosure law.  

Spraker wrote “the court is left to conclude that Aspen’s ‘underwriting’ of loans was merely a compilation of information centered around the appraisal of the real property securing the loan.”

“It is also unclear whether Aspen ever refused to broker a prospective loan,” the judge wrote.  

Spraker found Guinn fraudulently concealed the truth on four loans, including three in which he played both broker and borrower, a practice known as insider lending.  

“In the loans… Guinn played dual roles as the principal of Aspen, who brokered the loan, and part owner of the borrowers, who supplied the information to Aspen. On these projects, Guinn refinanced loans several times, and selected only the highest valuations of the real property that would nominally support additional loans. For each of these Coronado loans Aspen failed to disclose material facts that would have demonstrated that the borrowers could not fund or accomplish what remained to be done to achieve that valuation.”

Guinn filed bankruptcy in 2013, the same year the Nevada Mortgage Lending Division revoked Aspen Mortgage’s license.  

Despite the revocation, which applies only to the company, not the individual, Guinn is now a hard money loan broker at Battle Born Capital.

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Dana Gentry
Dana Gentry

Dana Gentry is a native Las Vegan and award-winning investigative journalist. She is a graduate of Bishop Gorman High School and holds a Bachelor's degree in Communications from the University of Nevada, Las Vegas.