Former Gov. Kenny Guinn, left; Jeff Guinn; right.
Jeff Guinn, the son of former Nevada Governor Kenny Guinn, is appealing a federal judge’s ruling upholding a bankruptcy court’s finding that Guinn fraudulently concealed information on four loans brokered by his former company, Aspen Financial, a hard money lender.
Hard money loans are high-interest, short-term loans that reap double-digit interest rates for investors who pool their funds.
In September, U.S. District Judge Cristina D. Silva upheld a federal bankruptcy court’s ruling in 2019 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 filed a notice of appeal to the Ninth Circuit last month.
Guinn earned lucrative broker fees to pool funds from investors, who earned double-digit interest rates making high-risk loans to developers during the real estate boom that preceded the Great Recession.
Guinn’s father, who was governor at the time, invested millions of dollars held in a blind trust in loans brokered by his son. However, in a deposition, Jeff Guinn’s brother Steve disclosed that despite the blind trust, his father was aware of the details of his investments.
Jeff Guinn operated his hard money lending company “loosely” according to Bankruptcy Judge Gary Spraker. However, the bankruptcy court found Guinn did not engage in “overarching fraud” on more than 20 loans at issue in Ruthe’s suit.
“He relied on appreciating land values to justify Aspen’s hard money loans to local contractors,” wrote Spraker. “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.”
In 2013, the state’s Mortgage Lending Division revoked Aspen Financial’s license because the company was insolvent. The MLD subsequently allowed Guinn to open another hard money lending company, Battle Born Capital.
“The division is aware of the recent court action involving Mr. Guinn and is in the process of reviewing it,” the Mortgage Lending Division said following the fraud finding in 2019. “Because the matter is still open and ongoing, further details cannot be provided at this time. If the division finds cause to take action against the license upon completion of the review, the final actions would be public record and will therefore be posted online at http://nmlsconsumeraccess.org/.”
The MLD has declined to comment further.
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