Las Vegas developer tangling with lender in bankruptcy case

Las Vegas developer Jean Marc El Jwaidi says he has been mistreated by Vestin Mortgage and he is working to obliterate the lender’s claim in his bankruptcy case.

El Jwaidi gained notoriety in 2009 when he was arrested by state Securities Enforcement Division investigators in what they called a Ponzi scheme in which millions of dollars was raised from investors for his never-built PG Plaza development at Russell Road and the Las Vegas Beltway.

With both El Jwaidi and his company Babuski LLC filing for bankruptcy, El Jwaidi settled criminal charges of bilking an elderly investor by having a benefactor to El Jwaidi pay two of the victims $338,306.

Now, creditors -- including Las Vegas-based Vestin Realty Mortgage I Inc. and related Vestin entities -- have filed $23.4 million in claims in his personal bankruptcy case and El Jwaidi wants millions of dollars of those claims extinguished.

Getting the claims reduced is important for El Jwaidi since his personal Chapter 7 bankruptcy liquidation petition listed just $6.273 million in assets.

In an objection filed Thursday to the Vestin entities’ claim of $13.3 million against his personal bankruptcy estate, a claim related to El Jwaidi’s personal guarantee of the Babuski loan from Vestin, an attorney for El Jwaidi said Vestin had loaned Babuski only $8.7 million and that Babuski had repaid Vestin some $8.3 million.

Vestin foreclosed on the property and obtained it with a credit bid of only $1 million, El Jwaidi’s filing said.

"Vestin’s claim should be disallowed because Vestin has been repaid over $8.2 million and has title and possession to a property valued at $8.8 million when it advanced only $8.7 million to the debtor’s company," said El Jwaidi’s objection.

El Jwaidi’s filing complained that after Babuski defaulted on the loan "due to circumstances beyond the debtor’s control," Vestin agreed to accept monthly payments of $200,000.

"However, in approximately June of 2009, Vestin refused to accept any further payments," the filing said. "Vestin claimed that because the Nevada Secretary of State was investigating the debtor, it would no longer accept payments on the loan."

"Apparently, Vestin (also) believes that it is entitled to charge the debtor interest and late fees to the tune of $4 million after a bankruptcy filing," said the filing by El Jwaidi, calling Vestin’s claim "unconscionable."

Vestin is likely to resist the objection as it claims to have lost millions of dollars in its dealings with El Jwaidi.

In the Babuski bankruptcy case, Vestin had said vacant land it eventually foreclosed on was appraised in July 2009 for $8.8 million -- far less than the $13.9 million owed on the mortgage.

Vestin at the time said that since Babuski was out of business and could no longer raise money from investors, there was no hope of it becoming current on the loan. Besides the arrest of El Jwaidi, state regulators had ordered El Jwaidi, Babuski and certain employees to stop selling unregistered securities in the form of promissory notes to develop PG Plaza.

Vestin’s claim, made before the $1 million foreclosure credit bid, included $9.5 million in principal, $2.8 million in interest and $1.7 million in late fees.

As a "hard money" lender, Vestin is known for charging interest rates higher than commercial banks as Vestin’s customers often can’t gain traditional bank financing for their projects.

The objection to Vestin’s claim in its entirety was one of numerous objections to claims filed by El Jwaidi last week.

The other objections, typically objecting to portions of the claim, involved:

--Walid Sayegh, claiming $170,000

--Georges Nader, $130,000

--McDonald Carano Wilson LLP, $275,000

--Andrea Weiland, $45,000

--Judith Anderson, $45,000

--Anicia Cheng, $130,000

--Joshua Paul Lehman, $25,000

--Timothy Ballard, $57,000

--Nancy Grigor, $575,000

--Eden Lasala, $10,000

--Eva Dimaano, $10,000

--Phillip Fabella, $41,500

--Charles and Shelley Grimes and Paul Hackspiel, $115,000, $339,000 and $345,000

--Davric Corp., $1.9 million

--Jerry E. Pollis Family Trust, $919,000

--Jason Agudo, $35,000

--R&L Straightline Tile LLC, $900,000

--Scott and Sherry Klempke, $1.195 million

--Julie O’Mara, $147,000

--Dr. Rico Fontillas and Myma Alforque, $300,000

--Elma Zenarosa, $20,000

--Marielle Zenarosa, $15,000

--Lamar Central Outdoor, $36,000

--State of Nevada Department of Employment, Training & Rehabilitation, $18,000

Another claim, to which El Jwaidi has not objected, was presented by MGM Grand casino collections for $50,000 for checks presented in 2009 against a closed account.

Separately, El Jwaidi reached a compromise with Manouchehr Dezfooli, who had sued El Jwaidi in March in Clark County District Court charging El Jwaidi had failed to repay at least $700,000 from a 2005 loan.

After that lawsuit was filed, an attorney for El Jwaidi asked that Dezfooli and his attorney show cause why they should not be sanctioned for violating the bankrupty’s automatic stay of litigation – and Dezfooli’s attorney said he was unaware El Jwaidi’s bankruptcy case was still active.

"Despite the horrible economic situation in Las Vegas and the fact that the debtor and his companies were the victims of a fraudulent loan that ultimately led to his personal bankruptcy, the debtor wants to do the right thing and attempt to pay his legitimate creditors as much as possible on their claims," El Jwaidi’s bankruptcy attorney, Matthew Johnson, wrote in a court filing complaining about the Dezfooli lawsuit. "To make this possible, the debtor will be required to obtain funding, either through gifts or loans or a combination of both, that will allow the debtor to fund the settlements that he is so diligently working to obtain. Now the debtor has not only been damaged by being required to pay attorney’s fees and costs in dealing with an unlawfully-filed complaint, but the unwanted publicity (in the Las Vegas Sun) may make it more difficult for the debtor to obtain the financing needed to resolve his claims and allow his creditors to be paid on their claims."

Terms of the compromise were not disclosed.

A September trial, in the meantime, has been set for a complaint filed by the bankruptcy case’s trustee against El Jwaidi alleging he’s failed to explain losses to the bankruptcy estate in the two years preceding the 2009 bankruptcy filing.