Russ Steele
The Sac Bee has the this story: Nevada County DA took special 'hard money' loan favors
NEVADA CITY – His personal finances in disarray and his ability to do his job compromised, Nevada County District Attorney Clifford Newell sat in a local cafe, eyes welling, as he described how he became beholden to a loan broker who is under investigation for bilking investors.
A few years ago, Newell and his wife assumed crushing debts to keep their summer camp business solvent. Unable to get a conventional loan – "Neither of us were qualified," Newell said – they borrowed from what is called a "hard money" broker, the equivalent, some say, of a legal loan shark who uses others' money to make high-priced loans.
That decision inextricably linked Newell, the county's top law enforcement officer, to Philip Lester. That hard money broker has since been accused by investors of cheating them, leading to investigations by police, and now the state attorney general's office, for securities fraud.
A yearlong Bee investigation found that Newell, 54, received favorable treatment on his own loans from two hard money brokers. Documents show that one of them, Lester, tried to help the Newells avoid foreclosure and possible bankruptcy by raising money for a loan and misleading investors who contributed.
Lester has since forfeited his lending license, ceased doing business, and admitted to numerous violations of laws designed to protect investors, involving other loans. Newell said he did not know about the false statements to investors and could recall little about his own transactions with Lester.
Newell said he and his wife "were moving property and loans, trying to keep all the balls in the air. Some of it was smoke and mirrors."
Newell's ties to the broker offer a window into a culture of fraud in the hard money community in Nevada County. A Bee review of thousands of pages of court and regulatory filings shows that for more than 20 years, a number of hard money brokers have misused or stolen their investors' money. Some brokers landed in prison; many investors lost their life savings.
You can read the rest of the story here.
Exit Question: Will this corruption eclipse the ongoing Diaz/County/Aptitude Solutions law suit for violating copyright laws?
