Known as USA Capital , USA Commercial Mortgage Co.'s hard money lender (USACM) is a Las Vegas, Nevada mortgage broker owned by Tom Hantges, Joe Milanowski who went bankrupt in 2006. Rodney Balinski was also part of the company, as an assistant to Tom Hantges and Joe Milanowski.
Video USA Capital
Operation
'USA Capital', USA Commercial Mortgage Co.'s hard money lender (USACM), is a mortgage broker based in Las Vegas, Nevada owned by Tom Hantges and Joe Milanowski. Affiliated with lending/brokerage activities at USACM is a management company, USA Securities, and two funds, Trust Trust Fund and for Nevada residents alone, Diversified Trust Deed Fund.
There are two general categories of investors;
- fund investors who collect their money with others and allow USACM to choose which investment to make and
- Direct lenders who want to evaluate the project for themselves before investing in individual loans.
Although there are instances of a single lender directly funding the entire loan, most loans are funded by many entities, including two Trust Trust Funds themselves. Typically loans ranging from up to $ 3,000,000 to $ 30,000,000 will be funded by between 30 and 300 people, each of which is the recipient of a fraction of the promissory note.
A loan mediated by USACM offers investors high interest rates relative to the safe interest rates available on CDs and Treasury Notes. At least publicly, the USACM maintains an almost unimpeachable record of stability and integrity for years and advertises that "no investor ever loses a cent of the point."
When borrowers approach USACM in need of money, USACM will negotiate difficult terms. This includes initial origination fees and loan points, ongoing service fees and renewals, and equity participation returns or the cost of success that is all paid to USACM. Retail investors only receive interest.
Very often loans are made on land or projects very early in the development, rights or marketing stage. In most cases, this property does not generate rental income so that unit sales, or refinancing or sale of further entitled land are required to repay the investors back. Penetrating enough accounts to pay interest for the loan period is generally funded with investors' own money and as a result most loan repayments are almost entirely dependent on continued high demand for condo conversion and stable demand or acceleration for ready-to-build land.
Maps USA Capital
Bankruptcy
In 2005 by draining the funds and reducing the ability of borrowers to sell condos to the public or sell the land to builders, borrowers began to fail to meet its obligations. USACM hides this fact from both Nevada regulators and investors. In an effort to remain solvent USACM not only continues to accumulate costs by initiating speculative loans to the weakening real estate market but tells investors that loans have been extended when in fact the loans have been settled. The proceeds from payments, instead of being paid out to eligible recipients, are transferred to pay off thousands of other investors, check their monthly interest. Therefore every loan in the portfolio appears to be performing.
On April 13, 2006 the company declared bankruptcy. At the time of bankruptcy the company had 6,500 investors and manages $ 962 million in investor assets, making it the largest bankruptcy case in Nevada's history.
Court case
Marc Levinson, a lawyer representing investors at USA Capital, likened the operation to the Ponzi scheme. Judge of Bankruptcy Court Linda Riegle ordered the appointment of a trustee to oversee things when it was revealed that Hantges and Milanowski owe $ 9.8 million to former famed Gambino family boss John Gotti.
In November 2006 some investors organized themselves as the US Capitalizing Protection Group. As of March 2007 membership has grown to over 750.
On March 15, 2007, the New York City private equity firm Compass Partners announced that they were the highest bidders at a bankruptcy auction. The company pays $ 47 million for the right to service most loans, and for the assets of the First Capital Trust Fund of the United States. Many investors are opposed to Kompas's involvement.
That same month, investors received a letter from the FBI informing them that they may be victims of crime and that USACM is being investigated. According to the investment prospectus distributed to Diversified Fund investors, all invested funds will be secured by real estate. This is not the case because at least one large unsecured loan is made to an entity owned and controlled by one or more of the actors in USACM. As a result, Joseph Milanowski accepted a plea bargain and was sentenced to 12 years in prison on one count of wire fraud.
USA Capital Management was also found to be directly involved with some funded developers, conflicts of interest and the Nevada Mortgage Lending Division then issued an opinion stating that the USACM's profit participation was negotiated on its own behalf while borrowing was against the law of Nevada.
On June 7, 2007, Michael Carmel, a Chapter 11 Defender was appointed at the Thomas Hantges Estate Bankruptcy. The Trust Agent retains Brian Shapiro, Esq from Law Officer Brian D. Shapiro, LLC as a local Las Vegas Police advisor and Robbin Itkin, Esq. Law Office of Steptoe and Johnson as general counsel. They are currently investigating the assets and transactions of Thomas Hantges.
References
Source of the article : Wikipedia
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