Why Jeff Guinn’s Return to Lending Should Matter to Everyone. A Cautionary Tale.

The website for Battle Born Capital is long on platitudes regarding the vast experience of company principals in brokering hard money loans. Battle Born’s lending pros, among them Jeff Guinn, the former hard money broker who owned the now-defunct Aspen Financial,  refer to the years since the mortgage collapse as “a season for reflection and introspection, as well as a time to study the reasons for both the very successful trust-deed investment (hard-money lending) marketplace which evolved and grew so rapidly in Southern Nevada from the late 1980’s until the mid 2000’s, as well as the rapid collapse of that same marketplace following the overall Mortgage Industry implosion of 2007-’08.”

Allow me to cut through the “reflection and introspection” and remind Mr. Guinn and Company of what happened, all of which will be laid out in far more detail in my upcoming book,  The Anointed Son: A True Story of Greed, Power and Blind Trust, about Guinn and his father, former Nevada Governor Kenny Guinn.

Not every hard money lender suffered the massive losses of investors who entrusted Guinn with their money.  Aspen Financial investors were hit especially hard for a number of reasons.  Here are a few:

  1. Guinn admits he failed to follow the state’s disclosure laws because they were too cumbersome.  He even claimed in testimony he had a pass from state regulators who knew he was breaking the law.
  2. Aspen Financial engaged in serial refinancing of the same properties, often with little, if any, improvements made to the property.  Just ask the individual lenders, many of them senior citizens, who have been waiting a decade to be paid more than $50 million owed by Aspen borrower Howard Bulloch.  Bulloch pocketed millions of dollars in “Cash Out” from loans arranged by Guinn, but stiffed investors.  Now he wants them to accept pennies on the dollar in exchange for relinquishing their shares.
  3. Unlike other brokers, Aspen largely failed to foreclose on troubled loans or to pursue personal guarantees.
  4. Jeff Guinn made loans to himself and stiffed his own Aspen investors.

I could go on and on.  Aspen Financial brokered loans to some of the largest homebuilders in Southern Nevada, the same companies responsible for much of the artificial appreciation that precipitated the meltdown.  The local market, as even Jeff Guinn’s new company admits on its website, has been slower to regain its value since the recession.  Perhaps that’s a troubling indication of just how out of whack those pre-recession values really were.

In 2013 the state issued a summary suspension and revocation of Aspen’s license.

Since then, Guinn has faced trial on federal bankruptcy fraud charges involving his lending practices at Aspen Financial.  Federal Judge Gary Spraker has yet to issue a ruling in the case, which was tried 18 months ago.

Anyone interested in investing with Guinn now should take a look at his testimony.

The return of Jeff Guinn to the lending industry should be of concern not just to those who invest in hard money loans, but to anyone with an interest in restoring stability to Southern Nevada’s real estate market.

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Disclosure:  I briefly performed investigative work for attorney Dennis Prince, who went up against Guinn in bankruptcy court on behalf of client Donna Ruthe.  Some of what I learned from that work, for which I was paid, is included in my upcoming book.

 


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